Diligent watchdog: CCP gathers evidence of anti-competitive behavior

Officials from regulator were locked up by consumer electronic company.


Express June 22, 2011

ISLAMABAD:


Despite being physically assaulted and locked up by the employees of an electronics company, officials at the Competition Commission of Pakistan on Tuesday said that during raids they had gathered “substantive evidence” of collusive and anti-competitive behaviour against two companies that cost the public exchequer Rs2.7 billion.


The raids took place after a whistleblower inside the companies informed the CCP that seven companies had been colluding to keep prices high when bidding for four contracts to supply transformers to a state-owned power distribution company.

After gathering initial evidence, CCP officials raided two companies: PEL and FICO High-Tech. During the raid at PEL on June 16, employees were initially cooperatives with the authorities until the CCP officials tried to confiscate documents, at which point the employees assaulted the officials, locked them inside the PEL facility and called the police to arrest them on what appear to be fabricated charges.

Nonetheless, the CCP officials were able to confiscate both print and electronic records from both companies and say that the raids have allowed them to build an even stronger case against the companies for colluding to keep prices high when bidding for government contracts.

“The documents impounded during the search and inspection of the two transformer manufacturing companies provided substantive evidence, of violations of the law,” said Rahat Kaunain, the CCP chairperson. “The data obtained from the computer discs provided substantive information about collusive behaviour.”

The CCP raids on PEL and FICO were the first ever conducted by the government watchdog on individual companies. Previous raids have typically focused on trade associations representing specific industries. Despite the assaults and manhandling, however, the CCP seemed keen to emphasise PEL’s eventual cooperative behaviour. “Despite the initial troubles, what we appreciate at the end is the cooperation extended by PEL in completing the inquiry,” said Kaunain.

Under the Competition Act of 2011, collusive behaviour is punishable by up to Rs75 million or 10% of the company’s revenue. While the CCP has yet to complete the inquiry into PEL and the other electronics firms, the regulator seems confident of being able to prove its case. Past inspections by the CCP have always resulted in notices being issued to various entities for their violations of the law.

The CCP said they may also raid the other five companies named by the informant.

“These inspections indicate beyond any doubt that the [Competition] Act applies to everyone without exception and that the Commission has the will and the means to apply the laws without fear or favour,” said Kaunain.

The chairperson said businesses should not be scared of the CCP since its job is to ensure a level playing field for all companies and entrepreneurs.

Published in The Express Tribune, June 22nd, 2011.

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