Cartel Collusion in Russian Public Procurement: Legal Risks and Liability

 

August 12, 2019

BRACE Law Firm ©

 

Cartel collusion, or a so-called "horizontal" anti-competitive agreement, is considered by FAS Russia to be one of the most serious violations of antimonopoly legislation. The word "cartel" (from the Italian "carta", meaning document) refers to a secret agreement between entrepreneurs competing within the same commodity market.

In accordance with Article 4 of Federal Law No. 135-FZ dated July 26, 2006, On Protection of Competition (the "Law on Protection of Competition"), a commodity market is the sphere of circulation of a product (including foreign-made products) that cannot be replaced by another product or an interchangeable product, within the boundaries of which (including geographic boundaries) a purchaser can acquire the product based on economic, technical, or other capacity or expediency, and where such capacity or expediency is absent outside those boundaries. Such secret agreements aim to extract excess profits, which ultimately harms consumer interests by depriving them of the opportunity to choose high-quality goods and services at affordable prices.

The legislative definition of a cartel is provided in Article 11 of the Law on Protection of Competition. Cartels are recognized as agreements between:

• Economic Entities selling goods on the same commodity market (competitors);
• Economic Entities purchasing goods on the same commodity market.

However, the mere conclusion of such an agreement is insufficient to establish the existence of a cartel, as such agreements must lead to:

• The establishment or maintenance of prices (tariffs), discounts, markups (surcharges), and (or) margins;
• The increase, decrease, or maintenance of prices during tenders;
• The division of a commodity market based on territorial principles, the volume of sales or purchases, the assortment of products, or the composition of sellers or purchasers (customers);
• The reduction or termination of product manufacturing;
• The refusal to enter into contracts with specific sellers or purchasers (customers).

Pursuant to Clause 18, Article 4 of the Law on Protection of Competition, an agreement is a written arrangement contained in one or several documents, as well as an oral arrangement.

As noted by Igor Artemyev, the Head of FAS Russia, at a State Council meeting on April 5, 2018, cartels currently account for approximately 2% of GDP and "have truly overwhelmed the economy today". [1]

According to the official website of FAS Russia, the primary methods for implementing a cartel to maintain prices (including in electronic auctions) include:

• Bid suppression: Competitors agree to refrain from bidding or to withdraw their bids so that a designated participant wins;
• Complementary bidding: Competitors agree to submit bids with intentionally losing prices or unacceptable terms so that a designated participant wins;
• Bid rigging: A conspiracy involving at least three participants in an open auction against other bidders. One variation of such a conspiracy is known as the "taran" (battering ram). Its essence is that two conspirators take turns significantly lowering the price to induce other participants to abandon the competitive struggle, after which a third conspirator submits an offer with a slight price reduction. However, upon review, the commission disqualifies the applications submitted by the two participants who significantly lowered the price for failing to meet the requirements of the procurement documentation. Consequently, the Customer awards the contract to the third conspirator. [2]

In practice, the number of cartel agreements detected by FAS Russia has increased over the past year, which may negatively impact the expenditure of budget funds. We believe this was the fundamental factor for introducing criminal liability for entering into such agreements. Below, we examine the primary indicators of anti-competitive agreements and the liability measures applicable to violators in more detail.

It should be noted that a program of measures to detect and suppress cartels was approved in 2019.

The Interagency Program of Measures to Detect and Suppress Cartels and Other Anti-Competitive Agreements for 2019–2023 aims to ensure the economic security of Russia, protect competition, and detect and suppress monopolistic activities by Russian and foreign companies, government authorities and their subordinate organizations, as well as state extra-budgetary funds and individuals, including individual entrepreneurs. [3]

The main implementation areas of the Program include:

• Improving the system of state influence on the causes and conditions that facilitate the conclusion of anti-competitive agreements;
• Conducting interagency activities to detect the restriction or elimination of competition;
• Improving legislation (antimonopoly, criminal, criminal procedure, and administrative offense legislation) and bringing regulations into compliance with Russian antimonopoly laws;
• Implementing interagency measures aimed at preventing the conclusion of anti-competitive agreements;
• Conducting a range of measures to detect and suppress offenses and crimes in this sphere, as well as to detect and suppress anti-competitive agreements and corruption-related crimes in the sphere of public procurement to ensure the security of the Russian Federation, etc.

