CCP penalizes three dairy associations for collusive practices in fresh milk pricing

ISLAMABAD: The Competition Commission of Pakistan (CCP) has imposed fines on three dairy associations in Karachi for conspiring to manipulate fresh milk prices, violating Section 4(1) and 4(2)(a) of the Competition Act, 2010.

The fines include PKR 1 million on M/s Dairy and Cattle Farmers Association (DCFA) and PKR 500,000 each on M/s Dairy Farmer Association Karachi (DFAK) and M/s Karachi Dairy Farmers Association (KDFA).CCP approves Nishat Chunian Group’s corporate restructuring under scheme of arrangement

The CCP launched an investigation after numerous media reports and articles pointed out a significant increase in milk prices across Karachi. The probe revealed that the three associations, operating at various stages of the fresh milk supply chain, were directly responsible for the price hike in Karachi and its neighboring areas.

During the investigation, it was argued that the price caps set by the Commissioner Karachi under the Sindh Essential Commodities Price Control and Prevention of Profiteering and Hoarding Act, 2005, had not been updated for three years, despite rising inflation. However, the CCP’s findings showed that the associations had exerted undue influence on the supply chain to manipulate the milk prices.

The Order established that evidence, including video recordings, confirmed that the price hikes announced by the associations were effectively implemented throughout the supply chain. The associations used coercive methods to enforce compliance with their pricing structure, threatening wholesalers and retailers with milk supply interruptions if they did not follow the imposed prices.

The Order concluded that the associations held significant power over key pricing factors, such as bandhi rates, mandi rates, wholesale prices, and retail prices, leading to substantial distortions in the fresh milk market.

The Order also revealed that the associations caused artificial milk shortages by hoarding the product in ice factories, later selling it at inflated prices in interior Sindh. These actions disrupted the supply chain and imposed an unfair financial burden on consumers.