The Competition Commission of Pakistan (CCP) has issued show cause notices to 10 jute mills, all members of Pakistan Jute Mills Association (PJMA), for alleged cartelization in supply of gunny bags to various government departments including Pakistan Agriculture Storage & Supply Corporation Limited (PASSCO) in violation of Section 4 of the Competition Act, 2010. The following jute mills have been issued the show cause notice: Crescent Jute Products Ltd., Amin Fabrics Ltd., Indus Jute Mills Ltd., Habib Jute Mills Ltd., Thal Ltd., Sargodha Jute Mills Ltd., Suhail Jute Mills Ltd., White Pearl Jute Mills Ltd., Pioneer Jute Mills Ltd. and Madina Jute Mills Ltd. In order to detect cases of collusive tendering or bidding in the public procurement, CCP contacted various government agencies including PASSCO to provide information on the procurements made by them during last three years. The data provided by PASSCO raised suspicion about bid rigging- a type of collusive behavior among the jute manufacturing mills prohibited under Section 4 (2) (e) of the Act. The Commission on its own decided to initiate a formal enquiry under Section 37(1) of Act and appointed an enquiry committee comprising of Ms. Shaista Bano (Director Cartel, Monoplies and Trade Abuses) and Ms. Nadia Nabi (Joint Director, Cartels, Monopolies and Trade Abuses). Based on the information available with it and on recommendation of the Enquiry Committee the Commission deemed it appropriate to search and inspect the office of PJMA located in Lahore under the power granted to it by Section 34 of the Act in order to collect any evidence regarding the suspected violations of section 4 of the Act. The duly authorized officers of CCP conducted the search on 8 July 2010 and impounded valuable materials and documents from the offices of PJMA. The impounded documents provided information about the collusive activities going on between the jute mills. It was found out by the enquiry committee that there is, prima facie, cartelization in the market of jute bags in violation of Section 4(1) read with 4(2) (a), (b) & (e) of the Act. Members of PJMA appear to have deliberately devised a mechanism in an agreement to allocate quota for jute bags tenders invited by different government departments and have, prima facie, violated Section 4(1) read with Section 4(2) (b) and (e) of the Act. Members of PJMA have mutually discussed the price of jute bags and appear to have a pricing strategy before and after the opening of tenders, thereby, prima facie, fixing the price of jute bags in violation of Section 4(1) read with Section 4(2) (a) of the Act. As a result, show cause notices have been issued to these jute mills and the case has been fixed for hearing on 6 November 2010.
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