PTBP Web Desk
The Competition Commission of Pakistan (CCP) has recently issued show cause notices to ten prominent steel structure suppliers.
These companies are under scrutiny for allegedly engaging in collusive bidding practices during procurement tenders issued by various Distribution Companies (DISCOs). This practice is suspected to be a violation of Section 4 of the Competition Act of 2010, which addresses anti-competitive and monopolistic practices.
The CCP’s action marks a significant step in addressing potential anti-competitive behaviors within the steel supply industry in Pakistan. The ten companies implicated in these allegations include M/s. AM Associates (Pvt) Ltd, M/s. Ajmer Engineering Electric Works (Pvt) Ltd, M/s. Khalifa Sons (Pvt) Ltd, M/s. Siddique Sons Engineering (Pvt) Ltd, M/s. Vision Engineering (Pvt) Ltd, M/s. AW Engineering (Pvt) Ltd, M/s. FN Power (Pvt) Ltd, M/s. Gujranwala Cable (Pvt) Ltd, M/s. AH Associates (Pvt) Ltd, and M/s. Process Dynamics (Pvt) Ltd.
The CCP’s initiative to investigate these companies did not stem from external reports but was instead a suo motu action under Section 37(1) of the Competition Act. This approach underscores the CCP’s proactive stance in preserving competitive markets. During the investigation, the CCP carried out searches and inspections at the premises of three Lahore-based companies, seizing crucial documents and records that would provide further insight into the bidding processes from 2015 to 2022.
The analysis of the tender data, particularly concerning the procurement of transmission towers, revealed alarming patterns. Out of 357 tenders evaluated, 135 displayed clear signs of collusive behavior. This collusion manifested in identical or nearly identical rates submitted by the companies, with minuscule variations ranging from 0.001% to 1%. Notably, behaviors such as bid rotation, sole participation, and the division of quantities among the companies suggested a systematic approach to manipulating tender outcomes.
Three companies, M/s. AM Associates, M/s. Ajmer Engineering, and M/s. Khalifa Sons, were highlighted in the CCP’s report for their roles in collective decision-making concerning the rates and quantities in the tenders. These firms were found to have engaged in activities like predetermined price-fixing and strategic non-participation in certain bids to ensure that one of the preselected firms would invariably win, a direct contravention of several clauses of Section 4(2) of the Competition Act.
The inquiry concluded that the collusive activities of these ten companies had implications beyond just provincial boundaries, affecting market dynamics across the entirety of Pakistan. This situation poses significant concerns about market fairness and the integrity of public procurement processes, potentially leading to increased prices and reduced choices for end consumers.
The show cause notices serve as a formal request for the companies to respond to the allegations and justify their actions. Should the companies fail to provide a satisfactory response, the CCP is empowered to impose penalties, including fines and corrective measures, to restore competitive conditions in the market.
