The Competition Commission of Pakistan (CCP) has issued Show Cause Notices to International Steel Limited (ISL) and Aisha Steel Mills Limited (ASML) for alleged cartelization in the flat steel market.
Stated in a press release on Tuesday that an inquiry conducted by the Commission found prima facie evidence suggesting that the two leading producers engaged in price-fixing, coordinated price changes, and exchanged commercially sensitive information, in violation of Section 4 of the Competition Act, 2010.
The CCP initiated an inquiry in May 2021 following informal complaints regarding possible cartelization by local flat steel manufacturers. Complaints suggested that prices of flat steel products were moving in parallel, and there were allegations of an artificial shortage in the market.
Price analysis indicated a pattern of price parallelism among the major players, with price changes occurring simultaneously and in identical quantum. Between July 2020 and December 2023, the prices of cold-rolled coil (CRC) increased by Rs. 146,000 per metric ton for ISL and Rs. 145,900 per metric ton for ASML, reflecting an average increase of 111 percent.
To further investigate these allegations, the CCP conducted a Search & Inspection at the premises of ISL and ASML on June 12, 2024. The impounded evidence suggests that the two companies allegedly coordinated with each other before implementing any price changes and discounts. As per the inquiry report, ISL and ASML also exchanged commercially sensitive information on raw material purchase prices, allowing them to align their final product pricing.
Flat steel products, including Cold Rolled Coil (CRC) and Galvanized Coil (GC), are widely used in various industries such as electronics, automotive, agriculture, and manufacturing. Any anti-competitive behavior in this sector has far-reaching implications, affecting industrial costs and consumer prices. The CCP’s investigation, however, found no evidence of collusive activity by the smaller local competitor, Hadeed Pakistan Limited (HPL).
Following these findings, the CCP has issued Show Cause Notices to ISL and ASML. The Commission will pass a final order in the case after reviewing the written and oral arguments presented by the parties.
