Tender for deep solar pumping systems: CCP acquits KP Directorate of Agri Engg in restrictive trading conditions

Competition Commission of Pakistan (CCP) has declared that Khyber Pakhtunkhwa Directorate of Agriculture Engineering (Respondent) has not been involved in restrictive trading conditions in its tender for 'Procurement and Installation of Deep Solar Pumping Systems on Agriculture Tube-wells/open-wells.'

The CCP inquiry report has observed that based on the foregoing, no prima facie violation of Sections 3 or 4 of the Competition Act is made out by the Respondent in the instant matter.

The Commission received a complaint filed by M/s Catkin Engineering Sales & Services (Pvt) Limited (Catkin or the Complainant) under Section 37(2) of the Competition Act, 2010 (the Act).

It has been alleged by the compliment that the unfair terms and conditions are alleged vis-a-vis the impugned tender. The company/firm must have registration with Khyber Pakhtunkhwa Revenue Authority (KPRA). Secondly, the company/firm must have Rs 200 million average turnover for the last three years in solar pumping systems. Thirdly, the firm should have experience of projects of similar and complex nature worth Rs10 million completed in last five years. Fourthly, the company/firm should have test bed for verification/testing of solar pumps along with all accessories as per ISO 9906 in company premises (firm must have third party certification regarding test bed arrangements).

The questions before the Inquiry Committee were whether the tender for procurement and installation of solar pumps for agriculture tube-wells in KPK violated provisions of the Act. As per the decision of the Grievance Redressal Committee, submitted by the Respondent, the concerns raised by the Complainant were satisfactorily addressed however, the Inquiry Committee deemed it appropriate to examine the matter under the relevant provisions of the Competition Act.

The alleged anti-competitive clauses of the impugned tender were examined one by one to see whether they were anti-competitive. The company/firm must have registration with KPRA: based on the findings, it appears that registration with KPRA is the same as obtaining a National Tax Number (NTN) from the Federal Board of Revenue (FBR) i.e. a person/entity does not have to be actually paying any taxes to obtain an NTN. It is also observed that registration with KPRA can be done online through its website.

Therefore, it appears that this clause does not adversely impact competition.

The company/firm must have Rs 200 million average turnover for the last three years in solar pumping systems: based on the findings, it is noted that the PEC recommendation is for the firm to maintain an average turnover over a five-year period; however, the impugned SBD requires turnover to be maintained over a three-year period which appears to be less stringent since it would be easier for a firm to maintain a certain level of sales over 3 years rather than five years. Therefore, this clause does not appear to impede competition.

The firm should have experience of projects of similar and complex nature worth Rs 10 million completed in last five years: based on the findings of paragraph 24, it is noted that the burden of proof in the instant matter rests with the Complainant who has failed to substantiate as to how the impugned clause is restrictive of competition. The Respondent's assertion that the value of the project is Rs 187.435 million whereas the impugned clause requires only Rs 10 million worth of projects shows that apparently the criterion required is not as stringent as is alleged. Therefore, the criteria do not appear to be anticompetitive.

The company/firm should have test bed for verification/testing of solar pumps along with all accessories as per ISO 9906 in company premises (firm must have third party certification regarding test bed arrangements): based on the findings of paragraph 28, it is noted that the condition of having the test bed facility on the company premises appears to be unnecessary and the Respondent has failed to provide a satisfactory answer as to why 13 marks were assigned for this requirement.

Copyright Business Recorder, 2019