LEVEL OF INTERACTION BETWEEN FAS AND ALL-RUSSIA PEOPLE’S FRONT INCREASED SIGNIFICANTLY

Open discussion between the All-Russia People’s Front and the Federal Antimonopoly Service at the XV “Public Procurement” National Forum and Exhibition focused on joint investigation of cartels

The event took place on 4 April 2019. Stats-Secretary, Deputy Head of FAS Andrey Tsarikovskiy opened the discussion.

He pointed out that the All-Russia People’s Front is “out nearest allies, we have been working together since long, and plenty of cartels are exposed upon your preliminary investigations”.

“Earlier fines used to be imposed upon those cases, now the first criminal cases are already opened following your signals”, added Deputy Head of FAS.

He also asked the activists of the “For Fair Procurement” project of the All-Russia People’s Front to join monitoring over 12 national projects: “I would like very much to draw your attention: new national projects are adopted. Their funding has started, and as always around a good thing, a lot of swindlers can emerge around it. This should be traced”.

At the end of his welcoming address, Andrey Tsarikovskiy awarded a co-chair of the regional branch of the All-Russia People’s Front in the Samara region, an activist of the “For Fair Procurement” project, Vadim Nuzhdin, a medal of the Federal Antimonopoly Service “For competition protection” for significant contribution and active work on exposing anticompetitive agreements.

Head of FAS Anti-Cartel Department, Andrey Tenishev, continued the dialogue with the activists.

He pointed out that several largest cartel cases opened upon the signals from the All-Russia People’s Front means hundreds and billions of Rubles.

“Let’s take the Samara region: a case on an anticompetitive agreement in procurement of drugs and medical products. “NOVOPHARM” OJSC has just paid a full fine – 3.5 million RUB within the statutory period. Earlier “PHARM-SKD” Ltd. also paid a fine imposed upon it a second cartel participant – more than 85 million RUB. They paid the fines that they appealed, went through judicial proceedings. The total fines exceeded 90 million RUB. These are normal antimonopoly fines for a cartel”, said Andrey Tenishev.

He added that 85% of all cartels are bid-rigging by their nature. The state does not get any saving that typically reaches 20-22% at competitive tenders.

“If there is collusion with an ordering party, the question concerns not only the loss of expected gain of the state but also competition and the product quality suffer”, continued Head of FAS Anti-Cartel Department. “An example is an Ulyanovsk cartel on supplying food products to social facilities. The results of the sectoral cartelization: poisoning of schoolchildren, cadets of Ulyanovsk Suvorov military school. Usually, holding a gun to the head of a government customer by a cartel leads to quality deterioration”.

Discussing another type of anticompetitive agreement – collusion with the authorities, Andrey Tenishev pointed out: “All bids are rejected and the company that remains is not the best one but the one loyal to the authorities. An example – a Chelyabinsk case: “Yuzhuralmost” that in 2014 had no single contract for road construction and re-construction in the region, and at the end of 2018 – already 98% of such contracts.  They used to say that the single supplier is good but the quality of roads in the region is awful. Business is destroyed, roads are crushed, and the Minister of Road Construction and the Governor are fired”.

The speaker also described a scheme on overrating the initial maximum contract price. Such cases are investigated, for instance, in medication and medical equipment supplies in Dagestan, Khakassia and Yakutia. “It created shortage in hospitals: increased the price fivefold – the state purchased five times less”, added Head of FAS Anti-Cartel Department. He emphasized that any cartel excess profit is a fertile ground for corruption.

He also informed that the law enforcement bodies began to open considerably more cases on restricted competition (Article 178 of the Criminal Code).

“The total number of cases opened by FAS remained the same but the scale has changed dramatically: we began to “dig” significantly deeper”, summed up Andrey Tenishev.