Electrical equipment makers: CCP to issue show-cause notices

The Chairperson of Competition Commission of Pakistan (CCP), Rahat Kaunain Hassan, said on Tuesday that the Commission would shortly issue show-cause notices to Pakistan Electric Power Equipment Manufacturers Association (PEMA) and its 22 members who have been, prima facie, involved in cartelisation.
Talking to a group of reporters, she said that, based on the impounded documents recovered from the offices of PEL, FICO and PEMA, the enquiry Committee has found prima facie violation of cartelisation among the manufacturers of electric power equipment. The PEMA and its 22 members have been found, prima facie, involved in 'bid rigging' through price fixing and share allocation. "In this regard, the CCP would issue show-cause notice to the PEMA and its 22 members in 1-2 days period", the CCP Chairperson added.
About the inquiry report, she said that the enquiry report showed that not only such members collude on the aspect of price and share allocation but also delivery schedule and important clauses of tender documents including performance bond, performance guarantee, payment and sales tax & SED documents. The three relevant markets where cartelisation has been unveiled are switchgear, energy meters and transformers (sub-categories in which violations have been found are power transformer, distribution transformer, pad-mounted and low current transformers).
She explained that the procurement cost in one financial year for the three products mentioned is roughly estimated to be Rs 100 billion. "There are eight dicsos, and it is our understanding that for Pesco alone the procurement of these three products comes to around Rs 15 billion. There are various for a, such as 'Switchgear Forum'. 'Meter Forum', 'Distribution Transformers Forum' and LT CT Forum where co-ordination and co-operation is ensured."
She said that the evidence impounded includes SOPs, minutes of meeting, emails, and letters exchanged among the manufacturers, tender documents and their comparative statements. The existence of SOPs or reference thereto is found to ensure the implementation of decisions taken collectively pertaining to various economic aspects of the products by these manufacturers. The members of different fora are referred to by codes to ensure secrecy.
The enquiry also showed that impounded documents include specific 'cartel warning' to manufacturers/bidders from discos. Interestingly, a news clipping relating to amendment in the Competition Act regarding criminal punishment of cartel members was also found maintained in the impounded record.
With respect to procuring agencies, based on the impounded document, there is indication in the enquiry that discos may have engaged in anti-competitive behaviour. One instance related to discussion with manufacturers on price of one particular category of low loss transformer, Rahat added.