CCP Issues Show-Cause Notices to Goods Transport Associations
— August 19, 2024
ISLAMABAD (AIA) The Competition Commission of Pakistan (CCP) has issued show-cause notices to the Transporters of Goods Association (TGA) and the Local Goods Transport Association (LGTA) for allegedly fixing freight rates for transportation of goods from Port Qasim to various destinations nationwide, in what appears to be a violation of Section 4 of the Competition Act, 2010.
Transportation is vital to national economic growth, with local transporters playing a significant role in supporting various industries, including automobiles, textiles, oil and ghee, chemicals, beverages, paint, flour mills, cement, steel, and food, according to a press release issued Monday.
Recognizing the sector’s importance, the CCP took suo motu notice of concerns regarding collusion to raise and fix freight rates through circulars. The CCP’s inquiry found that TGA and LGTA raised transportation rates through price circulars in 2018, 2021, and 2022, while imposing strict conditions on member companies to adhere to these rates or face punitive measures. This constitutes a prohibited agreement, a prima facie violation of Section 4(1) in conjunction with Section 4(2)(a) of the Competition Act of 2010.
As part of the investigation, the CCP conducted a search and inspection, seizing records and documents that provided substantial evidence of the alleged violations. The inquiry further revealed that the anti-competitive actions of TGA and LGTA have had spillover effects in other provinces.
The impact on freight rates influences cargo arriving at Karachi Port Trust and Port Qasim, which is then distributed across Karachi, Sindh (including Hyderabad), Gharo, and Balochistan. These changes in freight costs could potentially raise the cost of goods manufactured, leading to broader economic consequences.