The Competition Commission of Pakistan (CCP) has exposed signs of cartelization and collusive behavior among fertilizer manufacturers, raising serious concerns about competition in the sector. The findings were revealed in a draft report titled “Competition Assessment of the Fertilizer Industry in Pakistan.”

According to the CCP, the fertilizer market is highly susceptible to cartel formation due to its oligopolistic structure and homogeneous products, like urea and DAP. The likelihood of such anti-competitive behavior increases in markets where fewer players dominate and products are similar.

The report highlights price parallelism across brands despite differences in input costs, such as gas prices—an indicator of possible collusion. CCP stressed the need for strict monitoring under Sections 3 and 4 of the Competition Act, 2010, which deal with abuse of dominance and anti-competitive agreements.

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In addition, CCP noted that some manufacturers force fertilizer dealers to purchase slower-moving products like micronutrients along with urea or DAP to maintain dealership rights. This practice constitutes an abuse of dominant position, violating Section 3(2)(e) of the Act.

The report urges stronger regulatory oversight and also calls upon the Securities and Exchange Commission of Pakistan (SECP) to conduct a cost audit of fertilizer manufacturers. This would help identify pricing irregularities and support informed policy interventions.

CCP had already recommended the reinstatement of cost audit requirements under the Companies Act, 2017 in its Policy Note dated May 8, 2020, particularly for the fertilizer sector to promote fair competition and transparency.