' MUHAMMAD MUNIR PERACHA, J.--- This judgment shall dispose of F.A.Os. Nos.166, 167, 168, 169, 170, 171, 172, 173, 174 and 175 of 2005. The appellants in all the appeals are Sugar manufacturers, and each one of them is aggrieved of order passed by Monopoly Control. Authority under the provision of section 12(1) of the Monopolies and Restrictive Trade Practices (Control and Prevention)
Ordinance, 1970 directing them:-- "To discontinue and not to repeat the practice of withholding of stock to create artificial shortage of the commodity in the market."
2. The case of the Monopoly Control Authority hereinafter referred to as "Authority" is that it took cognizance of increase in price of sugar and conducted market survey and found that the sugar price, which was around Rs,19-20 per KG by the end of December 2004, sharply increased to Rs,24.50 in January, Rs,25.50 in February, Rs,27.50 in March and Rs,28 in April, 2005. It is the case of the Authority that it initiated suo motu inquiry in the matter under section 14 of the Ordinance to determine the factors behind the increase in the price of sugar and to explore the possibility of the existence of restrictive trade practice. The Authority called for information from the manufacturers of sugar. Being convinced that unreasonably restrictive trade practices have been resorted to by the appellants, the appellants were issued separate show-cause notices dated 25-6-2005. The notice issued to each of the appellants is almost similar paragraphs 6 to 8 of the notice issued to the appellant in FAO No,166 of 2005 is reproduced:-- "6. And Whereas, from the information supplied by the undertaking and gathered by the Authority from the other sugar producers, press reports and Pakistan Sugar Mills Association established the following facts (special enquiry report attached):--
(i) that failure on the part of the mill owners to make timely payments to the cane growers, forced them to shift growing some other cash crops resulting in lesser area under cultivation for cane crop which caused lesser production of sugar in the country; and
(ii) that the mill owners did not release adequate stock of sugar commensurate to the demand, which created artificial shortage of sugar in the market to cause a sharp increase in the price of sugar from January 2005, that touched Rs,28-KG in April 2005.
7. And Whereas, the Authority is of the opinion, based on the said findings, that it is necessary in the public interest to initiate proceedings against you under section 11 of the. Ordinance;
8. And Whereas, agreement for the purposes of fixing selling price of a product and limiting quantity and means of production, distribution or sale thereof, by the competitors in the market.
Prime facie, constitutes unreasonably restrictive trade practices as provided under section 6(1) of the Ordinance."
3. Appellants in all the appeals filed reply to the show-cause notice. The Authority after hearing the appellants, passed order dated 21-9-2005. The concluding part of the order has already been reproduced.
4. I have heard the learned counsel for the appellant as well as respondent and have gone through the record of the case with their assistance.
5. Learned counsel for the appellant relying on the judgment of Lahore High Court, reported as "PLD 2007 Lahore 1" submits that the order of the Authority is liable to be set aside. According to the learned counsel, the cited judgment is applicable to the present appeals
6. On the other hand, the view, point of the learned counsel for the respondent is that the cited judgment is distinguishable. Learned counsel for the respondent Authority submits that the unreasonable restrictive trade practice having been resorted to by the appellants, the Authority rightly passed the order impugned in this appeal.
7. It is not disputed that the appellant is "undertaking" within the meaning of clause "m" of section 2 of the Ordinance. Agreement has been defined in clause-"a", trade in clause "k", trade practice in clause "1", and unreasonable restrictive trade practice in clause "n" of section-2 of the Ordinance.
"(a) "agreement" includes any arrangement or understanding whether or not in writing and whether or not it is or is intended to be legally enforceable.
(k) "trade" means any business, industry, profession or occupation relating to the reproduction, supply or distribution of goods or the control of production, supply or distribution of goods, or to the provision or control of any service.
(1) "trade practice" means any act or practice relating to the carrying on of any trade or business.
(n) "unreasonable restrictive trade practice" means a trade practice which has or may have the effect or unreasonably preventing, restraining or otherwise lessening competition in any manner."
8. The other two relevant sections in the present controversy would be sections 6 and 7 of the Ordinance. Sections 6 and 7 of the Ordinance are also be reproduced:-- "6 Unreasonable restrictive trade practices.--(1) Unreasonably restrictive trade practices shall be deemed to have been resorted to or continued if there is any agreement:--
(a) between actual or potential competitors for the purpose or having the effect of -
(i) fixing the purchase or selling prices or imposing any other restrictive trading conditions with regard to the sale or distribution of any goods or the provision of any services;
(ii) dividing or sharing of markets for any goods or services;
(iii) limiting the quantity or the means of production, distribution or sale with regard to any goods or the manner or means of providing any services;
(iv) limiting technical development or investment with regard to the production, distribution or sale of any goods or the provision of services;
(v) excluding by means of boycott and other person or undertaking from the production, distribution or sale of any goods or the provision of any services;
(b) between a supplier and a dealer of goods fixing minimum resale prices, including:--
(i) an agreement with a condition for the sale of goods by a supplier to dealer which purports to establish or provide for the minimum prices to be charged on the resale of the goods in Pakistan; or an agreement which requires as a condition of supplying goods to a dealer to the making of any such agreement;
(c) which subjects the making of any agreement to the acceptance by suppliers or buyers of additional goods or services which are not by their nature or by the custom of the trade, related to the subject-matter of such agreement.
