ISLAMABAD: The Competition Commission of Pakistan (CCP) has imposed a Rs60 million penalty on the All Pakistan Edible Oil Tanker Owners Association (APEOTOA) for fixing transportation charges and allocating business among tanker owners through a restrictive queue system, finding the practices in violation of Section 4 of the Competition Act, 2010.
The Commission imposed separate penalties of Rs30 million each for price fixing and market allocation, making the case a significant enforcement action against anti-competitive practices in the edible oil transportation market.
The case originated from CCP’s market surveillance, which detected circulars issued in connection with transportation charges for edible oil, ghee and fats transported from Karachi ports to destinations across Pakistan.
Following the surveillance findings, the CCP initiated a suo motu enquiry in August 2024 and subsequently conducted a search and inspection in February 2025.
According to the Commission, material recovered during the search established that APEOTOA revised transportation rates 89 times between 2019 and 2025. Of these revisions, 52 involved increases while 37 involved reductions.
The CCP found that corresponding circulars issued by the Pakistan Vanaspati Manufacturers Association (PVMA) communicated matching changes in transportation rates. Representatives of APEOTOA also acknowledged during the proceedings that transportation rates were determined through an agreement between the two associations.
The Commission rejected APEOTOA’s position that its rate circulars were merely advisory in nature. It held that even recommendations issued by a trade association can restrict competition if they influence members’ independent commercial decisions.
The CCP also relied on the Supreme Court’s judgment in the PVMA case, under which competing businesses are required to retain the freedom to independently determine their prices rather than coordinate pricing decisions through an association.
The Commission identified a separate anti-competitive practice in APEOTOA’s queue system for allocating transportation business among tanker owners.
Under the system, consignments were allocated to tanker owners through parchis for lifting cargo instead of allowing individual tanker operators to independently compete for available business.
The CCP found that the association also enforced compliance with the allocation mechanism. A September 2023 circular, for example, prescribed a penalty of Rs500,000 each for a tanker and its owner for violating specified conditions relating to the allocation system.
According to the Commission, such a mechanism had the effect of dividing the market among tanker owners and restricting their ability to compete independently for consignments.
The CCP determined the relevant market as road transportation services for edible oil, ghee and fats across Pakistan.
While determining the quantum of penalty, the Commission considered several factors, including APEOTOA’s substantial position in the relevant market, the duration of the pricing conduct, involvement of senior management and the continuation of rate revisions even after enforcement proceedings had commenced.
The pricing conduct covered a period of nearly six years, from 2019 to 2025, according to the CCP’s findings.
The Commission has not only imposed the financial penalty but also ordered APEOTOA to immediately cease the anti-competitive practices identified in the proceedings.
The association has been directed to recall its existing price circulars and discontinue the queue system to the extent that it has the effect of allocating or dividing the market among tanker owners.
The CCP has further ordered the association to publish notices in two Urdu and two English national newspapers clarifying that tanker owners are free to independently determine transportation rates and lift consignments regardless of whether they are members of the association.
The direction is intended to communicate directly to market participants that tanker owners must retain independent commercial decision-making over transportation charges and access to business.
APEOTOA has been given 60 days to deposit the penalty and submit a compliance report to the Commission.
The CCP warned that failure to comply with its directions could result in an additional penalty of Rs50,000 per day, besides possible criminal proceedings under Section 38 of the Competition Act, 2010.
The enforcement action underscores the regulator’s scrutiny of trade associations where collective decisions or mechanisms may restrict independent competition among their members.
For the edible oil and ghee supply chain, transportation charges represent part of the logistics cost involved in moving imported and other edible oil products from ports to markets across the country. The CCP’s findings therefore place particular emphasis on ensuring that transport operators independently determine their commercial rates and compete for consignments.
The Rs60 million penalty comprises Rs30 million for the alleged price-fixing arrangement and Rs30 million for the market-allocation mechanism, while the association has also been directed to dismantle the practices identified by the regulator and demonstrate compliance within the prescribed period.