The Competition Commission of Pakistan (CCP) has issued show-cause notices to the National Transmission and Dispatch Company (NTDC), Lahore Electric Supply Company (LESCO), Faisalabad Electric Supply Company (FESCO) and Multan Electric Power Company (MEPCO) for abuse of dominance and collusion in the procurement of various categories of auto-power transformers.

Their action is in violation of Section 3 and Section 4 of the Competition Act, 2010, said a press release issued here on Monday.The CCP received a complaint from”7Aays Corporation” wherein it was alleged that the NTDC, LESCO, FESCO, and MEPCO are abusing their dominance in the market of power/auto transformers by allowing monopoly to MR-Germany made on-load tap-changers (OLTCs) although there are other manufacturers as well.The CCP conducted an enquiry in the matter.

In terms of the enquiry report, it appears that the NTDC, LESCO, FESCO, and MEPCO are imposing an unfair trading condition on the suppliers of transformers by unnecessarily referring to a particular brand i.e. MR Germany in the bidding documents (despite the fact that a complete International Electro technical Commission (IEC) specification exist for the same), by insisting that the bidders supply transformers equipped with MR Germany’s OLTC, and by rejecting the bids of the suppliers of transformers equipped with any other brand of OLTC.

Due to this unfair trading 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) & (g) of the Act.

The show cause notices further state that NTDC, by issuing the recommendation to purchase only MR Germany’s OLTC equipped transformers, and FESCO, LESCO and MEPCO, by accepting this recommendation, have prima facie 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.

It would be pertinent to mention that curbing anti-competitive practices in public procurement is one of CCP’s priority areas of enforcement. CCP has previously prosecuted several instances of anti-competitive behavior in the power and energy sector.These undertakings have been asked to submit written replies to the show cause notices and to appear before CCP at the hearing in the matter fixed for 4 April 2013.