ISLAMABAD – The cement sector of Pakistan has repeatedly faced allegations of cartel-like behavior over the past three decades, according to a recent study by the Competition Commission of Pakistan (CCP).
The report highlights a persistent cycle of coordinated price increases, regulatory intervention, and legal challenges that have limited the effectiveness of enforcement measures.
The industry, characterized by a homogeneous product, excess capacity, and limited differentiation, has historically exhibited conditions conducive to collusion.
The first significant instance of coordinated price hikes occurred in 1992, following the privatisation of state-owned units and rising post-flood demand. While the defunct Monopoly Control Authority (MCA) confirmed collusive practices, penalties were largely administrative and lacked deterrent effect.
Similar patterns emerged in the late 1990s when cement manufacturers collectively raised prices, despite regulatory findings that the increases were profit-driven rather than cost-related. Orders to dismantle cartels were often ignored, and legal challenges frequently delayed or overturned sanctions. In some cases, administrative interventions by government bodies, such as the Economic Coordination Committee, replaced regulatory efforts, undermining enforcement.
The early 2000s witnessed continued attempts at cartelisation. In 2003, the MCA directed 18 manufacturers to reduce prices, but court rulings limited the regulator’s authority, citing restrictions under the 1970 law. Further price spikes in 2007 again exposed gaps in investigative powers, including the absence of tools like search rights or whistleblower mechanisms, allowing suspected collusion to go largely unpunished.
A turning point came with the Competition Ordinance, 2007, which modernized the CCP’s enforcement powers. In 2008, the Commission uncovered a formal “marketing arrangement” among cement producers that allocated production quotas to maintain elevated prices. This led to a landmark penalty of Rs6.3 billion in 2009, one of the largest anti-cartel fines in Pakistan’s history. However, litigation over the case prolonged resolution and highlighted ongoing challenges in deterring collusive behavior.
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