Additionally, the Program established a list of future activities. These include analyzing legislation for provisions that restrict competition and facilitate the hidden monopolization of the economy, preparing amendments to antimonopoly, criminal, and criminal procedure legislation, and the Code of Administrative Offenses of the Russian Federation (the "CAO RF") to timely detect and suppress cartels and other anti-competitive agreements, preventing cartel participants from bidding, and strengthening liability for violating Russian antimonopoly laws. Planned measures also include developing a draft law to reduce administrative fines for participants in anti-competitive agreements who are willing to pay fines voluntarily within established timeframes.

The Program’s implementation period is 2019–2023. The government expects the Program to prevent the conclusion of anti-competitive agreements in tenders and commodity markets and contribute to the fight against the unauthorized and inefficient use of state (municipal) property and budget funds, the theft of state property and money, corruption, and the shadow and criminal economy.

According to Andrey Tenishev, the Head of the Anti-Cartel Department of FAS Russia, anti-competitive agreements extend to nearly all pharmaceutical groups of medicinal products and almost all types of medical devices. These include drugs for treating HIV, oncology, and hepatitis, as well as pacemakers, etc. Participants in these anti-competitive agreements include dozens of manufacturing companies, official distributors, and customers. [4]

The primary indicators that FAS Russia generally qualifies as proving the existence of a cartel conspiracy are as follows:

• Bidders submit initially unacceptable terms or prices, resulting in a single winner;
• Conspirators take turns submitting bids with the most favorable price offers;
• Applications are submitted from a single IP address;
• Procurement participants withdraw previously submitted applications without apparent reason;
• Auctions involve either a minimal price reduction by one participant with an intentional lack of reaction from others, or a sharp reduction in the Initial Maximum Contract Price (the "IMCP") by all participants without the subsequent intention to conclude the contract. As previously mentioned, this strategy is called the "taran" and is used to force non-conspirators to abandon the procurement.

In exchange for participating in price-fixing, companies that submitted "sham" bids receive monetary compensation, another contract, or a subcontract from the procurement winner.

A fairly popular trend for creating imaginary competition is the use of "fly-by-night" companies, which are essentially created and function only to participate in a specific procurement, after which they cease to exist through liquidation or reorganization via merger with a similar "fly-by-night" firm in another region.

Price-fixing is detected not only by FAS Russia but also by the Prosecutor's Office, the FSB, and internal affairs bodies within their competence. FAS Russia identifies facts of cartel agreements during procurement, holds organizations administratively liable, and transfers information on audit results to law enforcement agencies to qualify the actions of cartel participants and, if a crime is established, to initiate criminal cases.

Specifically, on its official website, FAS Russia provides the following data: "Our interaction with law enforcement agencies shows that the number of cartels where participants have merged with state customers and government authorities is growing," emphasized Andrey Tenishev, Head of the FAS Anti-Cartel Department. "We are detecting more and more of them. However, such cartels are primarily subject to criminal prosecution, and the number of such criminal antimonopoly cases is increasing, already numbering in the dozens."

In 2018, there was an increase in the number of cases related to collusion between cartel participants and state customers (Article 17 of the Law on Protection of Competition). In 2018, FAS Russia initiated 82 cases under this article, compared to 48 cases in 2017. Furthermore, the total number of cases initiated by FAS in 2018 under the cartel articles of the Law on Protection of Competition grew by 13% compared to 2017, reaching 768 up from 678. [5] This trend continues in the current year.

Cartel Cases

Quite often, materials from antimonopoly authority cases and judicial acts in antimonopoly cases serve as the basis for initiating criminal proceedings. For example, the Samara District Court of the City of Samara announced a verdict in cases initiated against officials accused under Part 2, Article 178 of the Criminal Code of the Russian Federation (the "CC RF"). The court established that Economic Entities and officials of the Customer entered into a competition-restricting agreement (a cartel) prohibited by antimonopoly legislation. This case was considered based on materials from the Samara Office of FAS Russia. [6] Previously, the decision of the Samara Office of FAS Russia, which served as the basis for the verdict, was challenged in an Arbitration Court (Case No. A55-10042/2017). The court of first instance supported the controller's findings and established that the Economic Entities agreed to maintain prices in tenders — specifically, to maintain a certain price level for medical equipment spare parts and maintenance relative to the total IMCP. [7] The main evidence of the companies' bad faith behavior included video and audio files of personal meetings, transcripts of conversations between company heads, electronic correspondence regarding the preparation and conduct of the open auction, actions to prepare and sign a contract regulating the relationship between Samara Region healthcare institutions and the winner of the electronic auction, telephone conversation transcripts, and protocols of investigative actions conducted within the criminal case. The court established a causal link between the companies' actions and the price maintenance in tenders, as well as their awareness of each other's future actions. [7]

