Court supported FAS in a case against collusion between oil-submersible cable manufacturers

On 24 March 2017, Moscow Arbitration Court pronounced legitimacy and reasonableness of FAS decision on the case against “Kamsky Cable” Ltd., “ROSSKAT” Ltd., “Kavkazkabel” Cable Works” JSC, “Cable Alliance Holding” Ltd., “Uralkabel” JSC, “SIbkabel” JSC.

In June 2016, FAS found that oil-submersible cable manufacturers had formed a cartel that had resulted in maintaining and fixing prices, dividing the market by volume of sales, the range of goods and categories of sellers (in breach of Clauses 1 and 3 Part 1 Article 11 of the Federal Law “On Protection of Competition”).

The antimonopoly body established that at the beginning of 2014, in the absence of a “desirable” economic effect determined by inability of maximizing profit through increased production, the oil-submersible cable manufacturershad concluded an anticompetitive agreementto divide the market for sales of oil-submersible cable (except high-temperature cable) in 2014-2015, fix market shares for each cartel participant, and reject a competitive method of setting product prices.

Since most oil-submersible cables are sold under the frame of procurement procedures, in addition to the existing arrangements the respondents decided to divide procurement between the largest Russian oil-producing and oil-servicing companies (“Rosneft” NK” OJSC, “Slavneft” NGK” OJSC, “Bashneft-Dobycha” Ltd., “Rimera-Service” Ltd., “Orenburgneft” OJSC). The collusion included preliminary allocation of the range of purchased products, coordinating price bids of the agreement participants before sending them to the ordering party, and an economically unreasonable increase of prices for oil-submersible cable.

Head of FAS Anti-Cartel DepartmentAndrey Tenishev pointed out: “This is one of the largest cartels on the markets exposed by FAS. The respondent forced large state-run companies and other consumers to purchase oil-submersible cable at excessive, economically unreasonable prices”.

“In the near future the companies will be held administratively liable. The materials about the cartel will be forwarded to the Ministry of Interior to open a criminal case”, emphasized Stats-secretary, Deputy Head of FAS Andrey Tsarikovskiy.