Clause 2 para. 1 Art. 11 of the Federal Law dated 26.07.2006 No. 135-FZ "On protection of the competition" (hereinafter – the «Competition protection law») stipulates for competing business entities the prohibition of agreements which result or may result in increase, decrease or fixing of tender prices. It is assumed that such agreements can appear either in written or in verbal form.
Nevertheless, until recently, in the court practice there were no uniform criteria to prove the existence of the cartel agreement (taking into account that in case of the cartel agreement basically only verbal arrangements exist between the involved business entities).
However, a certain “boiling point” has been trespassed after holding the public tender No. 081010/001550/45 organized by the Ministry of Healthcare and Social Development in 2008, when several business entities simultaneously demonstrated coordinated actions. Such actions resulted in fixing of the maximum possible price for majority of lots. The Federal Antimonopoly Service (FAS of Russia) initiated then administrative investigations in respect of such companies, acting event not at its own initiative, rather upon the request of the Russian Prosecutor General Office. Having conducted rather continuous investigations, in 2011 FAS of Russia found guilty and hold all companies involved in the investigation administratively liable. These decisions of FAS of Russia have been challenged before court in three instances; finally the Federal Commercial Court of the Moscow Circuit issued two rulings (dated 17 October in case No. ?40-106906/2011 and dated 28 January 2013 in case No. ?40-28351/2012) which could be deemed as benchmark for the relevant case-law. First, the benchmarking effect is expressed by enshrining concise criteria for qualification of the cartel agreement. The other aspect of their importance is that pharmaceutical companies have been under close attention of FAS of Russia in this demonstrative “anti-cartel” case.
In its rulings the Federal Commercial Court of Moscow Circuit figured out the following facts subject to proof for the subsumption on existence of the cartel agreement:
- the agreement in verbal form has been stipulated between the competitors;
- performance of certain actions by the business entities is determined by such agreement;
- the relevant actions should pursue one common aim – fixing the tender price;
- consequence of the cartel agreement is obtaining economic profit by the business entities.
Special attention of the court is paid to evaluation of actual behavior of tender participants, including their preparation to the tender, existence of actual possibility to fulfill all obligations in respect of the lot won, as well as all further actions of the winning participant and other participants in respect of the relevant lot after completion of the tender proceedings.
To establish the violations of the Competition protection law the court applies the concept of bona fide conduct of the tender participant. It is the antimonopoly authority who should prove the bad faith of the tender participant by presenting the evidence on the following:
- the result of the tender (the lot price is fixed at maximum or close to maximum);
- improbability of the tender result without cartel agreement of the participants (i.e. the result of the tender is impossible without full awareness of the participants about conduct and intent of each other pursuing to fix the price);
- unusual conduct of the tender participant, i.e. the conduct which is not reasoned by objective economic factors (from the point of view of the ordinary participant who is interested to take part in the tender and to win it after submission of the application and bearing certain expenses).
One more aspect should be specifically noted. Namely, the FAS of Russia expressed commitment to expand the cooperation with law enforcement agencies to detect the cartel agreements. Particularly, in February 2013 the authority has proposed amendments to the Federal Law “On Operational and Search Activities”; further, the Head of FAS of Russia Igor Artemyev reported on 28 February 2013 about perspectives of criminal prosecution for violation of the prohibition of cartel agreements.