Cement 16 12 2020

COMPETITION COMMISSION OF PAKISTAN
__________________________________________________________________
ENQUIRY REPORT
(Under Section 37(1) of the Competition Act, 2010)
IN THE MATTER OF ALLEGED VIOLATION OF THE COMPETITION ACT,

2010 BY ALL PAKISTAN CEMENT MANUFACTURERS ASSOCIATION AND
ITS MEMBER UNDERTAKINGS
Noman Laiq│Irfan ul Haq│Aqsa Suleman│Sara Jamali│

│Furqan Khan Khattak
Dated: December 15, 2020
Page 1 of 59
I. BACKGROUND & FACTS
1. This report has been prepared in pursuance of the enquiry authorized by the
Competition Commission of Pakistan (the “Commission”), under Section 37 (1) of
the Competition Act, 2010 (the “Act”), on 18th May 2020 against suspected anti-
competitive conduct by All Pakistan Cement Manufacturers Association (APCMA)
and cement manufacturers in Pakistan.
2. Initiation of the enquiry is based on various media reports published, between April
and May 2020, regarding increase in the price of cement (50 kg bag) by the cement
manufacturers. Media reports alleged that increase in price of cement was due to
cartelization by the manufacturers who held a meeting subsequent to which price
increase in the range of Rs.45-55 per bag (50 kg) was announced. Regarding the
aforesaid rise in price of cement, a report published quoted that on behalf of the
Government in a meeting held with the members of All Pakistan Cement
Manufacturers Association (APCMA) the cement manufacturers were urged to revoke
the price hike due to its adverse impact on the construction industry. As per the news
reports reasons given by the representatives of cement companies were that the price
increase was due to surge in demand and the recent expansion drive adopted by many
cement manufacturers. Also, it was asserted that lower demand in the first two months
of the year 2020 have put pressure on the companies to keep the prices as low as Rs.
450/bag that were previously ranging between Rs. 550 to Rs. 600/bag. Furthermore,
representatives of the cement industry maintained that the average inflation for cement
in Pakistan is lower in comparison to other commodities with cement companies
incurring losses and if such a situation continues it will result in closure of various
plants. Former Chairman Association of Builders and Developers (ABAD) Mr.
Hassan Bakhshi hinted upon the cement cartel in Northern region becoming active,
post announcement of the construction package by the Government. A copy of
referred news reports is attached as Annex-A1 (I to IV).
3. In order to ascertain whether the reasons provided by the representatives of the cement
industry regarding increase in demand and price of cement are based on objectivity, a
probe was conducted. From the information collected it was noted that during June -
July 2019 a sharp increase was witnessed in cement price. Rate of cement during the
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mentioned period for Islamabad, Lahore and Karachi increased by Rs. 63, Rs. 101 and
Rs. 32 translating into hike of 11.4%, 18.6% and 5% respectively. Major
reasons/factors reported behind increase in the price included:
 Sales Tax on FED (impact of Rs 25/bag)

 Axle Load Restriction on transportation (impact of Rs 30/bag)
 Increase in diesel price (20% increase per litre)
 Implementation of taxes on cement dealers and a charge on cement
manufacturers for any sale of cement without any CNIC
 General inflation rose as high as 14%.
 Spending on Public and Private Infrastructure and housing remained
subdued.
 High construction cost discouraged real estate developers.
 Double digit interest rates deterred investors to obtain bank loans to fund
their operations.
 Devaluation of rupee pushed the cement prices down in international
markets.
4. It is pertinent to note that as per figures available on APCMA website the local cement
dispatches declined by 23.65% from 4.61 million tons in April 2019 to 3.52 million
tons in April 2020 due to the effect of COVID 19 pandemic on domestic markets and
construction activities in the country. Due to low demand the year 2020 started with
low cement prices. An incentive package for construction industry was announced by
the Prime Minister of Pakistan in the first week of April 2020 which slightly revived
the cement demand in the local market. Table below summarizes the price trend of
cement in major cities during the months of April and May 2020. In the month of April
2020, domestic dispatches in the North region reduced by 12.68% to 2.928 million
tons (April 2019: 3.353 million tons) and in South region it decreased by 49.85% to
0.342 million tons (April 2019: 0.683 million tons).
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Table 1 : Weekly average price of cement in major cities (April- May 2020) (Rs./ 50
kg bag)
Period (weekly) Islamabad Lahore Peshawar Karachi
02-04-2020 496 493 480 705
09-04-2020 496 493 483 705
16-04-2020 496 493 490 705
23-04-2020 496 500 519 705
30-04-2020 516 550 509 705
07-05-2020 516 540 509 705
Net % Increase/ 4% 10% 6% -

Decrease
(May/Apr)
Source: Pakistan Bureau of Statistics
5. It was surprising to note that the increase in the price of cement came into effect at the
time when:
a) Globally coal prices have dropped due to excess supply and lower
demand. Majority of the cement plants in Pakistan operate on coal which
reflect significant portion of the input cost. Between March and June
2020 per ton coal price dropped by approximately 16%1. This decline in
the price of coal should have had reflected in the price per bag of cement.
b) Oil prices reduced considerably in the international market as well as

in Pakistan. Between April and May 2020, the price of petrol and Diesel
reduced by Rs. 15 and Rs 272 respectively. Total energy cost comprise
of 50 – 55% of total cost of production of cement. Reduction in the
energy cost should have had reduced the per bag price of cement.
c) Interest rates dropped to a single digit figure as the State Bank of

Pakistan revised its monetary policy and slashed the interest rates by 525
bps from 13.25% to 8%3.
1
https://www.indexmundi.com/commodities/?commodity=coal-south-african&months=60
2
https://www.thenews.com.pk/print/652427-new-petroleum-prices-notified-petrol-to-sell-at-rs81-58-
diesel-rs80-10-per-litre
3
https://www.dawn.com/news/1557318/sbp-cuts-interest-rates-to-8pc-as-coronavirus-fallout-hits-
economy
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6. Sudden rise in price by the cement manufacturers at a time when there was low
demand compared to the installed capacity of the manufacturers and considering the
reduction in input cost particularly coal, fuel, transportation and interest rates raised
suspicion of collusive behavior among the cement manufacturers.
7. Based on the foregoing, the Commission on May 18, 2020 authorized an enquiry under
Section 37(1) of the Act to ascertain whether there has been any prima facie violation
of Section 3 and/or Section 4 of the Act on part of the cement manufacturers and
submit a report in the matter. The Commission for the purpose of the enquiry delegated
its powers under Section 33 and Section 36 of the Act to the enquiry committee.
8. Following officers were appointed as enquiry officers:
i. Mr. Irfan ul Haq (Deputy Director)

ii. Ms. Aqsa Suleman (Assistant Director)
iii. Ms. Sara Jamali (Assistant Director)
iv. Mr. Furqan Khan Khattak (Management Executive)
9. The Commission in its meeting held on November 13, 2020 reconstituted the Enquiry
Committee by adding a senior officer to the team, as few of the enquiry officers fallen
sick owing to the COVID-19.
i. Mr. Noman Laiq (Director General)

ii. Mr. Irfan ul Haq (Deputy Director)
iii. Ms. Aqsa Suleman (Assistant Director)
iv. Ms. Sara Jamali (Assistant Director)
v. Mr. Furqan Khan Khattak (Management Executive)
(hereinafter the “Enquiry Committee”)
10. To understand reasons behind increase in the price of cement, the Enquiry Committee
engaged with the cement manufacturers and All Pakistan Cement Manufacturers
Association (APCMA) vide letters dated May 20, 2020 and August 12, 2020 and
sought information and clarifications, in relation to July 2019 to May 2020 and
subsequently for the period June – August 2020, on the following aspects:
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a. Weekly price data of all cement products/brands manufactured by the
company in major cities including Islamabad, Lahore, Peshawar and
Karachi;
b. Weekly production, local and export dispatches (incl. total dispatches) of
all cement products/brands manufactured by the company including total
installed and utilized capacity;
c. Objective reasons for each price increase/decrease. Explicitly mentioning
the reasons behind price hike after the incentivized package announced by
the Government of Pakistan for construction industry;
d. Weekly ex-factory price data of all cement products/ brands manufactured
by the company;
e. Market share of the company based on installed capacity, production and
dispatches; and
f. Cost structure of cement (OPC only).
Detail of all correspondence is attached at (Annex-A2)
11. In response to the above letter, cement manufacturers provided cement price data,
cost structure, reasons behind increase in price, capacity utilization and dispatch data
of FY 2019-2020.
12. With respect to increase in price of cement, the cement companies provided various
reasons. Broadly reasons provided by the cement companies are summarized below:
a. FED increased by Government from Rs. 1,500 per ton to Rs. 2,000 (33.33%
increase) w.e.f. July 01, 2019 led to an increase of Rs. 25 per bag. Since,
cement is a third schedule item as per Sales Tax Act, 1990 and sales tax is
applied on Maximum Retail Price (MRP). Therefore, increase in FED
resulted in increase in the sales tax as well.
b. Due to implementation of axle load limit, companies had to pay extra freight
on transportation of coal and dispatch of cement which as per estimates
amount to Rs. 30 per bag.
c. The rupee depreciation against USD ($) led to booking of exchange losses
and increased the import bills of coals, stores, and spares.
d. Shifting of coal handling from Karachi Port Trust (KPT) to Pakistan
International Bulk Terminal (PIBT) as per the decision of Supreme Court
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of Pakistan increased port charges on coal handling drastically as the
charges are paid in USD ($). Moreover, free storage days are also less with
heavy demurrage/storage charges are paid to PIBT.
e. After the decision of Supreme Court, Punjab Government departments
started sending hefty water bills to cement manufacturers located in Punjab.
No such bills are paid by companies in Sindh and KPK.
f. Government of Punjab increased the royalty on limestone and clay by 100%
w.e.f July 01, 2019.
g. Kibor rates in most part of the FY 2019-20 remained on higher side resulting
in increased operational and financial cost.
h. The incentivized package announced by Government does not offer any
direct benefit to cement industry and has certain tax benefits for builders
and developers.
i. Impact of rising inflation on all cost overheads of the companies.
j. Changes in demand and supply along with seasonal fluctuations (monsoon,
winter, Ramazan, etc.)
13. From the information gathered from the cement companies it was noted that reasons
provided for the price increase pertained more directly to the period immediately after
June 2019 i.e. after announcement of Finance Bill 2019/20 and at best could be
relevant to argue and explain price hike in the said period when prices were increased
by 11.4%, 18.6% and 5% in Islamabad, Lahore and Karachi respectively. However,
the same grounds, such as increase in duties and taxes, axle load limit implementation
etc. could not be considered as underlying factors for further enhancement in prices
that occurred after 3rd week of April 2020. The graph presented below is a
compilation of price data received from cement manufacturing companies in response
to the letters issued by the Enquiry Committee in May and August 2020.
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GRAPH-1:WEEKLY CEMENT PRICES (NORTH REGION) MARCH -JUNE 2020
530
520
510
500
490
480
470
460
450
Bestway Lucky DG Khan Fauji Cherat Fecto Pioneer Gharibwal Kohat Maple Leaf
Source: Data received from Cement Companies, analyzed by Enquiry Committee
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14. The above graphical representation of data clearly indicates a pattern of price increase
by the cement manufacturing companies.
15. In the letter dated May 20, 2020 sent to All Pakistan Cement Manufacturers
Association (APCMA) the Enquiry Committee sought information related to: updated
list of APCMA members; details of association meetings held during July-2019 to
May-2020; decisions made and minutes of each meeting. APCMA in response
submitted the list of its member companies; List of executive committee members of
APCMA for the term 2019-20; approval of election schedule for electing Executive
Committee members; and details regarding tax issues.
16. Profiles of APCMA office bearers highlighted that the Chief Executive Officers and
senior representatives of major cement companies were also office bearers of
APCMA’s Executive Committee. Top representatives of APCMA among others
included: (i) Syed Noman Hassan, Director of Lucky Cement who held the position
of Vice Chairman APCMA; (ii) Mr. Farid Noor Ali Fazal, Director DG Khan Cement
who remained Senior Vice Chairman APCMA; and (iii) Mr. Azam Faruque, Chief
Executive of Cherat Cement occupied the position of Chairman APCMA.
17. In view of the above, the Enquiry Committee submitted a working paper to the
Commission to authorize its officers under section 34 of the Act to conduct ‘enter and
search’ inspections of premises of APCMA and those undertakings where the said
office bearers are employed. From the information gathered it transpired that the price
per bag of cement in South region remained unchanged and the likelihood of obtaining
required evidence from premises of APCMA and cement companies present in the
North region appeared to be high. Therefore it was proposed that ‘Enter and Search’
for companies situated in Karachi/South region i.e. Cherat Cement and Lucky Cement
may be conducted at a later date.
18. The Commission on 22nd September 2020 authorized two teams of officers to conduct
“enter and search” inspections of premises of APCMA and DG Khan Cement Limited.
On 24th September 2020 teams of officers duly authorized by the Commission
conducted inspection of the office of:
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a. APCMA office located at: 27-28 / 3A FCC, Gulberg-IV, Lahore; and
b. DG Khan Cement located at 53-A, Lawrence Road, Lahore; (collectively
referred to as ‘the Premises’).
19. The authorized teams impounded all the pertinent material including inter alia:
smartphone devices, documents and other computer stored data. Copies of the
respective authorization and inventory list are attached as (Annex-A3, I-IV)
20. In order to access information stored on impounded smartphone devices, the

