SECURITY COMPANIES IN THE MOSCOW REGION ARE SUSPECTED OF A CARTEL FOR 1 BILLION RUB

The cartel members harmed the regional budget significantly, which is especially bad in the course of the pandemic since the assets saved in case of competitive bidding could have been directed to fight COVID-19

Moscow Regional OFAS exposed elements of a bid-rigging cartel (Part 1 Article 11 of the Federal Law “On Protection of Competition”) for protection of medical facilities and property in the region.

To maintain prices at tenders, the bidders – private security companies – refused to compete and used common infrastructure to file price bids with an insignificant reduction of the initial maximum contract prices from 0.1 % to 4 %.

The total sum of the contracts concluded by the cartel reached nearly 1 billion RUB.

Head of FAS Anti-Cartel Department, Andrey Tenishev emphasized: “The cartel members not only have seriously harmed the regional budget but have also indirectly damaged the population of the Moscow region. Today the assets saved as a result of competitive bidding could have been directed to fight the consequences of the pandemic but the money are accumulated in the pockets of the thugs that formed the bid-rigging cartel. Such actions will not remain unpunished. FAS is ascertaining all circumstances of their unlawful actions”.

“Countering and suppressing such agreements for protection of medical and other facilities is an essential area of the work of Moscow regional antimonopoly body, especially when fighting propagation of COVID-19”, pointed out Alexei Azarenko, Deputy Head of Moscow Regional OFAS.

Reference:

In accord with Part 1 Article 11 of the Federal Law “On Protection of Competition”, agreements between economic entities – competitors, i.e.between economic entities that sell goods on the same market or between economic entities that buy goods on the same market, are recognized as cartels and are prohibited if such agreements lead or can lead to increasing, decreasing or maintaining prices during competitive bidding.

Liability for bid-rigging cartels is specified in Part 2 Article 14.32 of the Code on Administrative Violations. The fines can reach up to 50 % from the initial value of the tender subject.

Also, under Article 178 of the Criminal Code of the Russian Federation, restricting competition by concluding a competition–restricting agreement (a cartel) between economic entities – competitors, if such actions inflicted heavy harm upon the population, organizations or the state, or led to gaining especially large income are punished, in particular, by imprisonment for up to three years, with or without depriving of the right to hold particular positions or be engaged in particular operations for up to one year.