FAS opened a case upon signs of a bid-rigging cartel for supplies of food products for the needs of military training schools

The Federal Antimonopoly Service (FAS Russia) opened a case against several economic entities (1) upon signs of a bid-rigging cartel for supplies of food products for the needs of military training schools and special educational institutions under public defence procurement. The case was opened upon materials obtained by FAS in the course of unscheduled field inspections.

Having analyzed the obtained information, FAS established that to be awarded the government contracts at the highest possible price, the above economic entities reached an anticompetitive agreement. The cartel participants imitated competition among them and applied the “ramming” model at the auctions (2), as a result of which bona fide bidders refused to continue filing their price offers. The antimonopoly body also established that the cartel participants operated from the same address, used the same IP-address to file their bids and price offers, and the same persons prepared the first parts of the bids for several parties to the agreement.  

The actions of the legal entity and entrepreneurs have elements of violating Clause 2 Part 1 Article 11 of the Federal Law “On Protection of Competition” (concluding an anticompetitive agreement that led or could have led to increasing, reducing or maintaining prices during auctions).

“Unscheduled inspections remain one of the most efficient methods of exposing anticompetitive agreements. Cartel participants are aware of this and typically they strongly oppose the inspectors. Practice shows, however, that such conduct pattern does not help them to conceal the facts and escape liability for the committed violations”, emphasized the Head of FAS Department for Control and Inspection in Public Defence Procurement, Konstantin Alyoshin.

References:

1. 1.     “Tsentr-Invest” Ltd. and individual entrepreneurs Burykina, Serova, Mal’chikhina, Sitkina, Grinyova and Panteleeva.
2. 2.     “Ramming” - a conduct pattern at auctions applied by unfair bidders to eliminate competition and ensure that one of the cartel participants would win. Within a short period of time two of the cartel participants take turns to reduce the lot price significantly until they see that bona fide auction bidders, misled by this conduct strategy of their rivals, refuse to continue to compete. Then at the last second of the auction the third cartel participant offer its price slightly lower that the price offered by the bona fide auction bidders. Nowadays the Federal Antimonopoly Service and trading sites are able to promptly expose “ramming”.