Commission sought assistance from the Federal Investigation Agency (“FIA”), under
provisions of Section 53 of the Act, for digital forensic analysis to retrieve the digital
evidences as per the requirement of the Enquiry Committee. Scope of the digital
forensic analysis was to analyze evidentiary items relating to: phone calls made and
received, SMS messages, messages/conversations including media on app based
communication, email accounts, and retrieval of information with regard to key words
(Annex A-4-I). FIA report attached as (Annex A-4-II) whereas the relevant evidence
mentioned in enquiry provided by FIA is attached as (Annex A-5).
21. The information received from cement companies and evidence gathered from “enter
and search” form an integral part of this enquiry report.
II. OVERVIEW OF THE CEMENT INDUSTRY
22. The Enquiry Committee finds it pertinent to provide an overview of the industry to
contextualize the TOR’s of the enquiry report i.e. possible violation of Section 3 and
4 under the Act.
A. IMPACT OF CEMENT INDUSTRY ON PAKISTAN ECONOMY
23. Cement is among the key sectors of Pakistan’s economy and is also vital for its
economic development. Its significance can be determined from the fact that it affects
more than 40 other allied industries of which major industries include: steel,
chemicals, wood, sanitary, marble, tiles, glass and glazing, aluminum, copper wire,
bricks, stone crush, heavy transport, architecture and design, electric appliances etc.
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24. The cement is a sub-sector of Large Scale Manufacturing (LSM) which constitutes
9.5% of the Gross Domestic Product (GDP) of Pakistan4. Cement industry plays an
important role in providing employment to both skilled and unskilled workforce and
contributes more than 3% of the total people employed in Pakistan5. Any impact on
the cement sector disrupts the infrastructural development and the buying power of
ordinary consumer. The total local cement dispatches in Pakistan during FY 2019-20
were approximately 40 million tons (40 billion kilogram)6 therefore an increase of Rs.
01 per kilogram (Rs. 50 per bag) will result in financial impact of approximately Rs.
40 billion per annum.
25. The significance of cement industry has further enhanced due to the
commencement/launch of mega construction, development and energy projects in the
recent past under China Pakistan Economic Corridor (CPEC). Furthermore
announcement of Naya Pakistan Housing Scheme and construction of at least five
million units for the low income segment of the society has further increased the
demand of cement in particular. In order to boost economic activity and to provide
employment to maximum number of unskilled and skilled people in the post Covid-
19 period the government has also announced a special package for construction
industry thereby intensifying the demand of cement.
26. The total production of cement in Pakistan during FY 2019-20 is 47.8 MMT (Local;
and Export). Whereas the per capita consumption of cement in Pakistan is 175kg
which is lowest when compared with other countries such as: China- 1,737kg, India -
200kg, Afghanistan - 200kg, Thailand - 440kg.
27. Pakistan’s cement exports were valued at USD 261 million in 2019-20 that accounted
to approximately 1.1 percent of Pakistan’s total exports. Pakistan’s cement exports
have declined steadily since 2015 when its export value was USD 345 million. Total
world cement exports in 2019 were USD 11 billion and Vietnam is the largest
exporters (11.5 percent share) followed by Turkey (7.7 percent), Thailand (6 percent)
4 PAKISTAN ECONOMIC SURVEY 2019-20

http://www.finance.gov.pk/survey/chapter_20/03_Manufacturing_and_Mining.pdf
5 The Impact of Cement Manufacturing on Economic Development of Pakistan: The Analysis of Cement Industry
https://www.researchgate.net/publication/306379908_The_Impact_of_Cement_Manufacturing_on_Economic_Develo
pment_of_Pakistan_The_Analysis_of_Cement_Industry
6
Data gathered from APCMA website
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and Canada (4.8 percent). Pakistan’s share in world exports of cement in 2019 was 2.3
percent and was ranked as the 11th largest exporter in the world7.
28. In terms of export destinations, Afghanistan is the largest export market for Pakistani
cement accounting for approximately 34 percent of all exports followed by
Bangladesh with a 29 percent share, Sri Lanka 17 percent. Exports to India remain
suspended however, previously sizeable amount of exports were made to it. Another
major export destination was South Africa however, exports to this destination
remained subdued on account of anti-dumping duty imposed which has been lifted
this year.
B. MARKET STRUCTURE
29. The Cement industry in Pakistan comprises of total 19 companies of which 16

companies and 24 plants are operational and are divided into two regions - North and
South. North region includes areas of Punjab, KPK, and AJK, consisting of 18 cement
manufacturing plants. Installed capacity of North region in FY 2019-20 is 76% of the
total capacity of cement manufacturers in Pakistan. South Region includes areas of
Sindh and Balochistan, comprising 06 cement manufacturing plants having a share of
24% in the total capacity of the industry8. The highest concentration in the North region
is due to the availability of raw material. Plant wise location of cement companies
located in the North and South region is as under.
7
Calculations based on ITC Trademap
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30. Of the 16 operational cement companies in Pakistan, 10 are located and operational
exclusively in North region while three (03) are exclusively located and operational in
the South region which includes: Attock Cement, Power Cement and Thatta Cement.
Whereas three (03) companies namely: D.G Khan Cement, Lucky Cement and Dewan
Cement have presence in both regions. List of all cement companies, along with their
market shares across Pakistan is as under:
Table 2: Market Share of Cement Companies

FY 2018-19 FY 2019-20
Sr. Cement Share in Share in Share in Share in Share in Share in
# Companies Local Export Total Local Export Total
dispatches dispatches dispatches dispatches dispatches dispatches
1 Lucky Cement 15% 29% 17% 14% 27% 16%
2 Bestway Cement 18% 11% 17% 13% 23% 15%
3 D.G Khan Cement 13% 15% 14% 17% 4% 15%
4 Fauji Cement 7% 3% 7% 12% 2% 11%
5 Maple Leaf Cement 8% 5% 7% 7% 6% 7%
6 Attock Cement 5% 21% 7% 7% 3% 6%
7 Askari Cement 5% 4% 5% 3% 22% 6%
8 Kohat Cement 6% 2% 5% 5% 4% 5%
9 Cherat Cement 5% 5% 5% 6% 1% 5%
10 Gharibwal Cement 4% 0% 4% 4% 0% 4%
11 Dewan Cement 4% 2% 4% 4% 0% 3%
12 Pioneer Cement 3% 1% 3% 2% 1% 2%
13 Dandot Cement 1% 0% 1% 1% 6% 2%
14 Fecto Cement 2% 1% 1% 1% 1% 1%
Flying Cement (Non
15 operational since March 2% 0% 1% 1% 0% 1%
2020 onwards)
16 Power Cement 1% 0% 1% 0% 0% 0%
17 Thatta Cement 1% 0% 1% 0% 0% 0%
Source: Impounded data analyzed by Enquiry Committee
31. Whereas, in terms of market share region wise top five companies in the North region
include Bestway cement, Maple Leaf Cement, D.G. Khan Cement, Lucky Cement,
Cherat Cement that have a respective market share of 20%, 14%, 12%, 10% and 9%
(collective share: 65%). Whereas in South region most of the share is owned by 03
companies and include Lucky Cement, Attock Cement and DG Khan Cement that
respectively own a share of 33%, 22% and 20% (collective share: 75%).
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C. COST STRUCTURE AND PRICE TRENDS
32. The cement industry is highly energy-intensive. There are different kinds of cement
plants that operate either on coal, gas or electricity while companies have also
introduced solar plants to bring energy efficiency. Energy costs are directly linked to
the cost of production which affect all producers differently.
33. The capital expenditure on the installation of the cement plants generally require
funding which cement companies raise through Initial Public Offerings (IPOs) or
through loans from the financial institutions. Once the capital investment has been
made comes the process of manufacturing of cement which begins with the processing
of raw material and ends with packaging and distribution of cement. In the production
of cement, Ex-factory price includes raw material, power and fuel cost and packaging.
Fuel is the major cost factor in the production of cement and accounts to approximately
50-55 percent of the total production cost. The main cost heads along with their
percentage in a cost of production are provided in table 3 below:
Table 3: Cost heads of Cement Production

Cost head Percentage share in Cost of sales
Cost of Raw Material (limestone, gypsum, 20%-22%
clay, sand, iron ore)
Fuel and Power cost 50%- 55%

Freight cost (transportation through sea, 15%-17%
rail and road)
Direct labor and Factory overheads (plant 10%-12%

depreciation/insurance/repairs)
Other cost (finance cost, marketing, admin 5%-6%

and selling cost)
Source: Annual Financial Statements of Cement Companies
34. The price of cement started to increase from the month of April 2020 and continued
to increase till June 2020. After March 2020 (the lowest point in time of cement
prices), the highest increase in the cement prices is recorded in the first quarter of the
FY 2020-21 i.e. July 2020 – September 2020 with an average increase of 8 – 9% in
Islamabad and Lahore. During the FY 2019-20 and FY 2020-21 the price trend of
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cement in major cities i.e. Islamabad, Lahore and Karachi gathered from Pakistan
Bureau of Statistics is illustrated below:
Graph-2:
Source: Pakistan Bureau of Statistics
D. PRODUCTION AND PERFORMANCE
35. The total installed capacity of cement manufacturers as on June 2020 is recorded at
69.2 MMT that as on June 2019 was 56.0 MMT recording an increase of 23.5%9.
Considerable increase in the installed capacity took place in the plants located in the
North region where capacity increased to 52.7 MMT as on June 2020 from 42 MMT
in June 2019. The increase in installed capacity by cement manufacturers is due to
expansionary drive adopted keeping in view the upcoming CPEC and other mega
projects in the country.
36. In terms of cement dispatches in the FY 2019-2020, North region contributed 86% to
the local dispatches while South catered 14%. Although North region has higher share
in terms of local dispatches, the South region dominates in export of cement with the
share of 75%. Region wise comparative statement of the local dispatches for the FY
2018-19 and FY 2019-20 of the cement manufacturing companies in the North and
South region are as under:
9 Data derived from impounded data, APCMA website https://www.apcma.com/data_monthly1920.html.
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Graph-3: Cement Industry Local Graph-4: Cement Industry Export
MMT Dispatches Dispatches
50.00 MMT 7.9
43.00 40.34 39.97 8.0
34.33 7.0 6.5
36.00 32.36 5.9
6.0
29.00 5.0 4.0
22.00 4.0
15.00 3.0 2.5
7.98 2.0
5.64 2.0
8.00
1.0
1.00
July 2018- June 2019 July 2019- June 2020
South region local dispatches North region export dispatches
North region local dispatches South region export dispatches
Source: Impounded data and APCMA’s official Website (Data analyzed by Enquiry Committee.)
Graph-5: Cement Industry Installed Operational Capacity

