Karelia OFAS exposed cartels between bidders of auctions for supplying medical equipment and medicines

Karelia OFAS found that “Rosmedkomplekt” Ltd., “Market Pharm” Ltd., “Etalon Trading” Ltd. and “PIK” Ltd. violated Clause 2 Part 1 Article 11 of the Federal Law “On Protection of Competition”. The companies concluded a competition-restricting agreement to maintain the initial (maximum) price level at auctions.

The case was opened in September 2015 upon analyzing documents and data provided by e-trading sites following OFAS requests.

Investigating the case, OFAS established that in 2013 - 2015 the above entities took part in 38 open e-auctions for supplying medical equipment and drugs and repeatedly formed cartels: concluding anticompetitive agreements and further participating in them. The companies coordinated and agreed upon their actions in advance, informed each about their strategies and pursued a common action plans at the auctions.

The government customers were the Ministry of the Republic of Karelia for Health Care and Social development and some regional and federal medical institutions.

The total sum of initial (maximum) contract prices reached over 85 million RUB.

Commenting the case, the Head of Karelia OFAS Artur Pryakhin said: “In our opinion, the objective of cartel participants was maintaining a particular price level at the auctions to conclude the government contracts at the most beneficial prices. In a vast majority of the auctions the price was reduced to a bare minimum – 0.5-2.5% of the initial (maximum) contract prices”.

The totality of evidence collected during the investigation leads to the conclusion that the final outcome of the 38 auctions in question would not be possible without Rosmedkomplekt” Ltd., “Market Pharm” Ltd., “Etalon Trading” Ltd. and “PIK” Ltd. being fully informed about the line of conduct and intentions of each bidder.

The case materials are now being processed to open an administrative case under Article 14.32 of the Code on Administrative Violations.

Reference:

Clause 2 Part 1 Article 11 of the Federal Law “On Protection of Competition”: agreements between competitors – economic entities selling goods on the same market are recognized as cartels and are prohibited if such agreements lead or can lead to increasing, decreasing or maintaining prices in the course of competitive bidding.

Anticompetitive agreements are the most serious violations of the antimonopoly law, most frequently in the form of cartels or trusts.

Cartels are punishable under Part 1 Article 14.32 of the Code on Administrative Violations: a “turnover” fine or a fine up to 50% of the costs of the subjects of competitive bidding.

Under 1 Article178 of the Criminal Code competition restriction by concluding c competition-restricting agreement between competitors (Cartel) prohibited by the  antimonopoly law of the Russian Federation, if such an act cause heavy damage to citizens, organizations or the state, or resulted in gain ling income in a large-scale, is punished by a fine form 300,000 RUB to 500,000 RUB, or in the size of the wage or other income of the violator for the period from 1 to 2 years, or community service for up to three years without the right to hold particular positions or be involved in particular activities for up to 1 year or without such a punishment, or imprisonment for up to three years without the right to hold particular positions or be involved in particular activities for up to 1 year or without such a punishment.