CCP ISSUES SHOW CAUSE NOTICE TO 46 SUPPLIERS OF LINE HARDWARE FOR BID RIGGING IN TENDERS OF OVER PKR 5 BILLION OF WORTH FLOATED BY POWER DISTRIBUTION COMPANIES

ISLAMABAD: The Competition Commission of Pakistan (CCP) has issued show cause notices to 47 suppliers of Line Hardware Material to the Electric Power Distribution Companies (DISCOs) for prima facie operating as a cartel and engaging in collusive bidding in violation of Section 4 of the Competition Act 2010.

The CCP initiated a formal enquiry on a tip off from an informant regarding, prima facie, collusive activities of line hardware suppliers/manufactures participating in the procurement tenders called by DISCOs. Line hardware items are components used in transmission lines for electricity distribution.

During the enquiry, procurement data from DISCOs was sought. In addition, inspection of the premises of two undertakings engaged in the supply of Line Hardware material was carried out to gather evidence against the suppliers engaged in collusive activates.

The scrutiny of the impounded record revealed collusive arrangement among the suppliers of line hardware in terms of allocation of tender, division of tender quantity, and tender manipulation through decisions involving aspects such as who will participate as against surrendering tender documents, who would place a higher bid and whether there will be a single winner or multiple winners with tender quantity divided among themselves as per pre-determined shares.

The undertakings appear to be part of an association namely Manufacturers and Contractors Association. This association, prima facie, is used to discuss and make strategy for tenders invited by the DISCOs for procurement of Line Hardware Material.

An idea of the damage caused by a rigged tender can be gauged from a research by International Monetary Fund that shows a 30% efficiency gap in terms of quality vs cost balance in infrastructure development of various projects. The foregoing implies, on an average, a 30% deterioration in quality in concomitance with a 30% increase in price in such procurements.

In the enquiry report it is estimated that that public procurement of line hardware products amounted to more than PKR 5 billion for period enquired (years 2015 – 2018).

As per enquiry’s findings, the evident collusive bidding on the part of line hardware suppliers and the association, manifested in various forms such as agreements, SOPs/Association’s decision having the object or effect of preventing and restricting competition in the relevant market, therefore, constituting a prima facie contravention of Section 4(1) read with Section 4(2)(e) of the Act.

The objective of such behavior appears to be gaining control over the outcome of tenders for benefit of all. On the recommendations of the enquiry report, show cause notices have been issued to Manufacturers and Contractors Association and 46 firms engaged in the supply of line hardware material.

According to official estimates, Pakistan spends approximately 20 percent of its GDP on public procurement. Therefore, the CCP’s top priority is to enforce the provisions of Competition Law against the instances of bid rigging. To improve its detection and investigation of bid rigging, the CCP has developed a Bid Rigging Analysis and Detection (BRAD) system, which will soon be inaugurated and implemented.

Bookmark the permalink.

Comments are closed.

  • RSS Newsnreleases

    • Atos has completed the acquisition of IDEAL GRP 27-Jul-2021
      PARIS, FRANCE: Atos has completed the acquisition of IDEA GRP, a Product Lifecycle Management (PLM) system integrator and platinum-level solution partner... Continue reading The post Atos has completed the acquisition of IDEAL GRP appeared first on NewsnReleases.
    • Simplicity Esports and Gaming evaluates IPO in US 27-Jul-2021
      BOCA RATON, FLORIDA: Simplicity Esports and Gaming Company  intends to list its common stock and warrants on The NASDAQ Capital... Continue reading The post Simplicity Esports and Gaming evaluates IPO in US appeared first on NewsnReleases.
    • TSX Venture Exchange okays Blue Rhino’s acquisition of Zebediela Nickel Company 27-Jul-2021
      LONDON, UK:  Blue Rhino Capital Corp has received conditional acceptance from the TSX Venture Exchange for its proposed qualifying transaction,... Continue reading The post TSX Venture Exchange okays Blue Rhino’s acquisition of Zebediela Nickel Company appeared first on NewsnReleases.
    • C. Hunter becomes CEO of HomeTrust Bank, President of HomeTrust Bancshares 27-Jul-2021
      ASHEVILLE: HomeTrust Bancshares Inc., the holding company of HomeTrust Bank, announced that C. Hunter Westbrook will assume the positions of... Continue reading The post C. Hunter becomes CEO of HomeTrust Bank, President of HomeTrust Bancshares appeared first on NewsnReleases.
    • Blackwood Partners and Nicola Wealth acquire another industrial land 27-Jul-2021
      TORONTO, ONTARIO: Blackwood Partners and Nicola Wealth Real Estate (NWRE) acquired a 34-acre industrial development site located in Grimsby, southwest... Continue reading The post Blackwood Partners and Nicola Wealth acquire another industrial land appeared first on NewsnReleases.