MMT
69.2
70.0
60.0 56.0
52.7
50.0
42.0
40.0
30.0
20.0 16.5
14.0
10.0
South region capacity (Cement) North region capacity (Cement) Total Operational Capacity
(Cement)
Source: Impounded data and APCMA’s official Website (Data analyzed by Enquiry Committee.)
37. Despite the fact that the FY 2019-20 ended at low profits for the cement companies,
the cement industry gained momentum during the first quarter of FY 2020-21. During
the quarter ended September 2020, the cement companies posted exponential growth
in their declared profits as compared to the same quarter in the preceding year.
Similarly, during the quarter ended September 2020, the cement companies recorded
an increase in earnings per share as compared with the same quarter of the preceding
year. The profit trend of cement companies is as under:
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Table 4: Profits of Cement Companies in the Quarter-ended September 2020
Quarter Quarter Quarter Quarter %Growth in

ended on ended on % Change ended on ended on % Change EPS
Sep-20 Sep-19 Sep-20 Sep-19
Cement Companies
Gross Profit Net profit
(Rs. in billions) (Rs. in billions)
Lucky Cement 3.90 1.4 +179% 2.20 0.94 +57% 133%
Bestway Cement 2.72 0.75 +263% 1.70 0.30 +496% 502%
D.G Khan Cement 1.01 -0.53 +287% -0.35 -1.42 +75% 75%
Maple Leaf Cement 1.23 -0.21 +600% 0.30 -1.30 +124% 115%
Fauji Cement 1.18 0.59 +100% 0.69 0.29 +138% 138%
Cherat Cement 1.11 0.19 +484% 0.31 -0.33 +194% 191%
Attock Cement 0.97 1.29 -25% 0.11 0.36 -69% -67%
Kohat Cement 0.95 0.115 +726% 0.51 0.08 +538% 473%
Pioneer Cement 0.30 0.033 +809% 0.04 -0.19 +121% 79%
Gharibwal Cement 0.57 -0.003 +16119% 0.26 -0.23 +213% 212%
Dewan Cement* -0.08 0.08 -200% -0.12 -0.06 -90% -85%
Fecto Cement 0.06 0.01 +425% -0.39 -0.05 +26% 26%
Flying Cement** 0.33 0.044 +650% -0.4 0.02 -2005% -292%
Dandot Cement*** -0.04 -0.05 -20% -0.11 -0.12 +8% 15%
Power Cement**** 0.67 -0.096 +794% -0.17 0.007 -2529% -2529%
Thatta Cement 0.19 0.36 -46% 0.007 0.011 +34% 33%
*Dewan Cement is non operational

**Flying Cementis non operational
*** Dandot Cement made no sales during quarter ended Sep 2020
****Power Cement begins production in July 2020
Sorted by Market share.
Source: Financial Statements of Cement Companies, analyzed by Enquiry Committee.
Page 18 of 59
38. Among the top 10 cement manufacturing countries in the world, China has the highest
production share i.e. 2,500 MMT. India and the USA round out the top three (03) at
280 and 83.3 MMT of cement produced annually. China produces more cement than
2nd to 10th ranking countries combined. Some of the top international cement
manufacturing companies have increased their cement production capacity due to an
expected increase in future market demand. Currently, global cement consumption
volume is expected to reach 4.42 billion tons in 2021, growing at a Compound Annual
Growth Rate (CAGR) of 2.96% by 2021. List of top ten cement producing countries
is given below:
Table 5: Top 10 Cement Producing Countries
Ranking Country Cement Production (MMT)
1. China 2,500
2. India 280
3. USA 83.3
4. Iran 75
5. Turkey 75
6. Brazil 72
7. Russia 69
8. Saudi Arabia 63
9. Vietnam 60
10. Indonesia 60
Source: Available at: Top 10 cement companies in the world in 2020
https://datis-inc.com/blog/top-10-cement-companies-in-the-world-in-2020/
39. The cement sector in Pakistan has history of being alleged of collusive activities and
has also been penalized in the past to an amount of collectively more than Rs. 6.3
billion on account of violation of Section 04 of the Act by the Commission. In 2012
the Commission again initiated enquiry against cement companies, however the same
could not be proceeded further due to stay order granted to cement companies by the
Lahore High Court. Due of its very nature and characteristics cement industry world
over has always been prone to cartelization. A mere review of the cases of a few
international and regional jurisdictions highlighted that cement industry in countries
Page 19 of 59
like India, Turkey, Germany, Poland were penalized for involvement in anti-
competitive conduct. Some of the most common features seen in the cartels are that:
a. They agree on some type of quantity and/or price allocation mechanism

with regard to sale of cement. Quotas on quantity allocation based on
historical market shares or perhaps existing market shares depending on
the jurisdiction;
b. The role of association appeared to be strong in facilitating commercially
sensitive information between the cartel participants.
c. A common pattern among cartel participants is simultaneous increase in
prices.
III. ISSUES
40. In relation to the TORs, the Enquiry Committee has addressed the following issues:
i. The relevant market in terms of Section 2(1) (k) of the Act?

ii. Whether any cement manufacturing company holds a dominant position
in the relevant market in terms of Section 2(1) (e) of the Act? If yes,
whether the conduct of dominant player is abusive in terms of Section 3
of the Act?
iii. Whether APCMA or cement manufacturing companies have acted
collusively in respect of inter alia production, supply, distribution and
price control of cement in violation of Section 4 of the Act?
ISSUE – i: What is the relevant market in terms of Section 2(1) (k) of the Act and
whether any cement manufacturing company holds a dominant position in the
relevant market in terms of Section 2(1) (e) of the Act? If yes, whether the conduct
of dominant player is abusive in terms of Section 3 of the Act?
UNDERTAKING
41. Section 2(1)(q) of the Act defines an undertaking as:

“Any natural or legal person, governmental body including a regulatory
authority, body corporate, partnership, association, trust or other entity
in any way engaged, directly or indirectly, in the production, supply,
Page 20 of 59
distribution of goods or provision or control of services and shall include
an association or undertakings;”
42. As per the above definition, cement manufacturing companies registered under the
laws of Pakistan are engaged in production, supply and distribution of various
kinds of cement and are therefore undertakings in terms of Section 2(1) (q) of the
Act. Following is the list of such undertakings:
Table 6: List of Undertakings

Sr. No Cement Manufacturing Companies in Pakistan
1. Askari Cement Ltd (North)
2. Bestway Cement Ltd (North)
3. D.G. Khan Cement Ltd
(North & South)
4. Fauji Cement Ltd (North)
5. Gharibwal Cement Ltd (North)
6. Lucky Cement Ltd (North & South)
7. Pioneer Cement Ltd (North)
8. Thatta Cement Ltd (South)
9. Attock Cement Ltd (South)
10. Cherat Cement Ltd (North)
11. Dewan Cement Ltd (North & South)
12. Fecto Cement Ltd (North)
13. Kohat Cement Ltd (North)
14. Maple Leaf Cement Ltd (North)
15. Power Cement Ltd (South)
16. Flying Cement Limited (North) Non operational
17. Dadabhoy Cement Industries Limited (South) – Non operational
18. Zeal Pak Cement Limited(South) Non operational
19. Dandot Cement (North)
Source: APCMA’s Official Website
43. APCMA is a registered body of cement manufacturers in Pakistan incorporated

on September 14, 1992 under section 42 of the Companies Ordinance 1984 (Now
Companies Act 2017) and is licensed under Trade Organization Ordinance 2007
issued by the Ministry of Commerce. There are 19 cement manufacturing
companies in Pakistan out of which 15 are APCMA member companies. Non
member companies of APCMA include: Flying Cement Limited (North),
Dadabhoy Cement Limited (South), Zeal Pak Cement Limited (South), Dandot
Page 21 of 59
Cement (North). In view of foregoing, APCMA being association of undertakings
is an undertaking in terms of Section 2(1) (q) of the Act.
RELEVANT MARKET
44. Section 2 (1) (k) of the Act defines the “Relevant Market” as:
“Relevant market means the market which shall be determined by the
Commission with reference to a product market and a geographic market
and a product market comprises of all those products or services which
are regarded as interchangeable or substitutable by the consumers by
reason of the products’ characteristics, prices and intended uses. A
geographic market comprises the area in which the undertakings
concerned are involved in the supply of products or services and in which
the conditions of competition are sufficiently homogenous and which can
be distinguished from neighboring geographic areas because, in
particular, the conditions of the Competition are appreciably different in
those areas;
In light of the above definition, relevant market consists of a relevant product market
and a relevant geographic market.
Considering the relevant product market first, in Pakistan following types of cement
are commonly manufactured:
i. Ordinary Portland Cement ('OPC'),

ii. Sulphur Resistant Portland Cement ('SRPC')
iii. Low Alkali Cement (a variety of Portland cement) and
iv. Portland Blast Furnace Slag Cement ('PBFSC')
45. In terms of the production data received from the cement manufacturing companies,
most common type of cement is Ordinary Portland Cement (OPC) also known as “grey
cement”. OPC is widely used for general construction, reinforced concrete buildings
and bridges, pavements, heavy and large structures etc. Based on the production data
provided by the cement companies, the OPC accounted for 86% of the total cement
production. As OPC is the primary product being produced by all cement
manufacturing companies which cannot be substituted with other kinds of cement with
reference to price, characteristics and intended uses therefore for the purpose of this
enquiry relevant product market is the Ordinary Portland Cement.
Page 22 of 59
46. As regards the relevant geographic market, cement companies are primarily engaged
in the supply of cement in Pakistan and outside Pakistan i.e. exports, therefore the
relevant geographic market for the purpose of this enquiry may be divided into two
categories i.e. cement produced and supplied within the territory of Pakistan and
cement produced in Pakistan and supplied outside Pakistan.
47. As per data gathered from APCMA cement manufacturing companies in terms of their
geographical locations are divided in two regions i.e. North and South region. North
region comprise mainly of Punjab and KPK whereas South region includes areas of
Sindh and Baluchistan. The conditions of competition with respect to production, sale
and supply within the territory of Pakistan are sufficiently homogenous with respect
to regulatory framework and there is no restriction on interprovincial supply of cement
i.e. cement produced in one part of Pakistan can be marketed, supplied/transported in
any other part of Pakistan without any restrictions, therefore, for the purposes of this
enquiry one relevant geographic market is the market of whole of Pakistan. The other
relevant geographic market to be considered is the market of cement supplied outside
Pakistan i.e. exports. Cement is exported to various destinations, such as African
countries, Middle East countries, Afghanistan etc. using various routes and
transportation modes.
48. Based on the foregoing for the purposes of this enquiry one relevant market is the
market of OPC produced and supplied within Pakistan and the other relevant market
is the market of OPC produced in Pakistan and supplied outside Pakistan.
Abuse of Dominant Position
49. Section 2 (1) (e) of the Act defines the dominant position as follows:
“Dominant position of one undertaking or several undertakings in a
relevant market shall be deemed to exist if such undertaking or
undertakings have the ability to behave to an appreciable extent
independently of competitors, customers, consumers and suppliers and the
position of an undertaking shall be presumed to be dominant if its share
of the relevant market exceeds forty percent.”
Page 23 of 59
50. For an abuse of dominance by an undertaking to take place, it has to be established at
the very outset that the undertaking alleged of the same is deemed to have a dominant
position in the relevant market. As per the Act, an undertaking is deemed to have a
dominant position, if it has the ability to behave to an appreciable extent independently
of its competitors, consumers and suppliers or it is presumed to be dominant if its
market share exceeds 40% in the defined relevant market.
51. The dominance of an undertaking is to be established by analyzing the market shares