Additionally, in 2019, FAS Russia issued a decision regarding three medical equipment suppliers, finding them in violation of Clause 2, Part 1, Article 11 of the Law on Protection of Competition. These companies entered into and implemented an anti-competitive agreement that led to price maintenance in tenders for medical equipment supply. Between 2014 and 2017, the cartel participated in 117 tenders for healthcare institutions in 8 constituent entities of the Russian Federation; the total amount of state contracts concluded based on these tenders exceeded 660 million rubles. [8]

Participants in price-fixing commonly practice the increasing, decreasing, or maintenance of prices in tenders, as well as market division.

It is important to note that price-fixing is now also implemented using digital tools. In February 2018, the Moscow and Leningrad Offices of FAS Russia initiated cases based on signs of price maintenance in electronic auctions by competing companies. To maintain high prices, the companies used auction robots pre-programmed for non-competitive behavior, setting limits for IMCP reduction at 0.5 – 1%. [9]

Participants in anti-competitive agreements also practice submitting applications from a single IP address to maintain prices in electronic auctions. Courts across three instances refused to recognize as illegal a decision by the antimonopoly authority that accused two companies of entering into an oral cartel agreement, the implementation of which led to price maintenance in electronic auctions. Both companies were the only participants in the electronic auctions specified in the case, and their applications and price offers were submitted from the same IP address. [10]

Another form of price-fixing is the refusal to submit price offers. In February 2018, the Arbitration Court of the City of Moscow, in its decision on Case No. A40-177996/2017, supported the findings of FAS Russia regarding a conspiracy between two food and agricultural product suppliers, which resulted in price maintenance in tenders. The court stated in its decision: "The main qualifying indicator of such an agreement is its actual or potential ability to influence the price in tenders. At the same time, the possible non-participation of one of the cartel members does not indicate the absence of a concluded anti-competitive agreement. On the contrary, such circumstances may be a consequence of implementing the agreement, where one or several cartel members act in the interests of the cartel or one of its participants. Furthermore, when proving anti-competitive agreements, not only direct but also indirect evidence in its totality is considered. Indirect evidence usually includes, among other things, the lack of economic justification for the behavior of one participant in the Agreement that creates advantages for another participant, which does not correspond to the goal of conducting entrepreneurial activity — making a profit". [11] It is important to note that the Supreme Court of the Russian Federation agreed with the findings of the Arbitration Court of the City of Moscow.

As an additional example, one may cite the Decision of the Arbitration Court of the City of Moscow on Case No. A40-35064/2017, which established that a conspiracy participant submitted a bid for an auction while knowing in advance that the commission would reject the bid due to the lack of a required license; this was qualified by the controller and the court as formal participation in the procurement to ensure the victory of another participant. [12] Higher courts supported the findings of the Arbitration Court of the City of Moscow.

Based on the judicial practice cited above, we believe that any actions by procurement participants that deviate from reasonable actions aimed at extracting entrepreneurial profit in favor of another person (economically unjustified actions) may become a subject of increased attention from the controller.

Administrative Liability for Cartel Collusion and Statutory Cases of Exemption from Liability

Both administrative and criminal liability are established for violating antimonopoly legislation. Let us examine cases of administrative liability for entering into antimonopoly agreements and creating cartels.

The CAO RF contains Article 14.32, which provides for liability for committing offenses that restrict competition (conclusion of agreements).

This article provides for various types of offenses. Specifically, the conclusion by an Economic Entity of an agreement recognized as a cartel under Russian antimonopoly legislation entails sanctions in the form of an administrative fine on officials ranging from 40,000 to 50,000 rubles or disqualification for a term of 1 to 3 years; and on legal entities — from 0.03 to 0.15 of the offender's revenue from the sale of the goods (works, services) on the market where the administrative offense was committed, or the amount of the offender's expenses for the acquisition of the goods (works, services) on the market where the administrative offense was committed, but not less than 100,000 rubles.

