The anti-cartel watchdog has performed raids on the premises of Pakistan’s two largest tractor producers on the suspicion of collusion in growing costs by 28% inside two years.
The Competitors Fee of Pakistan (CCP) on Thursday entered and searched the premises of Millat Tractors Ltd (MTL), Lahore and Al-Ghazi Tractors Ltd (AGTL), Karachi, in accordance with a press assertion.
The raids have been a part of an investigation into the conduct of tractor producers for prima facie violation of Sections 3 and 4 of the Competitors Act 2010, it added.
Each the corporations absolutely cooperated by offering the related document, paperwork, assembly minutes and computer-stored data to the 2 search groups, stated the CCP.
The CCP initiated the enquiry upon receiving issues by the Pakistan Citizen Portal a few drastic improve in costs of tractors at completely different cut-off dates regardless of the subsidy reduction given by the federal government on gross sales tax and an ideal extent of localisation within the tractor trade.
The complainants additionally alleged that the tractors being manufactured have been of substandard construct high quality, leading to frequent breakdown.
The CCP’s personal function has lately come underneath scrutiny after it imposed a high-quality of Rs44 billion on sugar millers regardless of a break up determination.
The CCP stated that the tractor trade in Pakistan appeared to have a duopoly market construction, which made it extra inclined to collusive actions. Among the many three producers, Millat Tractors had a 70% market share and Al-Ghazi Tractors had a 29% share in final fiscal yr 2020-21. The duo has a collective market share of 99%.
The CCP’s preliminary investigation confirmed that each the tractor producers sequentially elevated costs in 2021 and the quantum of proportion improve was roughly related within the case of other merchandise, ie tractors.
Learn CCP ruling on sugar trade: the second opinion
Such a sequential value sample was additionally noticed within the years 2018 to 2020. Millat Tractors elevated costs by 1-5% in October 2018, then 7-13% in July 2019, as much as 3% in March 2020 and as much as 7% in July 2020.
Cumulatively, Millat Tractors elevated costs by as much as 28% in two years.
Equally, Al-Ghazi Tractors elevated costs of its varied fashions by 3-5% in October-November 2018, 5-10% in August 2019, as much as 4% in March 2020 and 5-7% in July 2020. In whole, Al-Ghazi Tractors elevated costs by as much as 26% throughout the identical interval.
The CCP stated that the tractor trade was over 90% localised and there was hardly any technological development by the tractor producers.
Thus, the value will increase by the market chief, ie Millat Tractors, adopted by the second largest market participant, ie Al-Ghazi Tractors, in shut succession and related quantum point out the opportunity of value coordination between the tractor producers.
Printed in The Categorical Tribune, September 3rd, 2021.