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National Contact Point final statement: Tower Solutions – ETCBL 02/2022

Summary

  1. On March 1, 2020, the Canada’s National Contact Point (NCP) received a Request for Review (RfR) from ETCBL (Notifier), a Bangladesh company, alleging that Canadian company Tower Solutions (Respondent) violated Chapters III and X of the Guidelines.
  2. As per its procedures, the NCP Secretariat and the NCP working group conducted an Initial Assessment, which entailed reviewing all the documentation provided by the Notifier and the Respondent and making a recommendation to the NCP Committee.
  3. Based on the working group recommendation, the NCP Committee concluded that the allegations of disclosure and competition merited further examination and offered its Good Offices.
  4. Mediation sessions were held on July 26, 2021 and November 19, 2021. While the dialogue did not result in a mutually agreeable solution between parties per se, the process generated concrete positive outcomes in the form of recommendations that are detailed in this Final Statement.

The Parties

  1. The RfR was filed by ETCBL, a Bangladesh-based engineering and trading company that provides design services to international turnkey contractors and represents several foreign companies in the power sector in Bangladesh. The RfR concerned the actions of Tower Solutions (Respondent), a Canadian company specializing in Transmission Modular Restoration Towers. The Company is federally incorporated with its headquarters located in Markham, Ontario.

The Request for Review

  1. The Notifier made 2 specific allegations, which can be summarized as follows:
    • Under Chapter III (Disclosure): allegation that Tower Solutions failed to disclose complete and accurate information about its concurrent business dealings with another local representative. ETCBL alleged that Tower Solutions deliberately concealed the fact that it was also dealing with another local agent while using ETCBL’s technical expertise to secure the project without providing the corresponding compensation.
    • Under Chapter X (Competition): allegation that Tower Solutions triggered a conflict of interest by deliberately engaging another agent that represented a competing bidder, in order to distort and monopolize part of the market through price fixing.
  2. The Notifier sought three (3) specific remedies:
    • That the NCP provide mediation between the parties, so that this situation not be repeated in the future.
    • Financial compensation from the Company in the amount of USD $100,000, representing the Notifier’s alleged financial losses and loss of credibility.
    • That the Company cease to supply their product to the Bangladesh market in the future.
  3. The Respondent confirmed the Notifier offered to represent them in early 2019, at which time they asked for background information on ETCBL before committing to engaging them as their local agent. According to the Respondent, the information that ETCBL provided was vague and did not inspire confidence.
  4. The Respondent noted that the first call for bids was cancelled because the company in charge of the process was under investigation by the Bangladesh government for corruption. At this point, the Respondent decided to part ways with the Notifier and chose to work with another agent for the second call for bids; the Respondent won the second call for bids.
  5. The Respondent refuted the Notifier’s assertion that they contributed to the Company’s success in Bangladesh as they did not work with the Notifier during the second call for bids noting that they changed agents before the second call for bids and before any purchase order was finalized. The Respondent therefore refused to pay any compensation.
  6. The Respondent disputed the allegation that the other agent was representing another company participating in the same call for bids because the Bangladesh Government Utility company would not have allowed this.
  7. The Respondent alleged that the Notifier also disclosed the price levels of competitors, which they viewed as inappropriate. The Respondent maintains that they requested a meeting to help resolve the situation, but that the meeting never took place. A breakdown in communication ensued which prompted Tower Solutions to cease working with ETCBL.

The initial assessment

  1. It is worth recalling that an NCP initial assessment is not a determination of whether or not the corporate behaviour or actions in question were consistent with observance of the OECD Guidelines, although the NCP can make such a determination at its discretion during an NCP process. The initial assessment is an indication of whether the NCP considers that an NCP-led dialogue between parties could be useful to resolve disputes related to the issues raised.
  2. During the Initial Assessment, both the Notifier and the Respondent were given the opportunity to provide clarifications and supporting documentation.
  3. The initial assessment evaluated whether the issues raised were bona fide and relevant to the implementation of the Guidelines, taking into account the criteria listed in the NCP Procedures Guide and the OECD Procedural Guidance. These criteria are cumulative, meaning that if the case fails to meet one or more criteria, it is not accepted:
    1. the identity of the party concerned and its interest in the matter;
    2. whether the issues are material and substantiated;
    3. whether there seems to be a link between the enterprise’s activities and the issue raised in the specific instance
    4. the relevance of applicable law and procedures, including court rulings
    5. how similar issues have been, or are being, treated in other domestic or international proceedings; and,
    6. whether the consideration of the specific issue would contribute to the purposes and effectiveness of the Guidelines.
  4. The Canadian NCP Committee came to the decision to provide its Good Offices because the case met the 6 criteria enumerated above, including furthering the objectives of the Guidelines. It was found that the parties could indeed benefit from a mediation but noted that, as the NCP is a non-judicial grievance mechanism, any legal questions would need to be addressed in the appropriate legal forum.

The facilitated dialogue

  1. Mediation sessions were held on July 26, 2021 and November 19, 2021. While the dialogue did not result in a mutually agreeable solution between parties per se, the process generated concrete positive outcomes in the form of recommendations that are detailed below.
  2. The Notifier noted that while it is not current practice to sign representation agreements in Bangladesh, they recognised that officialising business associations at an early stage via a contract can avoid misunderstandings. In this particular case, confusion stemmed around when the business relationship ended, and what had been done, or not, to communicate the termination of the business relationship.
  3. The Respondent affirmed that in offering the Notifier the opportunity to work with the other agent on the second bid, this offer further muddied the Notifier’s understanding that their original business relationship was terminated.

Recommendations

  1. The NCP encourages the implementation of the Guidelines as part of the Respondent’s business practice throughout its various activities and operations. The Guidelines recognise that its recommendations on disclosure are not expected to place unreasonable administrative burdens on enterprises but, at the same time, they encourage the adoption of communication practices on a broad set of topics. In relation to this specific instance, we encourage the Respondent to proactively disclose their information in relation to their business relations to subcontractors, suppliers and partners so as to avoid confusion.
  2. The NCP notes that at no point did the Respondent or the Notifier sign a contract to formalize their business relationship. The NCP encourages the Notifier to adopt business practices, such as signing contracts that clearly outline the responsibilities and deliverables for all parties, consistent, not only with the Bangladesh law, but also with standards and practices internationally recognized, especially when dealing with foreign companies.

Conclusion

  1. Though no agreement was reached on remedies, the NCP concludes that the mediation was successful because it facilitated a constructive exchange and allowed the identification of best practices around the implementation of the OECD Guidelines, more specifically in relation to Chapters III and X.
  2. The NCP thanks the parties for their collaboration during this process and encourages the parties to take action on the recommendations.

Annex A:

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