Power equipment makers: CCP issues show cause notices for collusive bidding
The anti-trust watchdog on Thursday issued show cause notices to Pakistan Electric Power Equipment Manufacturers Association (PEMA) and its 21 members for collusive bidding, leading to around Rs100 billion in procurement contracts with power distribution companies.
The Competition Commission of Pakistan (CCP) has also asked Pakistan Electric Power Company (Pepco) and eight power distribution companies to give their comments on the role of procuring agencies and also attend the hearing, which will be held in the first week of October.
According to the CCP, the power equipment manufacturers colluded while supplying goods to power companies. The CCP has estimated the cost of these contracts at around Rs100 billion.
The notices were issued after the CCP received material evidence from an informant about collusive activities of electric power equipment manufacturers in the tenders floated by power companies.
The CCP can impose a fine of up to Rs75 million or 10 per cent of annual sales, whichever is higher, if it is established that the Competition Act has been violated. CCP decisions can be challenged in an appellate tribunal and Supreme Court of Pakistan.
Earlier, the CCP constituted an inquiry committee and authorised it to inspect the premises in use of PEMA, Pak Electron Limited and Fico Hitech Private Limited. During the inspection, various documents including valuable information were seized.
On examination of the material, the inquiry committee found substantive evidence of a structured framework of collusive bidding in the procurement of certain electric power equipment by the manufacturers. Such equipment includes switchgear, energy meters and transformers.
PEMA and the manufacturers have been given 14 days to show cause in writing and to present their point of view before the watchdog.
The inquiry has also indicated few instances where officials of Pepco, power companies and transformer manufacturers met and deliberated on price for the supply of low-loss transformers.
The CCP is of the view that such a practice of Pepco and power companies may have adverse repercussions on competition in the market of transformers.
Published in The Express Tribune, September 23rd, 2011.
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