in the relevant market i.e. the quantity of cement sold in Pakistan and quantity of
cement exported outside Pakistan by the cement companies. The market share of the
Cement Companies are as under:
Table 7: Market Share of Cement Companies
FY 2018-19 FY 2019-20
S.R # Cement Companies
Total Dispatches* Total Dispatches*
1 Lucky Cement Pvt Ltd 17% 16%
2 Bestway Cement Ltd 17% 15%
3 D.G. Khan Cement Ltd 14% 15%
4 Maple Leaf Cement Ltd 7% 11%
5 Fauji Cement Ltd 7% 6%
6 Cherat Cement Ltd 5% 7%
7 Attock Cement Ltd 7% 6%
8 Kohat Cement Ltd 5% 5%
9 Askari Cement Ltd 5% 5%
10 Pioneer Cement Ltd 3% 4%
11 Gharibwal Cement Ltd 4% 3%
12 Dewan Cement Ltd 4% 2%
13 Fecto Cement Ltd 1% 1%
14 Flying Cement Ltd 1% 1%
15 Dandot Cement Ltd 1% 0%
16 Power Cement Ltd 1% 2%
17 Thatta Cement Ltd 1% 0%
Source: Impounded data from the premises of D.G Khan Cement, analyzed by Enquiry Committee
* Includes local dispatches and exports.
52. From data presented above it appears that no individual undertaking holds dominant
positioning in terms of its market share in the relevant market in Pakistan and in
relevant market of exports.
Page 24 of 59
53. OPC is a homogeneous product although it is available in different brands however
one brand can be easily substituted with the other brands of OPC most of the cement
manufacturing companies have excess installed capacities compared to the current
demand of cement. Therefore, the market of OPC is not a captive market and none of
the companies are in a position to behave independent of its customers, consumers or
suppliers.
54. The criteria for determining whether undertakings enjoy ‘Collective Dominance’
requires the establishment of ‘economic links’ or as per more recent jurisprudence
‘connecting factors’ between undertakings.
55. Collective dominance occurs usually in an oligopoly market structure where there are
a limited number of competitors with few large producers occupying the market. To
be precise, a dominant position is held collectively when the undertakings are
commercially linked in such a way that they adopt a common policy without explicitly
agreeing on a certain market/conduct.
56. Although cement industry can be viewed to have an oligopoly structure with few
players occupying large market shares, the evidence presented in the preceding paras
clearly indicates towards the existence of an explicit engagement of member
undertakings of APCMA on various accounts including: price fixing, output
restrictions etc. Therefore the analysis of anti-competitive conduct with respect to
collective abuse of dominance is not applicable for the case at hand.
ISSUE – II: Whether APCMA or cement manufacturing companies have acted

collusively in respect of inter alia production, supply, distribution and price control
of cement in violation of Section 4 of the Act?
57. Section 4 of the Act defines the prohibited agreement as follows:

“Prohibited agreements — (1) No undertaking or association of
undertakings shall enter into any agreement or, in the case of an
association of undertakings, shall make a decision in respect of the
production, supply, distribution, acquisition or control of goods or the
provision of services which have the object or effect of preventing,
Page 25 of 59
restricting or reducing competition within the relevant market unless
exempted under section 5.
(2) Such agreements include but are not limited to-
a) fixing the purchase or selling price or imposing any other restrictive
trading conditions with regard to the sale or distribution of any goods or
the provision of any service;
b) dividing or sharing of markets for the goods or services, whether by
territories, by volume of sales or purchases, by type of goods or services
sold or by any other means;
c) fixing or setting the quantity of production, distribution or sale with regard
to any goods or the manner or means of providing any services;”
58. During the “enter and search” inspection of premises of DG Khan Cement and
APCMA smartphone device of Official No 1, Secretary APCMA and Official No 20,
Marketing official, D.G. Khan Cement along with certain documents were
impounded. Computer stored information on smartphone device of Official No 20
(Marketing department official of D.G. Khan Cement) highlighted the presence of a
whatsapp group titled “APCMA Marketing Officials” (hereinafter referred to as the
“Whatsapp Group10”) which was created on 15th November 2018 by Official No 1,
Secretary APCMA. Relevant excerpts of the chat/posts/messages sent between the
representatives of the cement manufacturers is attached as (Annex-A6). Details of the
participants of the aforementioned Whatsapp group duly verified from Pakistan
Telecommunication Authority (PTA) is attached as (Annex- A7).
A. EVIDENCE IN RELATION TO FIXING OF PRICE
59. Analysis of the impounded documents, emails, whatsapp conversations, text messages
and other computer stored information indicates that at various instances cement
manufacturing companies have collectively discussed and decided cement prices and
agreed on changes in price levels. In terms of the evidence instances come specifically
in the year 2019 and 2020 wherein collective decisions pertaining to price fixing have
been taken by the cement companies for the North and South region separately and
have been notified for compliance by all members through whatsapp chats, text
messages and emails.
10
Names of officials appearing in whatsapp chat have been hidden and reflected as codes as referred in
Annex – A7-I.
Page 26 of 59
60. One of the extracts of the Whatsapp Group chat retrieved from the mobile phone of
Official No 20, DG Khan Cement is a message sent by Official No 1, APCMA on 12th
May 2020 to the participants of the Whatsapp Group suggesting price changes in per
bag of cement which were termed highly confidential and strict adherence to the price
changes was sought. The suggested price changes were meant to be effective from
12th May 2020 which also coincided with the date of the message. Relevant message
along with the proposed rate sheet is reproduced below in Figure 1. In terms of the
impounded materials such mutually agreed price levels have been communicated to
the cement manufacturing companies through Whatsapp group participated by all
members with effective dates for compliance purposes.
Official No 1, APCMA:
“Proposed MRP changes Highly – confidential”.
“Rates effective from today. Highly confidential. Please ensure strict
adherence”.
“No compensation allowed”.
Figure 1:
Maximum Retail Price / Bag

Maximum Retail Price/Bag
Cement Units
22-Apr-20 24-Apr-20 12-May-20
Askari Cement (Wah) 485 490 490
Askari Cement (Nzp) 485 490 490
Bestway Cement (Hattar) 480 480 488
Bestway Cement (Faruqia) 480 480 488
Bestway Cement (Chakwal) 480 480 488
Bestway Cement (Kalar Kahar) 485 485 493
Cherat Cement 472 498 491
Dandot Cement - - -
DG Khan Cement (DG Khan) 475 500 495
DG Khan Cement (Kalar Kahar) 475 500 495
Fauji Cement 470 490 490
Fecto Cement 460 498 485
Flying Cement - - -
Gharibwal Cement 475 510 490
Kohat Cement 480 510 490
Lucky Cement 452 452 485
Maple Leaf Cement 487 521 497
Pioneer Cement 458 515 490
Page 27 of 59
Source: Impounded data (message sent by Official No 1, Secretary APCMA in Whatsapp group on 12th May,
2020)
The above figure contains MRP’s for 22nd April, 24th April and 12th May 2020 and
shows that there was an increase in cement prices in the range of Rs. 05 to Rs. 57
between 22nd April and 12th May 2020 in the North region. It is worth noticing that
maximum retail price levels for each plant located in the North region has been
notified by the Secretary APCMA for strict compliance by the member undertakings
along with an effective date. Interestingly an article appearing in Dawn on 02nd May,
2020 “Govt takes note of cement price hike” quotes the Association of Builders and
Developers: “Cement cartel in North is again active to cash in soaring demand in
view of upcoming rising construction activities after government’s construction
package, he said urging PM to take strict action against cement cartel and also steel
bar makers for raising prices”. This news report corresponds with the
discussions/decisions reproduced above. The relevant news report is attached as
(Annex-A8).
61. In a private conversation on whatsapp (separate from the Whatsapp Group) the
officials of DG Khan Cement, Official No 4 sent messages to Official No 20 of DG
Khan Cement on 18th June 2020 regarding the proposed rates of cement for cement
plants located in the North region that were to be made effective from 22nd June 2020
onwards. Information exchanged regarding the rates is mentioned in figure 02 below,
Figure 2:
Page 28 of 59
Source: Impounded data (message sent by Official No 4, D.G Khan Cement to Official No 20, D.G Khan
Cement on 18th June, 2020)
62. Based on Figure-2 above a price increase of Rs.30-40 per bag, which amounts to
a range of 5.63-8.33%, as calculated below, appears to have been agreed upon by
all members to be made effective from 22nd June onwards.
Table 8:Price increase on account of rise in diesel prices
Current Proposed Change Change
Sr. Units
MRP MRP PKR %
1 Askari Cement (Nzp) 490 525 35 7.14%
2 Askari Cement (Wah) 490 525 35 7.14%
3 Bestway – Hattar 485 520 35 7.22%
4 Bestway – Chakwal 485 520 35 7.22%
5 Bestway – Farooquia 485 520 35 7.22%
6 Bestway – PakCem 490 525 35 7.14%
7 Cherat Cement Co. 485 520 35 7.22%
8 Dandot Cement Ltd. 0 0 0 0.0%
9 Dewan Hattar Cement 0 0 0 0.0%
10 DG Khan Cement 495 525 30 6.06%
DG Khan Cement
11 495 525 30 6.06%
(CHK)
12 Fauji Cement Co. 490 525 35 7.14%
13 Fecto Cement 485 520 35 7.22%
14 Flying Cement 0 0 0 0.0%
15 Gharibwal Cement 495 525 30 6.06%
16 Kohat Cement Co. 490 520 30 6.12%
17 Lucky Cement Ltd. 480 520 40 8.33%
Maple Leaf Cement
18 497 525 28 5.63%
Ltd.
19 Pioneer Cement Ltd. 490 520 30 6.12%
Source: Impounded data from the premises of D.G Khan Cement, analyzed by Enquiry
Committee.
63. Data obtained from PBS indicates that the price increase decisions were actually
implemented by the cement manufacturing companies. The table below shows that
between 16th April and 29th July per bag prices in Islamabad (ISB), Lahore (LHR)
and Peshawar (PWR) increased by Rs. 57, Rs.47 and Rs. 17 on average
respectively.
Page 29 of 59
Table 9: PBS data regarding price of cement in Islamabad (ISB), Lahore
(LHR) and Peshawar (PWR)
Period (Weekly) ISB LHR PWR

