CCP Issues Show Cause Notices to Steel Cartel for Anti-Competitive Practice

The Competition Commission of Pakistan (CCP) has issued show cause notices to ten steel structure suppliers involved in procurement tenders floated by various Distribution Companies (DISCOs) for the alleged collusive bidding a, prima facie, violation of Section 4 of the Competition Act, 2010. The ten undertakings include M/s. AM Associates (Pvt) Ltd, M/s. Ajmer Engineering Electric Works (Pvt) Ltd, M/s. Khalifa Sons (Pvt) Ltd, M/s. Siddique Sons Engineering (Pvt) Ltd, M/s. Vision Engineering (Pvt) Ltd, M/s. AW Engineering (Pvt) Ltd, M/s. FN Power (Pvt) Ltd, M/s. Gujranwala Cable (Pvt) Ltd, M/s. AH Associates (Pvt) Ltd, and M/s. Process Dynamics (Pvt) Ltd. The CCP took suo motu notice and initiated an inquiry under Section 37(1) of the Competition Act, 2010. During the inquiry, search and inspections were also conducted at the premises of three Lahore-based companies, where critical documents and records were impounded for further examination. During the inquiry, bidding data from 2015 to 2022, obtained from all DISCOs, particularly regarding the procurement of transmission towers, was analyzed. Economic evidence revealed a consistent pattern of bidding where these companies appeared to have submitted identical or near-identical rates, with differences as small as 0.001% to 1 percent Out of 357 tenders evaluated, 135 showed signs of collusion, including identical rates, division of quantities, sole participation, and bid rotation. Notably, M/s. AM Associates, M/s. Ajmer Engineering, and M/s. Khalifa Sons were found to have engaged in collective decision-making regarding the rates and quantities quoted, with the apparent aim of manipulating tender outcomes for mutual benefit. The inquiry report found that this collusive behavior included mutual agreements on the number of firms participating in tenders, predetermined price-fixing, and strategic non-participation to ensure that the preselected firm would win. Such practices constitute a prima facie, violation of Section 4(2)(a)(b)(c)(e) of the Competition Act, 2010. The CCP’s inquiry further concluded that the anti-competitive behavior of these ten companies extends beyond provincial boundaries, affecting market dynamics across Pakistan.