FAS exposed the most wide-scale cartel in Russia

90 legal entities are found guilty of taking part in a cartel of an unprecedented scope.

FAS made a decision on a case opened for violating Clause 2 Part 1 Article 11 of the Federal Law “On Protection of Competition” (cartel, bid-rigging) in the course of competitive bidding for supplying military uniforms and gear for the needs of the Ministry of Interior, the Federal Security Service and the Federal Customs Service.  

118 legal entities were brought in the case as respondents. FAS established that cartel participants were involved in 18 open electronic auctions for the total sum exceeding 3.5 billion RUB.

90 companies were found guilty. Some cartel participants simultaneously managed 3-4 legal entities and put them at auctions to create a veneer of competition.

Price bids were often filed by a single company in spite of 11 to 40 bidders that took part in an auction. Other bidders refused to compete to ensure that the “right” bidder would win and prices were maintained.

“Cartel members devised their own “quota” system; when quotas were estimated in view of the original contract price pro rata to the number of auction bidders.  “Quotas” could be obtained, changed or accumulated. When a particular amount of “quotas” was accumulated, and arrangements with other cartel members were reached, one of the cartel participants became a “contract holder” for the auction”, pointed out the Head of FAS Anti-Cartel Department, Andrey Tenishev.  

Several respondents that approached FAS under the frame of the leniency programme made confessions about forming the cartel and participating in it.

A number of cartel participants committed a repeated violation: in 2012 some of them were already held liable for a similar violation. At that time the antimonopoly body exposed and proved participation of more than 30 legal entities in a cartel. Courts supported FAS decision. Cartel members paid big administrative fines.  

Stats-Secretary, Deputy Head of the Federal Antimonopoly Service, Andrey Tsarikovsky, commented: “Cartels in the field of procurement for the needs of the law enforcement agencies not only undermine the fundamental principles of competition but can also threaten national security”.

The decision and case materials will be forwarded to the Main Department for Economic Security and Countering Corruption of the Ministry of Interior to open a criminal case under Articles 178 and 210 of the Criminal Code of the Russian Federation. The decision will be also forwarded to the Federal Security Service and the Federal Customs Service for awareness.