THERE IS A DIRECT LINK BETWEEN BAD ROADS AND ROAD CARTELS

FAS compared the findings of an independent survey and its decision on cartel cases

According to the survey carried out by an independent agency – “Zoom Market” in July 2019, the worst roads in Russia are in Chelyabinsk, Makhachkala and Omsk.

At the same time, these regions are the most cartelized in Russia in the road construction sector.

FAS made correlations between the localities and antimonopoly cases:

In March 2019, FAS found that Governor of the Chelyabinsk region, the Ministry of Road Facilities and Transport of the Chelyabinsk region and “Yuzhuralmost” JSC had violated Article 16 of the Federal Law “On Protection of Competition” by entering into an agreement that restricted competition on the market of road construction, reconstruction and repair the Chelyabinsk region.

FAS also found an anticompetitive agreement between the Ministry of Road Facilities and Transport of the Chelyabinsk region and “Yuzhuralmost” JSC at auctions for road construction, reconstruction and repair the Chelyabinsk region in 2016‑2018 in total exceeding 2.3 billion RUB.

Overall, Chelyabinsk OFAS exposed road construction cartels for over 32 m RUB.

An agreement with an authority was exposed in Dagestan: “Dormost” NPO” Ltd. agreed with Dagestan Ministry of Transport to create preferential conditions at auctions for road services in Dagestan for over 830 million RUB.

Dagestan OFAS also concluded that “Mostootryad-99” JSC, “Dorstoiotryad-99” Ltd., “Burbau” Ltd. and “Dormost” NPO” Ltd. had entered into an anticompetitive agreement and pursued it that led to maintaining prices at an auction for construction, repair and upkeep of roads and bridges in Dagestan for around 8 billion RUB. Moscow Arbitration Court confirmed the legitimacy of the OFAS decision.

Based on these facts, the Investigation Committee of Dagestan Ministry of Interior opened a criminal case under Clauses “a” and “c” Part 2 Article. 178 of the Criminal Code of the Russian Federation.

Omsk OFAS exposed road cartels for over 110 million RUB. For example, “Alliance”, “Transstroi” and “Stroitorg” concluded an anticompetitive agreement in procurement of repair works with the 9.7 million RUB initial value.

Saratov, Bryansk, Perm, Ivanovo, Ufa, Simferopol and Voronezh also are among the “anti-leaders” for the state of their roads.

Therefore, the link between cartels and deteriorated quality of road construction is evident.

In general, from 2016 to H1 2019, FAS opened 109 cases on cartels and other anticompetitive agreements in road construction, repair and maintenance in the course of over 560 tendering procedures. The total revenue of such cartels exceeded 70 billion RUB. Road construction cartels penetrated 79 regions of Russia.