CONSTITUTIONAL COURT SUPPORTED FAS IN DETERMINING CARTEL INCOME

FAS Russia believes that income received from the cartel should be determined based on the price of the contract concluded by its participant

Earlier, in the actions of the director and the sole participant of Modern Medical Technologies LLC, who won the auction for the repair of medical equipment of healthcare institutions in the Samara region, the fact of concluding an anti-competitive agreement was established. The director of the company was brought to criminal responsibility for actions restricting competition [1].

However, he did not agree with the verdict [2] of the Samara District Court of the city of Samara and appealed to the Constitutional Court of the Russian Federation. He tried to challenge the constitutionality of Part 1 and paragraph "b" of Part 2 of Article 178 of the Criminal Code of the Russian Federation, as well as Paragraph 1 of the notes to it.

According to the applicant, the norms disputed by him contradict the Constitution of the Russian Federation, since they allow calculating income within the cartel without deducting expenses related to the execution of the contract, in particular taxes, the cost of work and the profit rate of the enterprise.

The Constitutional Court of the Russian Federation determined  that the conclusion of an anticompetitive agreement in the field of procurement for public services not only encroaches on the normal state of competition, but also does not allow for the efficiency of budget spending, threatens the completeness of the state's social and economic obligations.

In its ruling, the court stressed that in the attempt to restrict competition, the costs of the economic entity have not yet been incurred. In this regard, in relation to an unfinished crime, the assumption that expenses should be taken into account to determine the amount of income is meaningless.

The Constitutional Court of the Russian Federation also noted that judicial practice indicates that income, including when attempting to commit a crime under the disputed article, is understood to be the price of contracts concluded based on the results of bidding.

As a result, the court recognized that the term "income" used in the norm of Article 178 of the Criminal Code of the Russian Federation means the price of the contract without reducing it by the amount of any expenses, including those incurred or planned in connection with the execution of the contract.

For reference:

[1] Article 178 of the Criminal Code of the Russian Federation, Paragraph 2 of Part 1 of Article 11 of the Law on Protection of Competition

[2] The income that an Economic Entity intended to receive by realizing criminal intent is equal to the price of the concluded contract and by virtue of Paragraph 1 of the notes to Article 178 of the Criminal Code of the Russian Federation is particularly large