OREANDA-NEWS. August 22, 2011. The Commission of the Moscow Office of the Federal Antimonopoly Service (Moscow OFAS Russia) found that the Health Care Department of the City of Moscow, the Moscow Department for Science and Industrial Policy, the Moscow Department for Social Security and Population, the Moscow Education Department and the Moscow Government as well as: “Sovetskaya Armia Works” CJSC, “Novator” CJSC and “No.3 Apparel Works” OJSC violated Article 16 of the Federal Law “On Protection of Competition”. The above entities concluded an agreement restricting competition on the market of production and sale of soft equipment, reported the press-centre of FAS Russia.

Investigating the case, the Commission of Moscow OFAS Russia discovered that in September 2009 the Moscow Departments sent letters to the Health Care Offices of Administrative Districts of Moscow and to the heads of city institutions, organisations and companies with recommendations to buy soft equipment without organising competitive bidding.

The letter included the recommendation to purchase small volumes of same-name goods for the sum not exceeding 100,000 Rubles (which by law would not require procurement through competitive bidding) from particular companies: “Sovetskaya Armia Works” CJSC, “Novator” CJSC and “No.3 Apparel Works” OJSC. According to the recommendations, these companies were proven bona fide suppliers and had goods production base and labour resources.

Analysing the case materials, OFAS found that after the recommendations were sent, sales by the companies selected by the Moscow Government without competitive bidding increased manyfold.

Thus, Moscow authorities, in breach of Article 16 of the Federal Law “On Protection of Competition” recommended city institutions to deal only with three suppliers, which created preferential conditions for these suppliers and restricted competition on the relevant market.

Currently the antimonopoly body is considering administrative proceedings against the violators, which can be imposed turnover fines based on the unlawful income of the economic entities who participated in the anticompetitive agreement.

“Selecting particular organisations and expressing the preference in such manner is nothing but violating the principle of fair competition between companies and organisations. Moscow is a large city with many professional, bona fide economic entities that should operate in equal conditions. In this case the actions of the Moscow Government and Moscow Departmenst are even more inappropriate”, pointed out Deputy Head of Moscow OFAS Russia, Yekaterina Solovyova.

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Article 16 of the Federal Law “On Protection of Competition” prohibits agreements between the federal executive bodies, the authorities of the constituent territories of the Russian Federation local –self-government bodies, other bodies or organisations exercising the functions of the above bodies, as well as state extra-budgetary funds, the Central Bank of the Russian Federation or between them and economic entities, or exercising concerted actions by the above bodies and organisations if such agreements or such concerted actions lead or can lead to preventing, eliminating or restricting competition.