Cartels are competition killers

Cartels kill competition and feed corruption. Head of FAS Department Andrey Tenishev talked about it with the listeners of the Academy of the Investigation Committee of the Russian Federation:

“In Russia anticompetitive agreements, including their most dangerous type – cartels have penetrated nearly all sectors of the economy, particularly, those of strategic importance (natural resources, construction, medicine, food products), as well as public trading, procurement by companies with state participation and public defence procurement.

A specifics of Russia is active involvement of officials in anticompetitive efforts who abuse office. It is most evident and large-scale in public procurement. Dozens of trillion Rubles are distributed annually through this system. The income unlawfully gained by cartels in this field is a corruption fueler.

The Federal Antimonopoly Service has established good cooperation mechanisms with the Investigation Committee and there are already first significant results.

Economic entities who participated in the bid-rigging cartel for allocating crab catching quotas in Primorie are held administratively liable and imposed multi-million fines. The former Head of Primorie Office of Rosrybolovstvo (Russian Federal Fisheries Agency) was held criminally liable for abuse of office, and cartel organizers – top executives of “Aquaresource-DV” Ltd., “Taifun” Ltd. and “Kometa” were arrested in absentia and international warrants are issued for their arrest. Following a lawsuit filed by the Prosecutor’s Office, the crab catching contracts concluded with the cartels participants were terminated. As a result of new competitive bidding in 2016, the proceeds to the state budget increased by 13 times.

Former Heads of the Offices of the Federal Accreditation Service in the South, North Caucasus and Crimea Federal Districts, Head of Kamensky District of the Rostov region, the former Chief Medical Officer of Khakassia Republican Hospital were sentenced to different periods of imprisonment for abuses and involvement in bid-rigging.

Large cartels are capable to eliminate competition in entire industries, as happened, for instance, with procurement of medicinal drugs and medical products.

“The Federal Antimonopoly Service exposed over 50 cartels covering thousands electronic auctions and operating in 80 subjects of the Russian Federation.  The Investigation Department of the Investigation Committee of the Russian Federation in the Samara region already opened the first criminal case upon a fact of bid-rigging for the right to carry out works on maintenance and repair of medical equipment with the original contract price over 4 billion RUB. I have no doubts that there will be new criminal cases against cartels and new sentences in the near future.”