FAS issued a decision on a case on selling “No.9 Bread-Making Plant”

Two bidders are guilty of collusion, and “Mezhtopenergobank” coordinated activities of other participants
On 14 October 2015, there was a tender for selling 100% shares of “No.9 Bread-Making Plant” OJSC. The original price was 432,998,000 RUB, the minimum price – 216,499,000 RUB. The bids were filed by: M. Malov, A. Kulakova, “Gradostroi-Invest” Ltd. and “Novoe Zavidovo” Ltd.
Three minutes after the start of the bidding, the auctioneer announced the bid filed by M. Malov, which equaled to the minimum prices – 216,499,000 RUB. Then an announcement was made about selling the shares of the bread-making plant to him. Other participants did not make their bids.
FAS opened a case upon signs of bid-rigging collusion against “Gradostroi-Invest” Ltd. and “Novoe Zavidovo” Ltd. and M. Malov.
In the course of the investigation a new involvant emerged – “Mezhtopenergobank” Shareholding Commercial Interregional Fuel-and-Energy Bank. It was suspected of coordinating activities of “Gradostroi-Invest” Ltd. and “Novoe Zavidovo” Ltd. at the bidding for sale of “No.9 Bread-Making Plant”.  Some signs of a violation were exposed during a bank inspection.
On 24 July the FAS Commission found that M. Malov, A. Kulakova had entered and implemented an agreement leading to price reduction of in the course of bidding for sale of “No.9 Bread-Making Plant” (Clause 2 Part 1 Article 11 of the Federal Law “On Protection of Competition”), and “Mezhtopenergobank” – coordinated economic activity of “Gradostroi-Invest” Ltd. and “Novoe Zavidovo” Ltd. (Part 5 Article 11 the Federal Law “On Protection of Competition”).
Last week the Central Bank withdrew the license of “Mezhtopenergobank”.
The Press-Service of the Central Bank reported: “Mezhtopenergobank deposited funds in low-quality assets, particularly, in the construction and investment sectors and inadequately evaluated credit risks. The Bank credited companies that are not involved in real economic activities”.
“The Bank licence is withdrawn, particularly, for such operations that FAS recognized as unlawful coordination”, added Head of FAS Anti-Cartel Department, Andrey Tenischev.
The case against “Gradostroi-Invest” Ltd. and “Novoe Zavidovo” Ltd. is terminated due to absence of violations in their actions.
Stats-Secretary, Deputy Head of FAS Andrey Tsarikovskiy emphasized: “Violations in competitive bidding for state property undoubtedly attract our special attention since they lead to selling property at reduced price and, therefore, damage the budget. We will continue carefully watching such bidding”.
The case materials will be forwarded to the Central Bank, Moscow Department on Competition Policy and the law enforcement bodies.