MUKHAMED KHAMUKOV: CARTELS ARE PROVED BY A TOTALITY OF DIRECT AND INDIRECT EVIDENCE

Cartels cannot be an object of full-scale economic-and-statistical studies on the real-time basis due to their illicitness and high latency, said Deputy Head of the Anti-Cartel Department of the Federal Antimonopoly Service (FAS Russia), Mukhamed Khamukov on 7 February 2020 at the “Legal and economic issues of analyzing the state of competition on the markets” Research-to-Practice Conference in St Petersburg

Economic and mathematical evaluations of cartels have to be done post factum, based on decisions of the antimonopoly bodies or Court rulings. Even in those cases there is no question about big data.

Economic tools can be used at all stages of cartel investigations. “To this end, it is enough for us to de-fragment the process of proof and see, how and where such tools can be used. At the same time it is important not to confuse economic analysis with formalized analysis of the state of competition under No. 220 Order. These are different studies, they only add each other”.

The speaker demonstrated possibilities of forecasting cartels with employment of economic, statistical, and mathematical tools and presented an author’s method of exposing cartels on markets.

In particular, 15 rather stable parameters can be used for the purposes of analysis, including market trends, the dynamics of changing companies’ market shares, jumps in income, the number of sellers and buyers on markets, the level of concentration, market entry barriers, etc. Other parameters were selected upon analyzing over 600 cartel decisions in the past five years.

Mukhamed Khamukov outlined three approaches, each of which has its own specifics of using economic tools in the course of investigating cartel cases:

1. Cartels on goods markets that do not necessarily lead to the consequences prohibited by the law.

“To prove them, predominantly direct evidence or their totalities are necessary that clearly show what is the subject of an particular agreement. The role of economic methods here is reduced to the minimum – to prove that an agreement has not resulted in prohibited consequences”, informed Mukhamed Khamukov.

2. Cartels that lead to the consequences prohibited by the law.

“Economic analysis here is applied to prove whether there are implications in the form of maintaining prices, dividing the market or terminating production of goods”, informed Deputy Head of FAS Anti-Cartel Department.

3. Bid-rigging cartels.

“Bid-rigging collusions can be proved also with sufficient totalities of indirect evidence. Economic analysis can be used as indirect evidence, refuting, for example, the arguments of defendants that reducing prices at tenders and auctions is impossible”, explained Mukhamed Khamukov.

He emphasized that economic, statistical or mathematical analysis can demonstrate that such market environment is impossible in the normal market conditions. Such analysis can also prove or refute possible harmful consequences of agreements, for example, fixing prices or dividing the market.

Decisions on holding liable for creating cartels can be made on the basis of a totality of direct and (or) indirect evidence, particularly, obtained through  economic, statistical or mathematical analysis of circumstances.

Mukhamed Khamukovshared FAS experience in investigating some cases and applying economic analysis to prove cartels.

He also drew attention of the Conference attendees to the risks of using the findings, including, first of all, equivocal interpretations.

“At the same time, data from economic, statistical or mathematical studies can be interpreted as evidence of a collusion between companies, parallel conduct, but it also can be a coincidence. Therefore, conclusions on violating the antimonopoly law should be founded on direct evidence or the necessary totality of indirect evidence, which can contain data obtained through these methods”, concluded Deputy Head of FAS Anti-Cartel Department.

Background:

The event was organized by FAS; “Yurist” Publishing Group; the Competition Law Department at Kutafin Moscow State Law Academy; the Department of Legal Protection of Economic Competition Law, St Petersburg State University; St Petersburg State University of Economics.