FAS suspects violations in the course of selling “No.9 Bread-Making Plant”

FAS opened a case upon elements of violating Clause 11 of No.135-FZ Federal Law “On Protection of Competition” against “Novoe Zavidovo” Ltd., “Gradostroi-Invest” Ltd. and M. Malov who are suspected of bid-rigging in the course of selling 100% shares of “No.9 Bread-Making Plant” OJSC.

Rosimuschestvo organized the procedure on 14 October 2015. The original share price was 432,998,000 RUB, the minimum price – 216,499,000 RUB. Four persons filed bids, including M. Malov, “Gradostroi-Invest” Ltd. and “Novoe Zavidovo” Ltd.

In three minutes after opening the trading, the moderator announced the price offered by Malov that matched the minimum price: 216,499,000 RUB. Then it was announced that the shares of the bread-making plant were sold to him. Other bidders did not submit price offers.

In the opinion of the antimonopoly body there was no competition in the course of trading: that was the only price offer that matched the minimum shares prices. FAS believes that there was collusion among bidders to make sure that Mr. Malov would win at the lowest lot price.

“State property privatization on the basis of bidding should be competitive. FAS watches carefully whether the law in this field is observed”, pointed out the Head of FAS Anti-Cartel Department, Andrey Tenishev. “As a result of big-rigging for privatizing state property the government loses money, short-received as a result of absence of competition and filing the best price offers by the bidders”.

Reference:

Shares of “No.9 Bread-Making Plant” OJSC were sold under No. 178-FZ Federal Law “On Privatizing State and Municipal Property” of 21 December 2001 (particularly, under Article 23 “Sales of state and municipal property through public offers”) and the Regulations on selling state and municipal property through public offers, approved by No. 549 Decree of the Government of the Russian Federation of 22 July 2002;

If the bidder’s guilt is proven, legal entities should be held administratively liable under Article 14.32 of the Code of the Russian Federation on Administrative Violations “Concluding a competition-restricting agreement, exercising competition-restricting concerted actions, coordinating economic activity”: from one tenth to the half of the original costs of the subject of competitive bidding;

Physical persons and officials can be held liable under Article 178 of the Criminal Code of the Russian Federation – “Restricting Competition”.