The Competition Commission of Pakistan (CCP) has issued show cause notices to Pakistan Electric Power Equipment Manufacturers Association (PEMA) and its 21 members for, prima facie, indulging in collusive bidding in procurement of electric power equipment by electric power distribution companies (DISCOs). CCP received material evidence from an informant regarding, prima facie, collusive activities of electric power equipment manufacturers participating in the procurement tenders called by DISCOs and initiated a formal enquiry by appointing an enquiry committee which comprised Nadia Nabi (Senior Joint Director), Syed Umair Javed (Deputy Director) and Muhammad Fahad (Junior Executive Officer). CCP also authorized its officers to inspect the premises in use of PEMA, Pak Electron Limited and Fico Hitech Private Limited. During these inspections various documents including valuable information was seized and impounded. On examination of impounded material, the Enquiry Committee found substantive evidence of a structured framework of collusive bidding in the public procurement of certain electric power equipment, by the manufacturers. Such equipment includes switchgear, energy meters, and transformers. The Enquiry Report and the evidence in form of materials impounded from the search explicitly indicates that, prima facie, PEMA members have regularly meetings at the platform of their association to discuss the tenders floated by DISCOs and formulate a common strategy in respect of tenders. Discussions at the PEMA forum include deliberation on fixing the price and allocation of quantities of electric power equipment required under the tenders. In terms of Enquiry Report and the impounded material, it appears that electric power equipment manufacturers carry out their collusive activities through different fora which have been named as Switchgear forum, Energy Meter Forum, Transformer Forum and LT CT Consortium. These fora/consortium have laid down their SOPs and are used to discuss and make strategies for tenders invited by the DISCOs for procurement of different categories of electric power equipment. Enquiry Report based on the evidence in form of minutes of meetings, tender documents, comparative statements and spread sheets reveals that these manufacturers, prima facie, have entered into collusive arrangements with the members of their respective forum in relation to the tenders floated by DISCOs for procurement of switchgear, energy meters, power, distribution, pad mounted and low current transformers particularly in terms of offering a pre-determined price and quantity in violation of section 4(2)(a),(b) &(e) of the Competition Act, 2010. PEMA and manufacturers have been given fourteen days to show cause in writing and to avail the opportunity of being heard before CCP. The Enquiry Report has also indicated few instances where officials of PEPCO, DISCOs and Distribution Transformer Manufactures met and deliberated on price for the supply of low-loss distribution transformers. CCP is of the view that such practice of PEPCO and DISCOs may have adverse repercussions on competition in the market of distribution transformers. Therefore, CCP has requested PEPCO and DISCOs to give their comments on the role of procuring agencies and also attend the hearing which has been scheduled on 07-10-2011.
The Competition Commission of Pakistan (CCP) has issued show cause notices to Pakistan Electric Power Equipment Manufacturers Association (PEMA) and its 21 members for, prima facie, indulging in collusive bidding in procurement of electric power equipment by electric power distribution companies (DISCOs).
CCP received material evidence from an informant regarding, prima facie, collusive activities of electric power equipment manufacturers participating in the procurement tenders called by DISCOs and initiated a formal enquiry by appointing an enquiry committee which comprised Nadia Nabi (Senior Joint Director), Syed Umair Javed (Deputy Director) and Muhammad Fahad (Junior Executive Officer).
CCP also authorized its officers to inspect the premises in use of PEMA, Pak Electron Limited and Fico Hitech Private Limited. During these inspections various documents including valuable information was seized and impounded. On examination of impounded material, the Enquiry Committee found substantive evidence of a structured framework of collusive bidding in the public procurement of certain electric power equipment, by the manufacturers. Such equipment includes switchgear, energy meters, and transformers.
The Enquiry Report and the evidence in form of materials impounded from the search explicitly indicates that, prima facie, PEMA members have regularly meetings at the platform of their association to discuss the tenders floated by DISCOs and formulate a common strategy in respect of tenders. Discussions at the PEMA forum include deliberation on fixing the price and allocation of quantities of electric power equipment required under the tenders.
In terms of Enquiry Report and the impounded material, it appears that electric power equipment manufacturers carry out their collusive activities through different fora which have been named as Switchgear forum, Energy Meter Forum, Transformer Forum and LT CT Consortium. These fora/consortium have laid down their SOPs and are used to discuss and make strategies for tenders invited by the DISCOs for procurement of different categories of electric power equipment. Enquiry Report based on the evidence in form of minutes of meetings, tender documents, comparative statements and spread sheets reveals that these manufacturers, prima facie, have entered into collusive arrangements with the members of their respective forum in relation to the tenders floated by DISCOs for procurement of switchgear, energy meters, power, distribution, pad mounted and low current transformers particularly in terms of offering a pre-determined price and quantity in violation of section 4(2)(a),(b) &(e) of the Competition Act, 2010. PEMA and manufacturers have been given fourteen days to show cause in writing and to avail the opportunity of being heard before CCP.
The Enquiry Report has also indicated few instances where officials of PEPCO, DISCOs and Distribution Transformer Manufactures met and deliberated on price for the supply of low-loss distribution transformers. CCP is of the view that such practice of PEPCO and DISCOs may have adverse repercussions on competition in the market of distribution transformers. Therefore, CCP has requested PEPCO and DISCOs to give their comments on the role of procuring agencies and also attend the hearing which has been scheduled on 07-10-2011.
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