Mukhamed Khamukov: FAS applies proactive methods of cartel exposure

New tools in the work of the Antimonopoly Service enable to form solid evidence base

On the final day of the workshop on “Antimonopoly regulation and countering cartels in retail” at FAS Centre for Education and Methodics in Kazan, Deputy Head of FAS Anti-Cartel Department, Mukhamed Khamukov discussed use of economic, statistical and mathematical methods in exposing anticompetitive agreements.

“First, cartel signs are verified. Next, the state of competition is analysed under the frame of investigating a case on violating the antimonopoly law. Recently such an analysis has become mandatory. The final stage is proving a cartel”, pointed out FAS representative.

Mukhamed Khamukov expressed concerns that cartels, in view of their illegality, cannot be a subject of a full-scale economic-and-statistical survey in the real time mode. “We have to perform such an analysis of anticompetitive agreements post factum based on decisions of antimonopoly bodies and court rulings. Even in those cases, however, it is not possible to talk about big sets of data”, reported Deputy Head of FAS Department.

The officer of the antimonopoly authority outlined the main cartel characteristics, seen on the markets and in the course of competitive bidding.

Mukhamed Khamukov emphasized to representatives of foreign competition authorities and FAS regional bodies that signs do not guarantee that there is a cartel. He added: "Single direct evidence is always better than numerous indirect ones”.

“Also, economic-and-statistical approaches allow us to form and confirm a hypothesis whether there is collusion”, said Mukhamed Khamukov. “Thus, proving a cartel we try to give a clear conclusion on every suspicion about presence or absence of an anticompetitive agreement”.

“It should be noted that we studied, how procurement procedures happen where cartel members participate, and when an independent company join procurement. All biddings with involvement of a cartel member typically end with a reduction of the original maximum price by 0.5%, that is, practically no reduction”, continued Mukhamed Khamukov. “When bona fide bidders are involved, reduction can reach up to 45%".

“We asked ourselves a question: can contracts be executed with high quality against such a  reduction?”, continued FAS representative. “Our study proved that all contracts were executed fairly, and the ordering parties did not have any issues with the contractors who won tenders with such a reduction from the original maximum price”.

The chief economist of Belgian competition authority, Alexis Walckiers, informed about a new legal term – “hub-and-spoke” cartels”. An anticompetitive agreement between goods suppliers or service providers is implemented through exchanging information between two market participants via an intermediary. Then the intermediary passes the information to another market participant and so on. Alexis Walckiers stated that in a recent case, Belgian competition authority many similar cases. He reported that similar cartels exist in Austria.

Summing up the workshop, Director of FAS Centre for Education and Methodics, Lenar Shafigullin, awarded Certificates to the participants and pointed out at the importance of such workshops, which allow sharing experience in the field of combating cartels and unfair practices of retail chains in order to further employ it in the work of competition authorities.