Federal Anti-Monopoly Service exposes cartel agreement between Moscow hospitals and suppliers for $11m

Federal Anti-Monopoly Service exposes cartel agreement between Moscow hospitals and suppliers for $11m

The administrations of medical institutions allowed participating in tenders only those companies with which they had agreements.

Three Moscow hospitals and the companies Farm Project and Vesta Farm were involved in price fixing. The administrations of medical institutions together with the management of the companies created the appearance of competition at auctions for the supply of medicines, medical equipment, and children's and dietary nutrition in 2014-2016. This is reported on the FAS website.

According to the department, before the auctions, the hospitals sent a description of the applications to the said company, and they, in turn, used this information to prepare documents for auctions. As a result, applications submitted by the Pharm Project and Vesta Pharm were optimally suited to the requirements of hospitals, and all the others - were rejected.

According to the department, before the auctions, the hospitals sent application descriptions to the said companies which, in turn, used this information to prepare documents for auctions. As a result, the applications submitted by Farm Project and Vesta Pharm perfectly fit the requirements of the hospitals, whereas all the other bidders were rejected.

“The wordings were included word for word in protocols of consideration of the first parts of the applications,” said the head of the FAS department for combating cartels, Andrey Tenishev. Because of the actions of the cartel, at 426 open auctions, prices were artificially maintained. “The total amount of initial maximum prices of contracts in the given auctions amounted to more than 644 million rubles ($11.1m),” the department reports.

The report also indicates the medical facilities that participated in the cartel – the City Clinical Hospital named after V.V. Vinogradov, City Clinical Hospital No. 67 named after L.A. Vorokhobova and the City Clinical Hospital No. 68, which are subordinated to the Moscow Department of Health.

The FAS emphasizes that these actions led to the elimination of bona fide players from the market and that all auctions ended with a minimum reduction of the initial contract prices.

Several defendants (the agency does not specify which ones) admitted their participation in price fixing. Now the anti-monopoly agency will send the case materials to the Main Directorate for Economic Safety and Counteracting Corruption of the Ministry of Internal Affairs of Russia to address the question of initiating criminal cases under Art. 178 and 286 of the Russian Criminal Code.

Tags: Moscow FAS
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