CASSATION COURT SUPPORTED FAS DECISION ON “EUROSERVICE FIRM” AND “MEGA PHARMA”

On 21 January, the Arbitration Court of the Moscow District dismissed a claim of “Euroservice Firm” CJSC and “Mega Pharma” Ltd. on invalidating the FAS decisions that the companies had violated the Federal Law “On Protection of Competition”*

In February 2018, the FAS Commission recognized that “Euroservice Firm” CJSC and “Mega Pharma” Ltd. had formed a cartel participating in 331 auctions for supplying medicinal drugs and medical products for over 800 m RUB.

The cartel participants disagreed with the decision and justified their position stating that by concluding a trust agreement for shareholdings in charter capital, they form a controllable group of persons. Under the agreement, 60% of shareholdings of the charter capital of “Mega Pharma” Ltd. were transferred into trust management of “Euroservice Firm” CJSC. In the opinion of cartel members, it established control of one company over another, which excludes qualification under Clause 2 Part 1 Article 11 of the Federal Law “On Protection of Competition”.

In the meantime, FAS stated that transfer of shares of the charter capital, not included in the Unified State Register of Legal Entities, does not incur transfer of  ownership and establishing control within the meaning of Parts 7, 8 Article 11 of the Federal Law “On Protection of Competition”.

Appeal Court and Cassation Court agreed with the FAS position, thus, having created a positive judicial practice with regard to inadmissibility of such actions of entities at auctions if there is a trust agreement.

The ruling of the Arbitration Court of the Moscow District confirmed not only the fact of collusion between “Euroservice Firm” CJSC and “Mega Pharma” Ltd., but also the grounds for imposing administrative fines upon defendants - in total exceeding 280 m RUB.

Head of FAS Anti-Cartel Department, Andrey Tenishev commented: “The case against “Euroservice Firm” CJSC and “Mega Pharma” Ltd. has became a real precedent because two instances – Appeal Court and Cassation Court supported the FAS position in terms of the trust agreement that has been causing contradictions between judges of various Courts of Law for the past 2-3 years”.

Deputy Head of FAS Anti-Cartel Department, Ekaterina Konopkina explained: “For already the third year in a row FAS has been actively countering cartels on the pharmaceutical market, which is one of the most socially essential for Russia. That is why winning at Courts in the case confirms efficiency of FAS efforts in this area”.