CCP disposes of complaint against K-P directorate

Directorate accused of restrictive trading conditions in its tender


​ Our Correspondent January 17, 2020
Representational image. PHOTO: REUTERS

ISLAMABAD: The Competition Commission of Pakistan (CCP) has passed an order, disposing of a complaint against Khyber-Pakhtunkhwa Directorate of Agriculture Engineering for alleged violation of Sections 3 and 4 of the Competition Act 2010.

Earlier, Catkin Engineering filed a complaint with the CCP, alleging that the directorate had restrictive trading conditions in its tender for the procurement and installation of deep solar pumping systems on agriculture tube wells/ open wells, which made it anti-competitive and violated Section 4 of the Competition Act.

According to the complainant, the tender from the directorate required the participating firms to be registered with Khyber-Pakhtunkhwa Revenue Authority (KPRA) and have an average turnover of Rs200 million in the last three years in solar pumping systems.

In addition to that, the tender demanded that the firms should have experience of projects of similar and complex nature worth Rs10 million, which were completed in the last five years, in addition to having a test bed for verification and testing of solar pumps.

The CCP inquiry examined all the clauses separately to see whether there was any violation of the Competition Act or not. In its order, a CCP bench stated that the complainant had failed to establish any violation of the Competition Act in the tender.

Regarding the first condition, the order stated that registration with KPRA was the same as obtaining the National Tax Number (NTN) from the Federal Board of Revenue (FBR) ie a person/entity does not have to be actually paying any taxes to obtain an NTN.

It also observed that registration with KPRA could be done online through its website, therefore, the clause did not adversely impact competition.

Regarding the second condition of Rs200-million average turnover, the order stated that Pakistan Engineering Council’s (PEC) recommendation called for maintaining average turnover by a company over a five-year period.

“However, the bidding document required the turnover to be maintained over a three-year period only, which appeared to be less stringent since it would be easier for a firm to maintain a certain level of sales over three years rather than five years,” it pointed out. “Therefore, this clause does not appear to impede competition.”

The order noted that the burden of proof rested with the complainant who failed to substantiate as to how the impugned clause was restrictive of competition and the condition of Rs10 million worth of projects in the last five years did not appear to be anti-competitive.

Moreover, the order said, the condition of having the test bed facility in the company premises appears to be unnecessary and Khyber-Pakhtunkhwa Directorate of Agriculture Engineering failed to provide a satisfactory answer regarding why 13 marks were assigned to the requirement.

The CCP bench disposed of the case and established that no violation of Section 3 or 4 of the Competition Act was found in the tender’s clauses.

The CCP is mandated under the Competition Act to ensure free competition in all spheres of commercial and economic activity, to enhance economic efficiency and to protect consumers from anti-competitive practices.

 

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