16/04/2020 496 493 490
23/04/2020 496 500 519
30/04/2020 516 550 509
7/5/2020 516 540 509
14/05/2020 516 540 507
21/05/2020 520 530 499
28/05/2020 520 530 503
4/6/2020 520 530 503
11/6/2020 520 510 497
18/06/2020 500 510 497
25/6/2020 500 510 493
2/7/2020 520 510 497
9/7/2020 530 530 506
16/7/2020 547 530 510
23/7/2020 553 530 510
29/7/2020 553 540 507
Net Increase/ (decrease) 57 47 17
Source: Pakistan Bureau of Statistics, analyzed by Enquiry Committee.
64. The rising trend in the price of cement is also verified by the data submitted by
cement companies for the FY 2019-20 to the enquiry committee. From the analysis
of the data it is noted that price of cement followed an overall upward trend
between April 2020 and August 2020. Price pattern of various cement companies
operating in the North region of Pakistan is presented in the following graph.
Page 30 of 59
GRAPH -6:CE ME NT PRICE S IN MARCH -AUGUS T 2020
525
520
515
510
505 Bestway
500
Lucky
PRICE (RS.)
495
490 DG Khan
485 Fauji
480
Cherat
475
470 Fecto
465 Pioneer
460
Gharibwal
455
450 Maple Leaf
MAR WEEK-1
MAR WEEK-2
MAR WEEK-3
MAR WEEK-4
APR WEEK-1
APR WEEK-2
APR WEEK-3
APR WEEK-4
MAY WEEK-1
MAY WEEK-2
MAY WEEK-3
MAY WEEK-4
JUN WEEK-4
JUN WEEK-1
JUN WEEK-2
JUN WEEK-3
JUL WEEK-1
JUL WEEK-2
JUL WEEK-3
JUL WEEK-4
AUG WEEK-1
AUG WEEK-2
AUG WEEK-3
AUG WEEK-4
Kohat
Source: Data received from cement companies, analyzed by Enquiry Committee
65. In another private whatsapp conversation Official No 4 DG Khan Cement also

Senior Vice Chairman APCMA on 17th August 2020 forwards a thread of
conversation to Official No 20, DGM- Marketing of DG Khan Cement, held
between the representatives of different companies wherein apprehensions were
expressed regarding downward pressure on prices due to Muharram and the
Monsoon rainfalls. In the same conversation it has been suggested that in order to
arrest this drop companies should reduce their quotas. Another important point to
note is that discussion indicates that pricing decisions are made at the highest
forum involving CEOs, Chairpersons and other senior officials including directors
on the board of the companies’ thus ensuring compliance (Annex-9). Following
conversation was forwarded to Official No 20.
Official No 13, Lucky Cement:

“AoA. Prices are sliding on a fast track in Pindi, GT road, Lahore and south. I
will share the wholesale prices of these areas soon”.
Page 31 of 59
“High volumes are putting a lot of pressure on volumes, though we are able to
resist the price drop from industry but won’t be possible if the downward trend
continues”.
Official No 16, Cherat Cement:

“Dear Zahir Shah please advise areas where u r facing problem and the units. We
can then speak to the concerned. Coz honestly my dealers r not talking about it
anywhere”.

“Dear Zahir Shah in Lahore Office Zone and in Faisalabad your own rate and
Pioneer is 513 and Maple 521. BW and Cherat is 500 and DG 505. In Sheikhupura
no brand is less than 505. In Lahore no Rate is below 500. For Cherat please send
Akbar to my office and I will show him my exact landed rate. In Sahiwal we have
not dispatched in last 2 months. In Multan office region my landed is 495 and 497
and rebate is Rs. 6-8 per bag so 480 is not possible. In Sialkot and Gujranwala
your rate is 500+ and not 495. No brand except Pioneer is below which has
improved today to 495. In KPK there is a drop of 2-3 rupees but we r under no
pressure to decrease. Also BW dropped last Friday and increased back today. As
for Cherat I should be happy that your rates r equal to us. It should be encouraging
for u😊 on serious note please note that we have not dropped a penny in last two
months. I don’t have info of Upper Punjab right now. We have not increased
quantity during this week only due to Lucky’s request.”

“Shoaib Sb, thank you for the clarity. Actually most of the shop keepers and dealers
are telling the same story which is slipping of prices in different areas by different
brands like u mentioned by yourself. This is not good for those brands who are not
changing their brand's prices downwards. If bestway type brands have dropped
their prices no matter for few days and that too with such huge quantities then it is
enough for dealers to exploit.”

“We need to keep discussing the rates to avoid ambiguity. I spoke to BW and
requested them not to drop unilaterally again. We need to stand our ground to keep
the system going. We will discuss further in our meeting.”

“I will suggest a proper price increase @ pkr 10 at least in next couple of days to
kill uncertainty which is prevailing in the market”.

“That is for the CEOs and Chairman to decide.”
Official No 13 Lucky Cement:

“True”
Page 32 of 59
“If we could only maintain the prices at this time that would. Specially in this
month where couple of things got togather like Eid, 14th August, rains and now
Muharram. I believe that the pressure is going to remain till the end of this month.
Therefore I suggest either to reduce little quota or keep the current quota least
intact for this month or whenever the demands get better.”
Official No 4, DG Khan Cement:

“We will discuss in detail tomorrow and will fix quota by consensus. Thanks”
Official No 4, DG Khan Cement::

“Please bring your price lists as it differs from what I have. Thanks”

“Thanks sir, when we will have the meeting sir”
66. The above conversation clearly shows that the officials of Lucky Cement, Cherat
Cement, DG Khan Cement are collectively deliberating, deciding and agreeing
upon the quantum of price increase and final price to be charged by the cement
companies from the customers. The aforesaid cement manufacturing companies
appear to have been monitoring the compliance of the agreed price levels by all.
67. Another instance highlighting mutual discussion and agreement on prices is a

conversation dated 16th November 2018 on the Whatsapp Group shows how
companies are discussing wholesale rates in KPK. It reads as follows:
Official No 16, Cherat Cement shares the file of “KPK Rates.XLSX” in the
Whatsapp Group:
“The state of WS Rates in KPK for your info please. We need to address/arrest
the situation before it gets out of hand. Likewise is the position in South
Punjab.”
Official No 6, Askari Cement:

“Shoaib sb, lets do it during next meeting at Fecto on Monday, Pindi too is
sliding.”
68. Apart from the above, from the impounded documents it is also noted that cement
companies monitor retailers so that cement at retail level could be sold in
accordance with pre agreed rates between the cement manufacturers. In this regard
a whatsapp chat of Official No 20, D.G Khan Cement with Official No 15 Maple
Page 33 of 59
Leaf Cement dated 20th July 2020 is mentioned below. A complete chat is attached
(Annex-9A)

“We have asked Muzammel to have a combined visit of Multan market tomorrow
pls you may also advise him to have a market visit with our office official so that
our ealer (black sheep) may be pointed out thanks
Our dealer selling at low rate may be pointed out”
69. In terms of the evidence provided in para 59 to 68 above for the North region plant
wise maximum retail price per bag of cement is discussed, decided and notified
through Whatsapp Group by Secretary APCMA for compliance by the member
undertakings.
70. In view of the above it clearly appears that APCMA member companies operating
in North region are involved in the collective decision making with respect to
Maximum Retail Price (MRP) of cement for each and every plant located in the
North region and also effective date of such prices. Such price fixing decisions,
taken by highest level officials of the companies involved are duly notified for
strict compliance and adherence. In terms of evidence reproduced above, instances
of deliberation and decision on price fixing specifically took place on 12th May
2020, 18th June 2020, 20th July 2020, 17th August 2020, 16th November 2018. The
above activities amount to cartelization for fixing prices and constitute prima facie
violation of Section 4(1) read with Section 4(2)(a) of the Act on part of member
undertakings of APCMA operating in the North region. The list of such
Undertakings is attached as (Annex-10).
B. FIXING OF PRICES ON BASIS OF INCREASE IN COST COMPONENTS
71. Scrutiny of the impounded evidence indicates that representatives of cement

companies using the platform of APCMA collectively discuss the changes in
different cost components of cement and with mutual agreement decide their
impact on the retail price of cement.
Page 34 of 59
72. A conversation dated 27th – 29th June, 2020 on freight rates based on fuel prices
and imposition of axle load limit held between APCMA and its member
companies in the North region in the Whatsapp Group is reproduced below:
“Increase in oil prices, decision will be taken on Monday with consensus whether
to increase ex factory or absorb the current price. Please do not take solo flight”.

“Dear friends. In my personal opinion we have two options:
#1 Absorb the effect of fuel and then once the budget is passed by the Assembly,
we meet immediately (secretly of course ) within 1-2 days and decide the whole
way-forward in one sitting. This includes adjustment of excesses and price
rationalization.
#2 Everyone increases the freight by (say) Rs. 5 to 6 pb from Monday (after proper
calculation of impact and also taking into account the coal freight from Karachi)
and let the landed rate increase in all Markets from whatever rates we r currently
operating at, and then do the fine-tuning in our Meeting. This would probably be
easy as different markets have different problems from different units. Lastly it
would require trust in each other (going down now-a-days)”.
“As for the excess till 30th June Cherat would not like to dispatch excess at low
retention. We would rather dispatch at higher retention after excise duty
decrease”.

“So you are proposing a meeting on 1st June or 2nd” (Typo corrected later as July)
“And we need to meet in person please”.
Official No 6 Askari Cement:

“July”
“Sooner the better,”

“Sure. We will be meeting on 1st or 2nd there are too many issues cropping up and
requesting everyone not to make decisions in isolation. We will strive for a
consensus. Meeting will discuss all issues. Also lot of complaints coming from
Karachi that North is selling huge quantities in South at very cheap prices. Please
desist from doing this. We must honour their prices in South. Thanks”.
Official No 7, Fauji Cement:

“As we discussed earlier we have a meeting on Monday. Please keep discussion
focused on agenda points. We can reach censensus”.
Official No 11, Pioneer Cement:

“It’s always preferred to have a discussion face to face”.
Page 35 of 59
“Furthermore, please share as if we are increasing freights for cement dispatch
from today?? Passing the impact or absorbing it is a different issue..”

“We are waiting for consensus on freight.”

“I believe we should discuss freight in the 2nd meeting as well”.

“Yes of course”.
Official No 10, Gharibwal Cement:

“Ali Nasir sb, market confirms that Pioneer has increased freight for GT Road
12.93% effective today. We are all trying to hold the freight till, we develop
consensus”.

“Please don’t increase till meeting”.

“Those who r short in current month will have a problem as they r entitled to
dispatch on Sunday.”

“Pioneer already announced increase in frieght effective today”.

“Pioneer is short and will be dispatching on Sunday”.
“Yes that’s the case with us.”

“We used to follow these instructions.”

“One of the companies which was short has also increased from today.”

“It is okay of anyone has increased today as long as we agree firmly that we will
not increase our base ex-factory so the landed in market would increase for all
evenly. PLEASE COMMENT ON THIS THAN ANYTHING ELSE.”
Official No 16, Cherat Cement @ 923008414531 Official No 1, APCMA:

“Please advise impact per bag on average.”
Page 36 of 59
“Impact of diesel price increase is ranging between Rs15 to Rs20 per bag. As
diesel is being used in cement transportation, coal transportation and mining
activity”.

