OREANDA-NEWS. March 18, 2013. The Federal Arbitration Court of the North-Caucasus District confirmed bid-rigging collusion between “Stroikov” Construction Company” Ltd., “RSK” Ltd., and “RosStroiContract” Construction-and-Production Firm” Ltd. in the course of an open auction for the right of capital repair of “Central Town Hospital” Municipal Health Care Institution in Zverevo.

In April 2012, the Commission of Rostov OFAS Russia found that the construction companies violated the Federal Law “On Protection of Competition” by maintaining prices at the auction.

Investigating the case, the Commission established that at the auction two bidders - “Stroikov” Construction Company” Ltd. and “RSK” Ltd. proposed damping prices for executing the contact: 26,000,000 Rubles and 26,500,000 Rubles accordingly. Then, however, the bids were declined as inconsistent with the auction documentation.

Rostov OFAS Russia proved that “Stroikov” Construction Company” Ltd. and “RSK” Ltd. deliberately submitted incomplete packages of documents with their bids expecting the bids would be declined, but at the same time they actively participated in the auction, undercutting prices from 72 to 26 million Rubles.

Such actions of “Stroikov” Construction Company” Ltd. and “RSK” Ltd. were aimed only at gaining advantages for the third participant of the anticompetitive agreement - “RosStroiContract” Construction-and-Production Firm” Ltd. This company won the auction and concluded a contract for 69 million Rubles.

“RosStroiContract” Construction-and-Production Firm” Ltd. and “Stroikov” Construction Company” Ltd. disagreed with the decision of Rostov OFAS Russia and filed a lawsuit.

The Federal Arbitration Court of the North-Caucasus District confirmed the fact of collusion and pronounced legitimacy of the decision made by Rostov OFAS Russia.

“At the auction the companies used a model of behavior that persons involved in public procurement conditionally call “ram””, explained the Head of Rostov OFAS Russia, Vadim Korneev. “At an auction two participants of the anticompetitive agreement imitate active bidding between each other and plummet the prices. Bona fide bidders lost interest to the auction. In the dying seconds the third cartel participant makes a bid slightly lower than a bid of a bona fide participant or the original contract price. Then the cartel participants that took the first and the second prices refuse to sign the contact or errors in their documents are exposed and they are elbowed out of the auction. Therefore, a contract must be concluded with the third participant of the cartel that is insignificantly different from the original price.

The ruling of the Cassation Court confirming bid-rigging at the auction makes a precedent, which will help law enforcement practice in general and will raise a considerable barrier for bid-riggers”.