CCP issues show-cause notices to goods transport associations over freight rate fixing

The Competition Commission of Pakistan (CCP) has issued show-cause notices to the Transporters of Goods Association (TGA) and the Local Goods Transport Association (LGTA) for allegedly fixing freight rates for transportation of goods from Port Qasim to various destinations across the country, a prima facie, violation of Section 4 of the Competition Act, 2010.

Transportation is a vital sector driving national economic growth, with local transporters playing a crucial role in supporting various industries, including automobile, textile, oil and ghee, chemicals, beverages, paint, flour mills, cement, steel, and food.

Recognizing the importance of this sector, the CCP took suo motu notice of concerns regarding collusion to raise and fix freight rates, through circulars.

The CCP’s inquiry revealed that TGA and LGTA increased transportation rates through price circulars in 2018, 2021 and 2022, while imposing stringent conditions on member companies to adhere to fixed rates or face punitive measures. This constitutes a prohibited agreement, a prima facie violation of Sections 4(1) read with Section 4(2)(a) of the Competition Act of 2010.

As part of the investigation, the CCP conducted search and inspection, seizing relevant records and documents that provided substantial evidence of the alleged violations.

The enquiry further highlighted that the alleged anti-competitive behaviour of TGA and LGTA has spill over effect across territories of other provinces. Cargo arriving at Karachi Port Trust and Port Qasim, which is then distributed across Karachi and adjacent areas of Sindh (Hyderabad), Gharo and Balochistan, is impacted by changes in freight rates. Consequently, these changes can affect the cost of goods manufactured, potentially leading to broader economic implications.