ISLAMABAD
The Competition Commission of Pakistan (CCP) has issued show cause notices to 10 jute mills, all members of Pakistan Jute Mills Association (PJMA), for alleged cartelisation in supply of gunny bags to various government departments, including Pakistan Agriculture Storage and Supply Corporation Limited (PASSCO), which is a violation of Section 4 of the Competition Act, 2010.
In order to detect cases of collusive tendering or bidding in public procurement, CCP contacted various government agencies including PASSCO for provision of information regarding procurement during the last three years. Data disclosed by PASSCO raised suspicions of bid rigging, a type of collusive behavior among jute manufacturing mills, prohibited under Section 4 (2) (e) of the Act.
The Commission decided to initiate a formal enquiry under Section 37(1) of Act and appointed an enquiry committee comprising of Cartel, Monoplies and Trade Abuses Director, Shaista Bano and Cartels, Monopolies and Trade Abuses Joint Director, Nadia Nabi.
Based on the available information and recommendation of the Enquiry Committee, the Commission deemed it appropriate to search and inspect the office of PJMA, located in Lahore. Section 34 allows collection of any evidence regarding suspected violations of section 4 of the Act. The duly authorised officers of CCP conducted the search on July 8, 2010 and impounded valuable materials and documents from the offices of the Jute Mills Association.
The impounded documents provide information of collusive activities happening in jute mills. The enquiry committee identified that prima facie, cartelisation exists in the market of jute bags which is a violation of Section 4(1) read with 4(2) (a), (b) & (e) of the Act.
It seems that members of PJMA have deliberately devised a mechanism to allocate quota for jute bags tenders invited by different government departments and have, prima facie, violated Section 4(1) read with Section 4(2) (b) and (e) of the Act.
Members of PJMA have mutually discussed the price of jute bags and appear to have a pricing strategy before and after the opening of tenders, thereby, prima facie, fixing the price of jute bags in violation of Section 4(1) read with Section 4(2) (a) of the Act. Consequently, show cause notices have been issued to these jute mills and the case has been referred for hearing, which is to take place on 6 November 2010.
Jute mills which have been issued show cause notice include: Crescent Jute Products Ltd., Amin Fabrics Ltd., Indus Jute Mills Ltd., Habib Jute Mills Ltd., Thal Ltd., Sargodha Jute Mills Ltd., Suhail Jute Mills Ltd., White Pearl Jute Mills Ltd., Pioneer Jute Mills Ltd. and Madina Jute Mills Ltd.