“Yes, we have increased freight in order to recover shortfall on Sunday. Regarding
increase of rs. 20/- p/b be increased on Monday after consensus”.
“AOA due to increase in diesel prices the cost on account of cement/coal
transportation and mining operations has increased and we are constrained to
increase our prices therefore, please increase MRP and wholesale prices by Rs14
per bag effective tomorrow. Please specify that this increase is due to costs having
gone up due to increase in diesel price. Please announce today. Thanks. Please
increase prices according to impact on your company ranging from Rs12 to Rs14.
Please share your current MRP”.
“Please increase prices according to impact on your company ranging from Rs.
12 to Rs 14.”
Official No 1, APCMA changed this group's settings to allow all participants to

send messages to this group.
“AoA. Please share your current MRP.”
Official No 8, Kohat Cement:

“Kohat current MRP 490. New MRP 504.”
“Bestway 485. Pakcem 490.”
Official No 7 Fauji Cement:

“Current MRP 490. Will increase to 505 or 500. In a meeting”

“480”

“486 and increasing today by 14 to go to 500.”
Official No 12, Fecto Cement:

“Our 485”

“Current Rs.488/- to Rs.503/-”
Page 37 of 59
“Our new MRP from tommorow would be 500”

“PLEASE HAMMER THIS INCREASE TO THE MARKET IN LIEU OF COAL
AND CEMENT TRANSPORTATION AND MINING OPERATIONS. A FACT IN
ITSELF.”
@923008414531 (Official No 1, APCMA):

“It was agreed that some will do 14 and some 12 and 13 as impact to everyone
will differ. Please manage that. Should not be uniform please.”
“FED reduced by Rs. 500 per ton.”

“Good news. It should not affect our price change decision which is due to increase in
diesel prices.”
73. The above conversation took place in the backdrop of Budget Speech (June 12,
2020) and an expected upward increase in diesel prices (which subsequently did
take place at the end of June 2020) wherein companies tried to develop a consensus
on freight rates (which is an important element in the MRP) and quantum of
adjustments in MRP since diesel also has an impact on cost of production of
cement. This communication shows deliberation by the cement manufacturing
companies on the Whatsapp Group on the increase in various cost factors. i.e. the
price of fuel and agreed with mutual consent on the quantum of price increase.
74. Another conversation thread reproduced below is a discussion carried out

regarding the implementation of freight rates revision in lieu of axle load limit
implementation limit. The conversation calls for a collective decision regarding
the freight rates and equivalent implementation of the same across the board in the
North region. The following excerpts from Whatsapp Group conversation dated
9th June 2019 between cement manufacturers reveals collective decision making
between manufacturers in terms of the freight rates.
“Sir. AoA. Please inform about axle load implementation status on your dispatches. Have
you increased freight rates or not”.
Page 38 of 59
“Mixed trend witnessed in the market. Will be cleared tomorrow”.

“Shehzad no dispatches possible beyond Sang Jani on the GT Road”
“This needs a collective decision tomorrow. The Budget can be taken care of in 12th June
meeting.”
Official No 2, Bestway Cement:

“Sir same is here we are loading trucks at per axle load limits yes collective freight
revisions is benefit for the industry”

“Yes. We need a collective decision. Freight has to be kept uniform by all.”
Official No 16, Cherat Cement @923008414531 (Official No 1, APCMA):

“I would propose an early VC (may be at 10:30am) to discuss only this and decide
increase in freight.”

“Sir Bestway Agee with the proposal”

“Agreed Raja Sahib. In your presence I cant afford to disagree 😜😜😜😜”.

“Sir
You are respected to me
Thanks”
Official No 16, Cherat Cement: @923008414531 (Official No 1, APCMA):

“As some of the friends r not responding please speak to Farid Sb and others to decide.”

“Due to Eid holidays, there were hardly any dispatches, and where dispatches were
made, we didn't get any issue. However, we need to have a collective decision on this at
the earliest.”

“Agreed sir my open cheque with all, what ever decided
Let's save this forum”

“This is temporary. Sooner or later everyone is gonna be affected.”
Page 39 of 59
“Sir, can you please ask your staff to manage vc tomorrow at 10:30 am at your Lahore
and Islamabad offices.”
75. In an instance similar to the above, a message dated 9th June 2019 was sent in the
Whatsapp Group by Official No 17, representative of the Dewan Cement, Karachi
informing about the decision regarding increase in the rates based on axle load
limit indicating the presence of a prima facie collusive activity by cement
companies in the South region. Relevant message sent by Official No 17 of Dewan
Cement, Karachi is reproduced below:
Official No 17, Dewan Cement, Karachi to Official No 1, APCMA dated 9th

June 2019
“Shahzad ASAK
Regarding Axle weight, We have had a meeting in south on last Saturday
and temporarily worked out (Approx 95% correct.) Finally all are agreed to
Increase Rs.25/= per Bag (Rs.500/= per ton)
Increased in whole sale price w.e.f 01-06-2019 by absorbing against
transport Axle weight.
Adil
Dewan
Karachi south”
76. In terms of the evidence reproduced in paras 71 to 75 above, it clearly appears that
the officials of –Fauji Cement, Bestway Cement, Pioneer Cement, Fecto Cement,
Cherat Cement, Lucky Cement, Kohat Cement, Askari Cement, DG khan Cement-
and of APCMA have deliberated on changes in various underlying cost factors of
cement including fuel price, axle load, government taxes and have collectively
agreed on and decided on quantum of impact to be passed on in the retail price of
cement. This was on Whatsapp Group of which all the cement companies in North
Region are participants with active role, on this aspect, being played by the above
undertakings. Such instances of discussions and subsequent agreement on price
changes took place on 9th June, 2019, and 12th June 2020 and are a prima facie
violation of Section 4(1) read with Section 4(2)(a) of the Act.
Page 40 of 59
C. DIVISIONS OF MARKET BY TERRITORY
77. In a conversation dated 27-29th June 2020 (already quoted in Para 72 above and
reproduced here for reference purposes) cement companies located in the North
region were directed not to distribute cement in South region. The relevant
message states:

“Sure. We will be meeting on 1st or 2nd there are too many issues cropping up and
requesting everyone not to make decisions in isolation. We will strive for a
consensus. Meeting will discuss all issues. Also lot of complaints coming from
Karachi that North is selling huge quantities in South at very cheap prices. Please
desist from doing this. We must honour their prices in South. Thanks”.
78. From the above excerpts it appears that the cement manufacturing companies in
the North and South region have an arrangement whereby each agrees not to
compete in each other’s respective territory. The companies in the North region
are not allowed to sell in the South region apparently due to different price levels
and quota arrangement discussed in detail later.
79. In another conversation on 12th May, 2020 on the Whatsapp Group, Official No 1,
APCMA posted cement rates for various cities of North region for the month of
May 2020 after which he shared a document regarding proposed MRP (Maximum
Retail Price) rate sheet named as “highly confidential”. The relevant messages
regarding the rate change are reproduced hereunder:
“Proposed rate sheet highly confidential”
Figure 2
Cities Premium brands Others
Khyber-Pakhtunkhawa - Cherat & Kohat - Rs. 485
Peshawar Askari, Bestway, Fauji & Lucky - Rs. Rs. 480
482
Nowshera Cherat & Askari - Rs. 485
Kohat, Lucky, Fauji & Bestway - Rs. 482 Rs. 480
Swabi Cherat & Askari - Rs. 485
Charsada, Mardan Cherat & Askari - Rs. 485
Page 41 of 59
Mingora & Temergarrah Fauji, Cherat & Askari - Rs. 495
Kohat, Bestway & Lucky - Rs. 492 Rs. 490
Kohat, Karak, Hangu Kohat - Rs. 485
Cherat, Lucky, Fauji & Bestway - Rs. 482 Rs. 480
Meer Ali, Miran Shah, Kohat & Lucky - Rs. 495
Parachanar Fauji, Cherat - Rs. 492 Rs. 490
D.I.Khan, Bannu, Lucky Maple, Lucky & Kohat - Rs.485
Marwat, Tank Cherat, Fauji, Bestway - Rs. 482 Rs. 480
Haripur Askari & Fauji - Rs. 485
Bestway - Rs. 482 Rs. 480
Abbotabad Fecto, Askari & Cherat - Rs. 490
Fauji, Bestway - Rs. 487 Rs. 485
Mansehra Fecto, Askari & Fauji - Rs. 495
Muzafarabad Askari, Fauji - Rs. 505 Rs. 500
Mirpur, (For Kotli add Askari, Fauji - Rs. 485
freight) Bestway - Rs. 482 Rs. 480
Rawalakot, Bagh Fauji, Fecto - Rs. 510 Rs. 505
Islamabad-Rawalpindi Fauji - Rs. 485
Askari, Fecto, Bestway - Rs. 482 Rs. 480
Attock Fecto & Askari - Rs. 485
Chakwal & Talagang DG Khan, Bestway &Maple - Rs. 485 Rs. 480
Gujarat, Jehlum, Mandi, Fecto & Fauji - Rs. 485
Dena Bestway & Gharibwal - Rs. 482 Rs. 480
Gujranwala Fauji & Askari - Rs. 490
Gharibwal & Bestway - Rs. 482 Rs. 480
Sialkot D.G. Khan, Fauji & Askari - Rs. 490
Gharibwal & Bestway - Rs. 482 Rs. 480
Sheikhpura Maple, DG Khan - Rs. 485
Pioneer, Cherat, Bestway - Rs. 482 Rs. 480
Maple - Rs. 495
Lahore, Shahdra D.G. Khan - Rs. 492 Rs. 480
Pioneer, Bestway & Lucky - Rs. 485
Kasur D.G.Khan, Maple - Rs. 495
Bestway, Lucky, Paidar - Rs. 485 Rs. 480
Okara, Sahiwal, Pakpattan D.G.Khan & Maple - Rs. 495
Bestway, Lucky, Paidar - Rs. 485 Rs. 480
Faisalabad, Jhang Maple Leaf - Rs. 495
D.G.Khan - Rs. 492 Rs. 480
Lucky, Bestway & Pioneer - Rs. 485
Sargodha, Khushab, Maple Leaf - Rs. 495
Mianwali Bestway, Lucky, Pioneer - Rs. 490 Rs. 485
Bhakkar, Layyah Maple Leaf - Rs. 490
Bestway, Lucky, Pioneer - Rs. 485 Rs. 480
Multan, Bhawalpur, D.G.Khan - Rs. 495
Bhawalnagar, D.G.Khan, Maple Leaf - Rs. 492 Rs. 485
Rajan Pur Lucky - Rs. 488
R.Y.Khan, Sadiq abad Maple, DG Khan, Lucky -Rs. 490 Rs. 485
Source: Impounded data from Whatsapp group
80. The above document is a proposed rate sheet for the cement manufacturers located
in the North region. From the mentioned rate sheet it appears that the North region
is further divided into major cities and for each city some companies are
designated as ‘premium brands’ which allows them to sell at a higher MRP
Page 42 of 59
whereas all ‘others’ sell at a price lower than the premium brands. For example,
in Islamabad-Rawalpindi – Fauji cement will sell at MRP of 485, Askari cement,
Fecto cement, Bestway cement at Rs.482 whereas ‘others’ will sell at Rs. 480. The
very fact of an APCMA official releasing such a price list ostensibly tantamount
to mutual agreement between cement manufacturers to sell their brands at prices
thus decided.
81. Based on the evidence reproduced in the above para 77 to 80 it appears that the
member undertaking of APCMA are dividing market for sale/supply of cement
into different territories/ zone in the North region. Furthermore, plants located in
the North region are restricted from supplying cement in the South region.
82. In view of the above it clearly appears that APCMA member companies have
mutually agreed to divide market in two region i.e. North and South region
whereby companies in the North region are barred from distributing cement in the
South region. Further evidence produced in para 79 above suggests that North
region is subdivided into different territories wherein brands are classified as
‘premium’ and ‘other’ brands. Such instances of agreement on allocation of
territories for sale/supply of cement appear to have been taken on 27-29th June
2020 and 12th May 2020. Such activity tantamount to collusive activity and
constitute prima facie violation of Section 4(1) read with Section 4(2)(b) of the
Act.
D. FIXING OF DISPATCH QUOTA
83. The analysis of the evidence impounded from the offices of APCMA and DG
Khan Cement clearly indicates the existence of collusive arrangement between the
cement manufacturers of North region to control production and supply of cement
in the relevant market for domestic sales.
84. In the North region supply is being controlled through fixing dispatch quantities
of cement. One such document impounded from the premises of DG Khan Cement
is reproduced below (Figure -3).
Page 43 of 59
Source: Impounded data from DGKCC
85. Figure 3 above apparently pertains to year 2018 and divides dispatch quantity over
each of the 19 plants comprising the North region on the basis of their installed
capacity. Figure further suggests that that cement companies held discussions
amongst themselves and subsequently agreed to a certain level of total daily
dispatches. This total dispatch quantity is then divided over each of the 19 plants
comprising the North region on the basis of the agreed upon formula i.e.
percentage share in the established capacity. For instance, the total installed
capacity for the North region (after taking into account the capacity expansion
drive in 2018-19) is 54,572,001 MT. The installed capacity for example, of Askari
Cement (Nizampur plant) is 1,701,000 MT therefore, Askari’s capacity divided by
total installed capacity of North region (1,701,000/54,572,001)*100 comes to a
share of 3.12 %. Once the daily dispatch quantity for the North region is agreed
upon i.e. 100,000MT (indicated at head of column 9 and 11) Askari’s Nizampur
plant’s daily dispatch quantity works out to be 3,117 MT (3.12% * 100,000MT).
Page 44 of 59
The above mentioned evidence has a column titled ‘ad hoc relief’ of 3,000 MT
which essentially further adjusts quantities on situational basis. An instance similar
to the one being discussed above is reproduced below. Whereas other similar
documents are attached as (Annex-A11).
Source: Impounded data from DGKCC
Page 45 of 59
86. A document impounded from the premises of DG Khan titled: “Statement of
production capacity and clinker/cement Dispatches July 2019 to June 2020” shows
the consolidated position of plant-wise dispatches (bifurcated along local and
export) and capacity utilization of plants in the North region. For detailed figures
please refer to (Annex-A12).
87. To verify the basis of quota allocation the Enquiry Committee conducted
correlation analysis of share of a plant’s capacity in the total installed capacity of
North region and its share in local dispatches in North region. For this purpose
plant wise dispatch data extracted from the impounded documents was used, the
analysis of which showed a perfect positive correlation between share of a plant
capacity in the total installed capacity of North region and its respective share in
the local dispatches for the North region. Correlation analysis is presented in the
Graph-7 and Graph-8 below for year 2018-19 and 2019-20.
GRAPH-7:CORRELATION OF OPERATIONAL CAPACITY AND

