ACTIONS OF KURSK REGIONAL OPERATOR FOR HOUSEHOLD WASTE TREATMENT RESTRICTED COMPETITION

“Ecopol” Ltd. prevented market entry

Monitoring zakupki.gov.ru, FAS revealed that “Ecopol” Ltd. had failed to organize competitive tendering in the South-West zone of the Kursk region to form prices for the services of transporting solid municipal waste.

FAS found that 44.63% of solid municipal waste of the Kursk region is produced the operation zone of “Ecopol” Ltd. According to the law, regional operator’s prices for the services of transporting solid municipal waste must be based upon the outcome of auctions, particular, if more than 30% of solid municipal waste is generated in the operator’s zone. Therefore, “Ecopol” Ltd. had an obligation to organize such auctions.

According to the Rules of competitive bidding *, the services for collecting and transporting solid municipal waste in a particular area within the operations zone of a regional operator are organized in lots.

Thus, the price for the service should form as a result of competitive procedures enabling to enter into a contract at an economically justified value: with an economic entity that offered the lowest price for solid municipal waste transportation.

FAS analyzed the situation and found that the company has executed several procurements of road transport services for carrying out solid municipal waste, 4-calss hazard, from a sole supplier. Such actions were contrary to the Rules of competitive bidding.

The main consumers of the services provided by “Ecopol” Ltd. are the population and legal entities in the Kursk region that cannot conclude contracts for solid municipal waste treatment with other companies, since “Ecopol” Ltd. is the regional operator in Kursk. By the standards of the antimonopoly law, the company has the dominant position in the South-West zone of the Kursk region and can exercise the decisive influence on the market.

Deputy Head of FAS Vitaly Korolev emphasized: “Thus, the FAS Commission has concluded that by failure to organize auctions, “Ecopol” Ltd. abused its dominance, which restricted competition, as it prevented market entry of economic entities. FAS issued an order to “Ecopol” Ltd. to stop violating the antimonopoly law. By 1 December 2019, the company must organize the auctions. Also, violations of the antimonopoly law incur administrative liability under the Code of the Russian Federation on Administrative Violations. The size of the fine will be determined upon investigating the administrative case”.

Head of FAS Department for Regulating the Housing-and-Utility Complex, Alexei Matyukhin, pointed out: “It should be underlined that only public announcement of auctions can bring out potential bidders that intend to meet the conditions of the procurement procedure and get entry to the market or the right to perform operations. Absence of auctions has an adverse impact on competition, and, as a consequence, the costs of services, in this case – solid municipal waste transportation”.

Reference:

* No. 1133 Decree of the Government of the Russian Federation "On approving  the Rules of auctions, on the outcome of which prices are formed for regional operators for transporting  solid municipal waste " of 3 November 2016.