After finding evidence of massive rigging, the anti-trust watchdog has issued show-cause notices to three manufacturers-cum-supplying companies for collusive bidding in a tender for supplying 3,000 power meters to Faisalabad Electric Supply Company (Fesco).
The Competition Commission of Pakistan (CCP) issued notices to Syed Bhais Private Limited, Creative Electronics Private Limited and Syed Bhais Electronics Engineering and Control Private Limited for violating the competition law. The anti-trust watchdog can slap a fine of up to Rs75 million or 10 per cent of annual sales.
Collusive bidding is an attempt by bidders to circumvent rules and laws laid down to ensure free and competitive bidding.
The companies have been given 14 days to reply to the notices and avail the opportunity of being heard before CCP.
A total of five companies obtained tender documents but only three companies submitted bids. The tender was opened on August 27, 2009 revealing that the bidders offered identical rates and quantity. Each bidder quoted Rs9,450 per unit and offered 1,200 meters whereas the total quantity required in the tender was 3,000 meters.
All the bidders were requested by Fesco to submit justified rates, however, they regretted to reduce tender rates and Rs9,450 per unit was offered as a final price.
“Submission of identical rate of Rs9,450 per unit and same quantity of 1,200 meters by each bidder is a direct evidence of information sharing among bidders,” finds CCP.
CCP initiated an inquiry into possible collusive bidding after reviewing details of public procurement carried out by Fesco in the past few years. The review was part of the CCP’s bid rigging detection programme aimed at identifying and curtailing collusive bidding in public procurement.
Collusive bidding poses serious concerns for public procurement, CCP said in its earlier enforcement orders. Due to the collusion between the bidders, the cost of public procurement artificially increases and the taxpayer suffers in the end.
Published in The Express Tribune, July 26th, 2011.