The Competition Commission of Pakistan (CCP) has sent “show-cause” letters to ten steel structure suppliers who were involved in procurement tenders put out by different Distribution Companies (DISCOs). These suppliers are accused of bidding against each other.
Ajmer Engineering Electric Works (Pvt) Ltd, Khalifa Sons (Pvt) Ltd, Siddique Sons Engineering (Pvt) Ltd, Vision Engineering (Pvt) Ltd, AW Engineering (Pvt) Ltd, FN Power (Pvt) Ltd, Gujranwala Cable (Pvt) Ltd, AH Associates (Pvt) Ltd, and Process Dynamics (Pvt) Ltd are some of the companies that have been linked to the case.
To look into what happened, the CCP used Section 37(1) of the Competition Act, 2010, which lets them just do so. During the investigation, the Commission searched and inspected the offices of three companies in Lahore and took important records and papers to look into further.
The investigation looked at bidding records from 2015 to 2022, mainly looking at how DISCOs across the country bought transmission towers. The economic analysis showed a worrying trend of bids that were the same or very similar, with differences as small as 0.001% to 1%. Out of the 357 bids that were looked at, 135 had clear signs of collusion, such as identical prices, sharing quantities, one-person involvement, and bid rotation plans.
The study showed that businesses like AM Associates, Ajmer Engineering, and Khalifa Sons worked together to make decisions about prices and quantities to change the results of tenders to their benefit. It was found that this collusive behaviour included agreed-upon numbers of companies participating, setting prices ahead of time, and strategically not participating to help a chosen company.
It looks like these acts are against Section 4(2)(a)(b)(c)(e) of the Competition Act, 2010, which says that practices like fixing prices, allocating markets, and rigging bids are illegal and hurt competition.
The CCP’s investigation found that these ten companies’ unfair business practices have had a big effect on the markets not only in their provinces but all over the country. These companies’ actions have hurt fair competition in the public buying sector, which has caused prices to rise and DISCOs to have fewer options.
The CCP’s enforcement actions show that it is serious about keeping Pakistan’s markets competitive. They send a strong message that collusive bidding and other actions that hurt competition will not be accepted. The accused companies will be punished and given corrective actions after more hearings.