ISLAMABAD: The Supreme Court has called upon the government to create incentives through appropriate policies to lower the cost of doing business and the cost of producing and supplying goods, thereby facilitating lower prices for consumers.

“It is the constitutional obligation of the government, as provided in Article 38 of the Constitution, to promote the economic and social well-being of the people,” emphasised Justice Jamal Khan Mandokhail.

Justice Mandokhail was heading a two-judge bench, also comprising Justice Salahuddin Panwhar, which took up an appeal against the Competition Commission of Pakistan (CCP) and the April 24, 2025 decisions of the Competition Appellate Tribunal (CAT), which held that the Pakistan Vanaspati Manufacturers Association (PVMA) had indulged in prohibited price-fixing under Section 4 of the Competition Act, 2010.

The SC, however, upheld the finding that the association had violated competition law by collectively determining the prices of ghee and cooking oil, while reducing the penalty imposed on PVMA from Rs50 million to Rs30m.

Vanaspati manufacturers’ price-fixing penalty reduced to Rs30m

The PVMA is a representative trade association of manufacturers engaged in the production and sale of ghee and cooking oil in Pakistan, representing the collective interests of its members before the government and public bodies.

Between 2007 and 2009, amid inflationary pressure and consumer concerns over the prices of essential commodities, the federal government, through the ministries of industries and interior, urged the industry to pass on to consumers the benefit of falling international palm oil prices.

A series of communications took place between PVMA and the government, following which manufacturers reduced the prices of ghee and cooking oil.

Later, on May 27, 2011, the CCP issued a show-cause notice to the association, alleging that it had played a leading role in negotiating and fixing prices on behalf of its members with the government, in violation of Section 4(1) read with Section 4(2)(a) of the Competition Act, 2010. It also alleged that PVMA had entered into arrangements with transporters to fix transportation rates and discriminated between manufacturing units and commercial importers, in violation of Section 3(3)(b) of the Act.

The SC ruled that the government’s consultations with PVMA on price reductions had been conducted without involving the CCP, followed by the association’s collective determination of prices, which constituted a violation of competition law.

Justice Mandokhail emphasised that competing businesses must determine their prices independently, based on individual commercial considerations. Collective price determination, whether undertaken directly by competitors or through a trade association, undermines competition by replacing independent pricing decisions with a common price.

The judgment said competition advocacy served as a preventive tool at the wider market level and could bring about positive behavioural changes among manufacturers, consumers and suppliers. Therefore, the CCP must create awareness and exercise its advocacy role before a violation of its Act occurs, the judgment emphasised. The statutory scheme made it clear that enforcement was only one part of the CCP’s mandate.

This role must be exercised regularly in a manner consistent with the broader objective of promoting economic efficiency and preventing anti-competitive behaviour, rather than merely imposing penalties on those who had departed from statutory standards.

The power to impose penalties was undoubtedly an important component of that mandate, the judgment said, adding that it should be a measure of last resort, invoked where the commission’s efforts to promote a culture of competition and secure compliance with the Act had failed.

This, however, did not mean that the CCP must, in every case, exhaust its advisory or advocacy functions before initiating proceedings. Where the material disclosed a clear contravention of any provision of the Act, it must exercise its enforcement jurisdiction in accordance with the law, the judgment said.

Published in Dawn, August 30th, 2026