St Petersburg Medical Cartel Will Come to Trial

| By | Cartel Agreements, FAS, Russian Pharma

Materials on 13 members of the cartel agreement will be forwarded to the law enforcement bodies to open a criminal case.

The Commission of St Petersburg OFAS established that actions of 13 companies: Polymedservice Ltd., DezPharm Ltd., Unimedpharm Ltd., Nevskaya Medicine Ltd., Perspektiva Ltd., Eligos Trading House Ltd., Impulsemed Ltd., Multimed Ltd., Unimed Ltd., VIF Ltd., Neva Medical Company Ltd., AFS Partner Ltd., and Perspektiva SPB Ltd. constitute a cartel agreement (Clause 2 Part 1 Article 11 of the Federal Law “On Protection of Competition”).

In 2015-2018 the companies took part in more than 200 biddings for supplying medications and expandable materials to the budgetary medical facilities in St Petersburg.

Investigating the case, the antimonopoly body found that to take part in electronic bidding the companies had used the same IP-addresses and sometimes changed them simultaneously. The competitors had common staff members, used the same infrastructure and pursued common administration-and-maintenance activity.

The companies also used a common conduct model in the course of bidding that was known to each company in advance and was determined by the anticompetitive agreement, which deliberately excluded competition and resulted in maintaining prices in procurement.

Moreover, it was found that collusion emerged at the moment of submitting commercial offers to budgetary organizations, i.e., at the time of setting the initial (maximum) contract price. As a result, such arrangements increased the initial (maximum) contract price twofold in some incidents. Since further price reduction in the course of bidding was insignificant (from 0.5% to 1.5%), members of the cartel agreement ensured gaining super profit.

The total revenue of the 13 companies gained through executing the contracts exceeded 849 million RUB.

Head of St Petersburg OFAS, Vadim Vladimirov, emphasized:

Actions of the “medical” cartel exposed by St Petersburg OFAS are prohibited by the law of the Russian Federation and constitute an unlawful business activity.

Since the companies’ actions have signs of a violation under Clause “c” Part 2 Article 178 of the Criminal Code of the Russian Federation*, St Petersburg OFAS is forwarding the case materials to the Economic Security and Anti-Corruption Department of the Ministry of Interior in St Petersburg and the Leningrad region.

* In accord with Clause “c” Part 2 Article 178 of the Criminal Code of the Russian Federation, if competition restriction through a cartel agreement between economic entities – competitors inflicted especially heavy damages on the population, companies or the state or resulted in gaining especially large income, such actions are punished by correctional labour for up to five years with depriving of the right to hold particular offices or be involved in particular activities for up to three years or without such, or imprisonment for up to six years with an up to one million fine or a fine in the size of the salary or other income of the convicted for up to five years or without such and depriving of the right to hold particular offices or be involved in particular activity for the period from one to three years or without such.

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