OFAS exposed a cartel agreement in public procurement of medicinal drugs

Moscow OFAS exposed a cartel in more than 100 auctions fort the total amount over 414 million RUB

In January 2017, the Office of the Federal Antimonopoly service in Moscow recognized a cartel formed by “BSS” Ltd. and “AMT” Ltd.  at public auctions for supplying medicinal drugs for the needs of various public institutions in 11 constituent territories of the Russian Federation. OFAS found that the companies violated Clause 2 Part 1 Article 11 of the Federal Law “On Protection of Competition”.

During the bidding, “BSS” Ltd. and “AMT” Ltd. acted in the interests if each other. An oral cartel agreement between the companies resulted in maintaining prices throughout 107 auctions.

It enabled “BSS” Ltd. to win 95 auctions with 0% - 1% reduction of the initial price and 3 auctions – with 1.5% - 5% reduction. The total auction sum exceeded 403 million RUB.

In its turn, “AMT” Ltd. won 7 auctions with 0.5% - 1% reduction from the initial price. In two other auctions the original (maximum) prices were reduced by 3% and 5.5% accordingly. The total auction sum exceeded 6 million RUB.

The wide range of medicines procured by public institutions included vital and essential drugs, particularly, insulin, as well as medicines for treating cancer, diabetes and various antibiotics.

As a result, due to absence of competitive rivalry between potential suppliers, public medical institutions were forced to procure medicinal drugs at excessive prices.

Materials are being prepared to transfer to the law enforcement bodies to open a criminal case under Article 178 of the Criminal Code of the Russian Federation.

In the near future OFAS shall open an administrative case against “BSS” Ltd. and “AMT” Ltd. Under Part 1 Article 14.32 of the Code of the Russian Federation on Administrative Violations, anticompetitive agreements are punishable with administrative fines: for legal entities - 10% - 50% from the original minimum value of the auction subject.