The Competition Commission of Pakistan (CCP) has imposed sanctions on three dairy associations in Karachi for colluding to influence fresh milk prices, in violation of Section 4(1) and 4(2)(a) of the Competition Act, 2010.
The penalties include Rs 1 million on M/s Dairy and Cattle Farmers Association (DCFA) and PKR 500,000 each on M/s Karachi Dairy Farmers Association (DFAK) and M/s Karachi Dairy Farmers Association (KDFA).
According to details, the CPC has initiated an investigation after multiple media reports and articles highlighting the spike in milk prices across Karachi. Investigations revealed that the three associations, operating at different levels of the fresh milk supply chain, were directly responsible for the price hikes in Karachi and its surrounding areas.
During the proceedings, it was said that the price ceilings fixed by the Karachi Commissioner under the Sindh Essential Commodity Price Control and Prevention of Profiting and Hoarding Act, 2005, were not revised for three years despite rising inflation. However, findings by the Chinese Communist Party showed that these associations exert undue influence on the supply chain to manipulate milk prices.
The order asserted that the evidence, in the form of video recordings, confirmed that the price increases announced by the associations were effectively implemented across the supply chain. Associations used coercive methods to enforce compliance with their pricing mechanisms, threatening wholesalers and retailers to suspend milk supplies if they refused to adhere to prescribed rates.
The order concluded that the associations had significant influence on key pricing elements, including pandi prices, mandi prices, wholesale prices and retail prices, resulting in significant price distortions in the fresh milk market.
The order further revealed that the associations created an artificial shortage of milk by storing it in ice factories and then selling it in the interior areas of Sindh at inflated prices. These practices significantly disrupted the supply chain and imposed an undue financial burden on consumers.