LOCAL DISPATCHES FY 2018 -19
Total Operational Capacity Total Local Despatches
12%
10%
8%
6%
4%
2%
0%
Source: Impounded data from DGKCC analyzed by Enquiry Committee
Page 46 of 59
GRAPH -8:CO RRE L AT IO N O F O PE RAT IO NAL CAPACIT Y
AND L O CAL DIS PAT CH E S FY 2019 -20
Total Operational Capacity Total Local Despatches
15%
10%
5%
0%
Source: Impounded data from DGKCC analyzed by Enquiry Committee
88. From the perusal of the impounded evidence it is noted that the agreed quota
allocation is routinely communicated by the Secretary APCMA member to
member companies of the North region for strict compliance and adherence. The
messages sent by Official No 1, APCMA to the Whatsapp Group are reproduced
below:
07th May, 2020

“Today 85,000”
08th May, 2020

“Sir today 90,000”
09th May, 2020

“AOA. Sir today 100,000”
16th May, 2020

“AOA. May 17th is allowed with 70,000 quantity in lieu of May 23 last working day before
Eid”.
19th May, 2020

“AOA. Dispatches will remain off from May 22 to May 27 during Eid holidays announced
by Government”.
21st May, 2020

“AOA. 50% of 110,000 is allowed for dispatches on May 27th 2020”.
29th May, 2020

“AOA. From today domestic is 105,000”.
Page 47 of 59
30th May, 2020
“From today domestic is 110,000”.
02nd June, 2020
“5 % of daily quantity from agreed backlog is allowed effective today”.
04th June, 2020

05th June, 2020

06th June, 2020

“AOA. Tomorrow Sunday is a full working day. Tomorrow Sunday is allowed with 70
percent. Please ignore the previous message”.
09th June, 2020

“AOA. Domestic quantity from today is 123,000”.
15th June, 2020

“AOA. Domestic from today is 126,000”.
19th June, 2020

20th June, 2020

“AOA. For Sunday, 40 % of 123,000 is allowed”.
“AOA. For Sunday quantity is revised to 30% of 123,000 is allowed. Please ignore
previous message”.
23rd June, 2020

“From today domestic is 120,000”.
25th June, 2020

“AOA, from today domestic is 130,000”.
89. From the text messages retrieved from smart phone of Official No 20, DG Cement,
it is noted that APCMA is in the practice of fixing quota for its member
undertakings in the North region since 2014. A complete trail of SMS thread
between Official No 20, DG Khan Cement to Official No 1 APCMA for the years
2014-2016 is attached at (Annex-A13). Some of these messages read as follows:
22nd December 2014

“Sir, From today Domestic quantity is 70000”
Page 48 of 59
6th February 2015
“From today domestic quantity is 85000”
9th February 2015

16th February 2015

15th February 2016

“Excess dispatch from DGK was due to some technical reasons. It will be adjusted today.
Thanks Shoaib”
“Ok no issue.”
13th October 2016

“Enhance quota to 105,000 from today....”
“No way”
14th October 2016

“Sir from today domestic quantity is 102000”
10th December 2016

“Any good news about quota enhancement?”
13th December 2016

“Sir, meeting tomorrow at 11am at Fecto office pindi.”
90. A conversation on the Whatsapp Group dated 06th July 2020 gives important
insight into how negotiations on fixation of dispatch quantities takes place between
the companies wherein they are fully cognizant of the resultant impact on prices.
The conversation between Official No 1 APMCA and other cement companies
Page 49 of 59
including Cherat Cement, Lucky Cement, Pioneer Cement, Fecto Cement,
Gharibwal Cement, Bestway Cement and Askari Cement wherein information
regarding retail price of cement was exchanged. After sharing of retail prices by
the members following conversation takes place:
06th July 2020

“AA Mkts r getting dried up since there is hardly any cement aval in the shops. Suggest
we increase the qty to 125-130 for two to three days else it can create alarm and invite
authorities’ atn.”
“Secondly once prices are not being taken upward lets sell the quantities”.

“Brig sb why cant we move towards little increase by 5 to 6 Rs”.

“You know the reason Sir the players who hv got huge qtys without any ???”
07th July 2020

“Domestic from today is 125,000”
91. From the above conversation it appears that cement companies are having a
discussion on increase in cement production quota and supply in the market. A
member, official no 6, Askari Cement suggests that supply of cement has dried up
in the market which would resultantly drive up prices thus potentially inviting
scrutiny from the relevant authorities. Another member suggests an increase in
prices by Rs. 5 to 6 however, it appears that this suggestion is rejected on the
reason that some big players have quantities to offload. In the end of the discussion
the decision intimated by Official No 1 Secretary APCMA is a quantity of 125,000
MT of cement which appears to be the quota of supply in the market agreed upon
by the members.
92. Another older conversation on the Whatsapp group dated 15 November 2018
shows how companies are fixing quotas in order to reduce downward pressure on
prices. It reads as follows:
15th November 2018

“Sir, for Friday and Saturday domestic quantity is 110,000.
Page 50 of 59
Sir, meeting will held on Monday at 10:30 am at Fecto office Pindi.”

“Prices are under pressure since last few days – if quantities are not decreased I feel that
prices will fall. Is this what we want please?”

“Totally endorse Kalim sb’s view point?
Prices at Rwp, Haripur, Bannu already showing negativity,
Prices will go down if we try to increase sale. Please adhere to quota.
There is a demand for next two or three weeks. More winters may effect demand in north.”
“Sir, for Friday and Saturday domestic quantity is 110,000.-
Sir, meeting will held on Monday at 10:30 am at Fecto office Pindi.”
Official No 19, Dewan Cement:

“Ok thanks.”
Official No 8, Kohat Cement:

“Ok.”

“Ok sir.

“J.I Noted. Thanks”
93. Another document impounded from the premises of DG Khan Cement dated June
15, 2016 indicates that in addition to fixing dispatch quantities in the North region
cement companies in the South region are also fixing dispatch quantities. Figure
04 below is an assessment of each of the five plants located in the South region
with respect to quota allocation (month-wise from April 2015 to June 2016). The
words ‘excess’ refer to plants which have exceeded their quota/dispatch quantities
and ‘short’ refers to those that have not met their assigned quota/dispatch
quantities. (DG Khan Cement which currently operates in the South region as well
was not operational there during this period).
Page 51 of 59
Figure 4
Source: Impounded data from the premises of D.G Khan Cement
94. Furthermore, from the scrutiny of the impounded evidence it appears that APCMA
has deputed monitoring staff on the premises of its member companies to ensure
compliance of agreed allocated dispatch quotas. The deputed monitoring staff
communicates dispatch report of APCMA office on routine basis. A trail of
messages noted in this regard are reproduced below:
Whatsapp Chat of APCMA Marketing Officials Group in May-June 2019
24th May 2019

Page 52 of 59
“Sir, it has been decided that daily dispatch report will not be prepared nor
any unit will send dispatch report to APCMA office. Regarding monitoring
staff deputed at factory, I have instructed them not to prepare report and sit
at their rooms till further notice.”
21st June 2019

“AoA. Sir, please ask the monitoring staff deputed at your factory to
stop/discontinue reporting and revert back to their employer company for
further instructions.”
95. Further evidence to this effect is a document shared between Official No 4, DG

