Business Recorder
EDITORIAL: Three decades of repeated cartelisation concerns in Pakistan’s cement industry, documented again in the Competition Commission of Pakistan’s latest sector study, point to a regulatory failure that is no longer defensible. The pattern has remained unchanged since the early 1990s: coordinated price hikes, delayed or diluted enforcement, prolonged litigation and, ultimately, no meaningful deterrence. The evidence is neither new nor ambiguous. From the post-privatisation price surge in 1992 to the quota-based “marketing arrangement” uncovered in 2008, the sector has repeatedly exhibited characteristics that make collusion both feasible and profitable. Homogeneous products, excess capacity and limited differentiation create the ideal environment for coordinated behaviour. What has allowed it to persist is not merely market structure but the consistent inability of the regulatory and legal system to enforce consequences. Each episode follows a familiar script. Prices rise in tandem across manufacturers, often without corresponding cost pressures. The regulator investigates and, in some cases, establishes collusive conduct. Penalties are imposed or directives issued. The industry responds not with compliance but with litigation. Courts intervene, stay orders are granted and cases drag on for years. By the time any resolution is reached, if at all, the market has already moved on, and the deterrent effect is lost. The 2009 penalty of Rs6.3 billion imposed by the Competition Commission of Pakistan was widely seen as a turning point. It was backed by documentary evidence, including production quotas designed to sustain price levels. Yet even this landmark action became entangled in legal proceedings, reinforcing the perception that enforcement can be resisted long enough to become ineffective. The lesson for market participants has been clear: regulatory risk is manageable. This is where the problem moves beyond competition law into governance. A regulatory framework is only as strong as its ability to deliver timely and enforceable outcomes. When cases are routinely delayed, diluted or overturned, the system signals tolerance for the very behaviour it seeks to prevent. Over time, this erodes credibility and encourages repetition. The cost of this failure is borne elsewhere. Cement is a foundational input for construction, infrastructure, and housing. Artificially elevated prices feed directly into higher project costs, slower development and increased financial burden on consumers. In an economy already constrained by inflation and limited investment, such distortions have wider implications for growth and affordability. There is also a broader institutional question. The persistence of cartel-like behaviour across decades suggests not just regulatory weakness but a deeper alignment problem between enforcement agencies, administrative bodies and the legal system. When interventions are overtaken by administrative measures or stalled in courts, the overall framework loses coherence. Addressing this requires more than periodic investigations. It requires a shift towards enforcement that is both decisive and final. Legal processes must be equipped to handle competition cases with urgency, ensuring that penalties, once imposed, are not indefinitely deferred. The regulator’s investigative capacity, strengthened since the introduction of modern competition law, must be matched by judicial efficiency. Transparency also has a role. Market behaviour that consistently raises concerns should be subject to continuous scrutiny, not episodic intervention. Public disclosure of findings, timelines for case resolution and clear accountability for delays would strengthen confidence in the system. The cement industry’s history offers a clear diagnosis. Repeated findings of coordinated conduct, combined with weak enforcement outcomes, have created a cycle that benefits producers at the expense of the broader economy. Breaking that cycle will require confronting not only the industry’s practices but also the institutional shortcomings that have allowed them to persist. The objective is not to target a single sector but to restore the principle that markets must operate within enforceable rules. Without that principle, competition policy becomes symbolic, and the costs of inefficiency and distortion continue to accumulate. Three decades is long enough to establish a pattern. It should also be long enough to correct it. Copyright Business Recorder, 2026
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