Kemerovo OFAS exposed a cartel at a medical procurement auction

“PHARGO” Ltd. and “Pharmacon” JSC violated Clause 2 Part 1 Article 11 of the Federal Law “On Protection of Competition”

The conclusion was reached by the Commission of Kemerovo OFAS having investigated a case on bid-rigging at drug procurement auction.

On 28 March, the Commission Chair, Head of OFAS Natalia Kukharskaya announced the resolute part of the decision regarding the two drug suppliers. It was ascertained that the companies entered into an oral agreement taking part in procurement for medical institutions in the Kemerovo region.

OFAS exposed 69 e-auctions for supplying medicinal drug and medical products in January 2015 - February 2016. “PHARGO” Ltd. and “Pharmacon” JSC used the following model of conduct: in the absence of other bidders one of the companies put a price offer and the second would decrease its price by 1% and become the winner. Or the second company did not make any price bids and the first one would win with only 0.5 % price reduction. Bothe participants file the auction bids and price offers form the same IP-addresses.

The total amount of the original maximum contract prices exceeded 56.5 million RUB.

“Kemerovo OFAS has ten working days to draw up the full decision. Then they will be forwarded to the respondents. Certainly, the companies may appeal the conclusions of the antimonopoly body at Court. Right now our goal is to hold the violators administratively liable”, specified the Commission Chair Natalia Kukharskaya.

Quoting a press-release, issued by Kemerovo OFAS, each economic entity can be fined from one tenth to one half of their initial value of the auction subject for breaching Article 11 of the Federal Law “On Protection of Competition”.

Under Clause 2 Part 1 Article 11 of the Federal Law “On Protection of Competition” agreements between competitors – economic entities are classified as cartels and prohibited <…>, if such agreements lead or can lead to increasing, decreasing or maintaining prices at auctions.

In accord with Article 14.32 of the Code of the Russian Federation on Administrative Violations, concluding an agreements by an economic entities which is prohibited by the antimonopoly law of the Russian Federation as well as participating in such an agreement, is punishable by an administrative fine upon officials: from 20,000 to 50,000 RUB or disqualification for up to three years; upon legal entities - from one tenth to one half of their initial value of the auction subject but no more than one twenty fifth of the overall sum of the income of the violator from implementing the agreement.