Khan Cement who is Senior Vice Chairman APCMA with Official no 20, DG
Khan Cement titled: “Statement of Dispatches for the Month of March 2020” that
contains daily dispatch quantities from 21st to 30th March 2020 for each company
in North and South region.
Page 53 of 59
Source: Impounded data, WhatsApp message sent from Official 4 to Official 20 of DGKCC
Page 54 of 59
96. Based on the findings of para (83-95) above it appears that cement companies in
the North and South region have entered into an arrangement/agreement to control
supply of cement in the relevant market by allocating dispatch quotas on the basis
of installed production capacity. In terms of the evidence the daily dispatch
quantities are routinely announced by Secretary APCMA for the North Region on
the Whatsapp Group.
97. Evidence suggest that daily dispatch quantities were shared specifically in the
years 2014-16, year 2018, April 2015 - June 2016 and also on 15th November 2018,
24th May 2019, 21st June 2019, 21st - 30th March 2020, 07th May - 25th June 2020,
06 - 07th July 2020 for compliance by the APCMA member undertakings in the
North Region. Such practice of entering into an agreement to limit supply of
Cement in the market by allocation of dispatch quotas amounts to prima facie
violation of Section 4(1) read with Section 4(2)(b) and 4(2)(c) of the Act.
IV. SUMMATION OF FINDINGS AND CONCLUSION
Issue I- What is the relevant market.
98. Based on the findings of paragraphs (44-48) the relevant product market is
Ordinary Portland Cement (OPC) more commonly known as Grey Cement.
Whereas relevant geographic market defined for the purposes of this enquiry
includes: (i) OPC produced and supplied within Pakistan; and (ii) OPC produced
in Pakistan and supplied outside the territory of Pakistan i.e. exports.
Issue II- Whether any cement manufacturing company holds a dominant position in
the relevant market in terms of Section 2(1) (e) of the Act? If yes, whether the conduct
of dominant player is abusive in terms of Section 3 of the Act?
99. In view of the discussion in para (49-52), no individual undertaking holds

dominant position in terms of its market share or its ability to behave independent
of its competitors, customers, consumers and suppliers in the relevant market.
100. With respect to collective dominance the Enquiry Committee observes in para
(54-56) above that although cement industry can be viewed to have an oligopoly
Page 55 of 59
structure with few players occupying large market shares, the evidence presented
in the preceding paras clearly indicates towards the existence of an explicit
engagement of member undertakings of APCMA on various accounts including:
price fixing, out put restrictions etc. Therefore the analysis of anti-competitive
conduct with respect to collective abuse of dominance is not applicable for the
case at hand.
Issue III Whether APCMA or cement manufacturing companies have acted collusively in
respect of inter alia production, supply, distribution and price control of cement in violation
of Section 4 of the Act?
(a) Fixing of price
101. Based on the findings of para (59-70) it appears that that APCMA member
companies operating in North region are involved in the collective decision
making with respect to Maximum Retail Price of cement for each and every plant
located in the North region and also effective date of such prices. Such price fixing
decisions, taken by highest level officials of the companies involved are duly
notified for strict compliance and adherence. In terms of evidence reproduced
above, instances of deliberation and decision on price fixing specifically took
place on 12th May 2020, 18th June 2020, 20th July 2020, 17th August 2020, 16th
November 2018. The above activities amount to cartelization for fixing prices and
constitute prima facie violation of Section 4(1) read with Section 4(2)(a) of the
Act.
(b) Fixing of price based on increase in cost components
102. Based on findings of para (71-76) above it appears that the officials of Fauji
Cement, Bestway Cement, Pioneer Cement, Fecto Cement, Cherat Cement, Lucky
Cement, Kohat Cement, Askari Cement, DG khan Cement under the platform of
APCMA have deliberated on changes in various underlying cost factors of cement
including fuel price, axle load, government taxes (FED, GST) and have
collectively agreed on and decided on quantum of impact to be passed on in the
retail price of cement. Such instances of discussions and subsequent agreement on
Page 56 of 59
price changes took place on 9th June, 2019, and 12th June 2020 and are prima
facie violation of Section 4(1) read with Section 4(2)(a) of the Act.
(c). Division of market by territory and volume of cement
103. Based on the findings of para (77-82) above it appears that APCMA member
companies have mutually agreed to divide market in two region i.e. North and South
region whereby companies in the North region are barred from distributing cement
in the South region. Furthermore evidence suggests that North region is subdivided
into different territories wherein brands are classified as ‘premium’ and ‘other’
brands. Such instances of agreement on allocation of territories for sale/supply of
cement appear to have been taken on 27-29th June 2020 and 12th May 2020. Such
activity tantamount to collusive activity and constitute prima facie violation of
Section 4(1) read with Section 4(2)(b) of the Act.
(d). Fixing of dispatch quota
104. Based on the findings of para (83-97) above it appears that cement
companies in the North and South region have entered into an
arrangement/agreement to control supply of cement in the relevant market
by allocating dispatch quotas on the basis of installed production capacity.
In terms of the evidence the daily dispatch quantities are routinely announced
by Secretary APCMA for the North Region on the Whatsapp group.
105. Evidence suggest that daily dispatch quantities were shared specifically in the years
2014-16, year 2018, April 2015 - June 2016 and also on 15th November 2018, 24th
May 2019, 21st June 2019, 21st - 30th March 2020, 07th May - 25th June 2020, 06 - 07th
July 2020 for compliance by the APCMA member undertakings in the North Region.
Such practice of entering into an agreement to limit supply of Cement in the Market
by allocation of dispatch quotas amounts to prima facie violation of Section 4(1) read
with Section 4(2)(b) and 4(2)(c) of the Act.
Page 57 of 59
V. CONCLUSION
106. Without prejudice to the generality of the foregoing and the findings of the enquiry
report, briefly the conclusions are as follows. The cement industry of Pakistan has
had a long history of cartelization dating back to 1992 when the erstwhile Monopoly
Control Authority (‘MCA’) found that cement companies had formed a cartel to take
advantage of the re-construction work that began after the devastating floods that
year. This pattern of cartelization recurred in 1998, 2003, 2007 and in 2009 when
CCP fined a total of Rs. 6.3 billion on account of involvement in the prohibited
agreements in violation of Section 04 of the Act. In the instant matter, it appears that
the same pattern of anti-competitive behavior has continued in the cement industry
with APCMA playing a lead role in organizing and facilitating collusive activity
through its platform. In the instant matter evidence points towards collusive behavior
whereby cement companies have discussed and agreed upon prices and dispatches of
cement unanimously using the platform of APCMA which is an act of blatant
cartelization.
107. The prima facie violations of Section 4 made out in this enquiry report come at a time
when projects under the CPEC umbrella continue to gain momentum and wide
ranging incentives have been announced by the Government for the construction
industry under the Naya Pakistan Housing Programme. This programme is aimed at
stimulating economic activity, which had been subdued due to the COVID-19
pandemic, and the provision of affordable housing for the common man. All these
activities contribute to a rise in the demand for cement with market sources estimating
that cement constitutes approximately 15-20% of the construction cost of an average
low-income home. Unfortunately, cement manufacturers through their cartelization
have taken undue advantage of the situation and appear to have sabotaged efforts for
the wider public good for their private gain.
108. The decisions to increase MRP by the cartel in April 2020 alone resulted in an
estimated increase in price per bag (50 Kg) of cement of Rs. 50 (collectively in
Islamabad, Lahore and Peshawer). If we multiply this increase with local dispatches
for the year 2019-2020 the economic impact as a result of price increase alone
amounts to approximately Rs. 40 billion annually. The mentioned loss amount is
Page 58 of 59
computed by using a conservative approach and is based on the evidence of fixing
MRP alone. If we take into account price increase at each point in time and damages
borne by consumers as a result of price fixing, quota fixation, division of markets and
other anti-competitive practices through concerted activities i.e cartelization would
be much higher. The loss to the consumer is the gain for the cartel members generally
the key reason why companies begin cooperating and hurting competition.
VI. RECOMMENDATIONS
109. Cement is one of the most important component in the construction industry and any
increase in price of cement has a knock on effect on construction and related
industries such as steel, glass, timber and wood. Lack of competition in the cement
industry has resulted in higher prices to the detriment of consumers at large and the
economy as a whole.
110. The Government’s efforts to boost the economy by offering incentivized package to
the construction industry and promoting ease of doing business in order to uplift the
socio-economic conditions have been thwarted as a result of collusion by the cement
companies using the platform of APCMA.
111. Therefore, it is in the public interest the Enquiry Committee recommends that the
Commission may consider initiating proceedings under Section 30 of the Act against
the APCMA and its member Undertakings in terms of the findings of the enquiry
report.
Noman Laiq Irfan ul Haq Aqsa Suleman

(Enquiry Officer) (Enquiry Officer) (Enquiry Officer)
Sara Jamali Furqan Khan Khattak

(Enquiry Officer) (Enquiry Officer)
Page 59 of 59

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COMPETITION COMMISSION OF PAKISTAN

IN THE MATTER OF ALLEGED VIOLATION OF THE COMPETITION ACT,

Noman Laiq│Irfan ul Haq│Aqsa Suleman│Sara Jamali│

Dated: December 15, 2020

 Sales Tax on FED (impact of Rs 25/bag)

09-04-2020 496 493 483 705

16-04-2020 496 493 490 705

23-04-2020 496 500 519 705

30-04-2020 516 550 509 705

07-05-2020 516 540 509 705

Net % Increase/ 4% 10% 6% -

b) Oil prices reduced considerably in the international market as well as

c) Interest rates dropped to a single digit figure as the State Bank of

8. Following officers were appointed as enquiry officers:

i. Mr. Irfan ul Haq (Deputy Director)

i. Mr. Noman Laiq (Director General)

Source: Data received from Cement Companies, analyzed by Enquiry Committee

20. In order to access information stored on impounded smartphone devices, the

II. OVERVIEW OF THE CEMENT INDUSTRY

A. IMPACT OF CEMENT INDUSTRY ON PAKISTAN ECONOMY

4 PAKISTAN ECONOMIC SURVEY 2019-20

29. The Cement industry in Pakistan comprises of total 19 companies of which 16

Table 2: Market Share of Cement Companies

Table 3: Cost heads of Cement Production

Fuel and Power cost 50%- 55%

Direct labor and Factory overheads (plant 10%-12%

Other cost (finance cost, marketing, admin 5%-6%

Source: Annual Financial Statements of Cement Companies

Source: Pakistan Bureau of Statistics

D. PRODUCTION AND PERFORMANCE

9 Data derived from impounded data, APCMA website https://www.apcma.com/data_monthly1920.html.

Graph-5: Cement Industry Installed Operational Capacity

July 2018- June 2019 July 2019- June 2020

Quarter Quarter Quarter Quarter %Growth in

Lucky Cement 3.90 1.4 +179% 2.20 0.94 +57% 133%

Bestway Cement 2.72 0.75 +263% 1.70 0.30 +496% 502%

Fauji Cement 1.18 0.59 +100% 0.69 0.29 +138% 138%

Cherat Cement 1.11 0.19 +484% 0.31 -0.33 +194% 191%

Attock Cement 0.97 1.29 -25% 0.11 0.36 -69% -67%

Kohat Cement 0.95 0.115 +726% 0.51 0.08 +538% 473%

Pioneer Cement 0.30 0.033 +809% 0.04 -0.19 +121% 79%

Gharibwal Cement 0.57 -0.003 +16119% 0.26 -0.23 +213% 212%

Dewan Cement* -0.08 0.08 -200% -0.12 -0.06 -90% -85%

Fecto Cement 0.06 0.01 +425% -0.39 -0.05 +26% 26%

Flying Cement** 0.33 0.044 +650% -0.4 0.02 -2005% -292%

Dandot Cement*** -0.04 -0.05 -20% -0.11 -0.12 +8% 15%

Power Cement**** 0.67 -0.096 +794% -0.17 0.007 -2529% -2529%

Thatta Cement 0.19 0.36 -46% 0.007 0.011 +34% 33%

*Dewan Cement is non operational

Table 5: Top 10 Cement Producing Countries

Ranking Country Cement Production (MMT)

a. They agree on some type of quantity and/or price allocation mechanism

i. The relevant market in terms of Section 2(1) (k) of the Act?

41. Section 2(1)(q) of the Act defines an undertaking as:

Table 6: List of Undertakings

43. APCMA is a registered body of cement manufacturers in Pakistan incorporated

i. Ordinary Portland Cement ('OPC'),

Abuse of Dominant Position