(2) No such agreement as is referred to in subsection (1) shall be deemed to constitute an unreasonably restrictive trade practice if it is shown--
(a) that it contributes, substantially to the efficiency of the production or distribution of goods or of the provisions of services or to the promotion of technical progress or export of goods;
(b) that such efficiency or promotion could not reasonably have been achieved by means less restrictive of competition; and
(c) that the benefits from such efficiency or promotion clearly outweigh the adverse effect of the absence of lessening of competition.
7. Other circumstances constituting concentration of economic power, etc.--(1) Without prejudice to the provisions of sections 4, 5, and 6, the Authority may by General Order prescribed the circumstances in which and the conditions under which undue concentration of economic power or unreasonable monopoly power shall be deemed to exist and the practice which shall be deemed to be unreasonably restrictive trade practice:--
(2) Where the authority is of opinion that, the making of a General Order under subsection (1) may be in the public interest, it shall conduct an inquiry affording the persons or undertakings likely to be affected by such order such opportunity of being heard and of placing before it relevant facts and material as it may deem fit.
(3) Before making any General Order under subsection (1), the Authority shall--
(a) publish in the official Gazette and in such other manner as in its opinion will bring it to the notice of all persons and undertaking likely to be affected thereby a draft of the proposed General Order together with a notice inviting suggestions or objections to be submitted before a date specified therein;
(b) consider any objection or suggestion which may be received by it from any person or undertaking with respect to the draft; and
(c) where it deems appropriate, afford an opportunity to any such person or undertaking of being heard and of placing before it facts and material in support of the objection or suggestion."
9. Section 7(1) of the Ordinance empowers the authority to prescribe by general order, the practice which shall be deemed to be unreasonably restrictive trade practice. However, before making any general order, the authority has to comply with the provisions of subsections (2) and (3) of section 7 of the Ordinance.
10. Before recording a finding that there has been or is likely to be contravention of the provision of section 3 of the Ordinance, the authority must establish that there exists or will exist an unreasonably restrictive trade practice. To establish the existence of an unreasonably restrictive trade practice, either the authority has to establish all the ingredients of an unreasonably restrictive trade practice mentioned in clause "n" of section 2 or has to resort to the deeming clause of sections 6 and 7 of the Ordinance. It is an admitted position that there is no general order prescribing the practice, which shall be deemed to be unreasonably restrictive trade practice. In case in hand, therefore, either the authority was to establish all the ingredients of unreasonably restrictive trade practice, or to prove an agreement mentioned in section 6 of the Ordinance justifying to presume that unreasonably restrictive trade practice has been resorted to or is continuing.
11. The relevant paragraphs of the show-cause notice have already been reproduced in earlier part of the judgment paragraphs 10 and 11 of the order of the authority, which are reproduced also shows that the authority relied on section 6(1) of the Ordinance:-- "10. Examination of the production, sales and stocks details clearly establish that the undertaking indulged in hoarding along with a good number of other sugar mills to create artificial, shortage of the commodity in the market to raise the prices to unreasonably high levels and thus harm consumers by cartel like behavior and restrictive trade practices actionable under the Ordinance thus upto December, 2004, it sold (actual lifting as per PSMA data) 816 tonnes, which is 7.28% of the total stock and upto January, 2005, 1,560 tonnes, which is 8.9% of total stock, till these months.
National average of all Mills till these months is much higher i,e, about 22% and 35% respectively.
11 After considering the arguments given by the learned counsel and the relevant record, and data as discussed supra the Authority concludes that withholding of stock of sugar by undertaking to create artificial shortage in the market has been proved which also established collusive arrangement in terms of section 6(1) of the Ordinance. The authority in view of powers vested under section 12(1) of the Ordinance, therefore, directs the respondent undertaking:-- ' To discontinue and not to repeat the practice of withholding of stock to create artificial shortage of the commodity in the market."
12. The only reason recorded by the Authority is that a very small percentage of total stock was sold in the market. I am of the opinion that this would not provide a sufficient criteria to hold that unreasonably restrictive trade practice has been resorted to. The authority did not mention in the order as to how much quantity of sugar was sold in the market in these particular months as compared to the earlier months. The collusive arrangement between the undertaking dealing with manufacturers of sugar has not been satisfactorily proved. In reply to the show-cause notice, it was pleaded by the appellants that a number of sugar mills sold more quantity of sugar in the market in October, 2004 to April 2005 as compared to there average monthly sale. This according to the appellants would negate the collusive arrangement. The authority failed to consider this aspect of the matter. There is no evidence that the sale of the sugar was refused by the undertaking despite demand by the dealers.
13. For all these reasons, I am of the considered opinion that orders of the authority dated 21-9- 2005 and 23-9-2005 are liable to be set aside. All these appeals are allowed and orders of the Monopoly Control Authority dated 21-9-2005 and 23-9-2005 are set aside. The parties are left to bear their own costs.