CCP issues notices to four power companies

Blames these DISCOs for abuse of dominant position in the market.

ISLAMABAD: The Competition Commission of Pakistan (CCP) has issued show cause notices to four electricity transmission and distribution companies for abuse of dominant position and collusion in procurement of auto and power transformers in violation of Section 3 and Section 4 of the Competition Act 2010.

The CCP took the move following a complaint from 7Aays Corporation that alleged that National Transmission and Dispatch Company (NTDC), Lahore Electric Supply Company (Lesco), Faisalabad Electric Supply Company (Fesco) and Multan Electric Power Company (Mepco) were abusing their dominance in the market of power and auto transformers by allowing MR Germany to create a monopoly in supply of on-load tap-changers (OLTCs) although there were other manufacturers as well. The CCP conducted an inquiry into the matter before issuing the show cause notices.

It appears in the inquiry that NTDC, Lesco, Fesco and Mepco are imposing an unfair trading condition on the suppliers of transformers by unnecessarily referring to a particular brand – of MR Germany – in bidding documents (despite the fact that a complete International Electro-technical Commission (IEC) specification exists for the same). The power companies insist that the bidders supply transformers equipped with MR Germany’s OLTC and reject the bids of the suppliers of transformers equipped with any other brand of OLTC.



Owing to this condition, the suppliers of transformers equipped with OLTC of any brand other than MR Germany are unable to compete in the market. Hence, it appears that NTDC, Lesco, Fesco and Mepco are abusing their dominant position in the relevant market for procurement of various categories of transformers in violation of Section 3(1) read with Section 3(2) and Section 3(3) (a) and (g) of the Competition Commission Act.

The show cause notices say NTDC, by issuing recommendation to purchase only MR Germany’s OLTC-equipped transformers, and Fesco, Lesco and Mepco, by accepting this recommendation, have entered into an arrangement for imposing a restrictive trading condition in the market for supply of transformers in violation of Section 4(1) read with Section 4(2)(a) of the Act.

These undertakings have been asked to submit written replies to the show cause notices and appear before the commission at a hearing fixed for April 4.

Curbing anti-competitive practices in public procurement is one of CCP’s priority areas of enforcement. The commission has previously taken action in several instances of anti-competitive behaviour in the power and energy sector.

Published in The Express Tribune, March 19^th, 2013.

Like Business on Facebook to stay informed and join in the conversation.