This specific offense does not include cases where an Economic Entity enters into an agreement that is impermissible under Russian antimonopoly legislation if such an agreement leads or may lead to an increase, decrease, or maintenance of prices in tenders, or the conclusion of an impermissible agreement between tender organizers and (or) customers and tender participants, if such an agreement aims to or results in the restriction of competition and (or) the creation of preferential conditions for any participants, or participation therein. For such offenses, the administrative fine for officials increases to a range of 20,000 to 50,000 rubles, and such persons may also be disqualified for up to 3 years. The fine for legal entities will range from one-tenth to one-half of the initial value of the tender object, but not more than one-twenty-fifth of the offender's total aggregate revenue from the sale of all goods (works, services) and not less than 100,000 rubles.

A separate offense involves the conclusion of so-called "vertical" agreements. Such an agreement is defined as an agreement between Economic Entities, one of which acquires a product and the other provides (sells) the product. Entering into such agreements will lead to a fine for officials ranging from 15,000 to 30,000 rubles or disqualification for up to one year; for legal entities, the fine will range from 0.01 to 0.05 of the offender's revenue from the sale of the goods (works, services) on the market where the administrative offense was committed, or the amount of the offender's expenses for the acquisition of the goods (works, services) on the market where the administrative offense was committed, but not less than 100,000 rubles. If the offender's revenue or expenses on the relevant market exceed 75% of the offender's total aggregate revenue, or if the offense was committed on a market where goods (works, services) are sold at regulated prices (tariffs), the fine ranges from 0.002 to 0.02 of the offender's revenue on that market, but not less than 50,000 rubles.

As a general rule under Article 23.1 of the CAO RF, Arbitration Courts consider cases involving the administrative offenses provided for in this article. However, Clause 39 of the Review of Judicial Practice of the Supreme Court of the Russian Federation No. 5 (2017), approved by the Presidium of the Supreme Court of the Russian Federation on December 27, 2017, states that challenging resolutions on holding officials administratively liable under Article 14.32 of the CAO RF does not fall within the competence of the Arbitration Court. Specifically, pursuant to Part 3, Article 23.1 of the CAO RF, administrative bodies carry out the consideration of cases regarding holding officials administratively liable unless they have transferred such cases to an Arbitration Court, or by an Arbitration Court if the relevant cases were transferred to it by administrative bodies. In the case considered in this Review, the matter was not transferred to the court. Consequently, the Supreme Court of the Russian Federation concluded that the provisions of Chapter 30 of the CAO RF and Paragraph 2, Chapter 25 of the APC RF do not allow for the consideration by an Arbitration Court of cases challenging decisions of administrative bodies to hold individuals who are not individual entrepreneurs administratively liable. [13]

Attention should be drawn to the fact that this article provides specific grounds that mitigate or aggravate the liability of legal entities for these administrative offenses. Mitigating grounds include the simultaneous fulfillment of the following conditions:

1. The offender is not the organizer of the competition-restricting agreements and (or) received mandatory instructions from other entities to participate in them;
2. The offender has not commenced the performance of the competition-restricting agreement.

Aggravating circumstances for a legal entity include the organization of impermissible agreements or the coercion of other Economic Entities to commit the offense or participate in competition-restricting agreements.

Offenders participating in competition-restricting agreements may be exempt from administrative liability if they voluntarily reported it to the antimonopoly service (which was unaware of the violations), refused to participate in the unlawful actions, and provided documents confirming the commission of the offense.

Furthermore, it is important to note that according to the Clarifications of the Presidium of FAS Russia No. 3 dated February 17, 2016, the prohibitions specified in Article 11.1 of the Law on Protection of Competition do not apply to the concerted actions of Economic Entities whose aggregate share in the commodity market does not exceed 20%, provided that the share of each such entity in the commodity market does not exceed 8%.

The provisions of Article 11.1 of the Law on Protection of Competition do not apply to the concerted actions of Economic Entities belonging to the same group of persons if one of such entities has established control over the other, or if such entities are under the control of a single person. [14]

However, judicial practice regarding exemption from liability for entering into a cartel agreement based on the aforementioned ground is contradictory.

Pursuant to Part 7, Article 11 of the Law on Protection of Competition, the prohibition on anti-competitive agreements does not apply to agreements between Economic Entities within the same group of persons if one such entity has established control over the other or if such entities are under the control of a single person.

According to Part 8, Article 11 of the Law on Protection of Competition, control is defined as the ability of an individual or legal entity to directly or indirectly determine the decisions made by another legal entity through one or more of the following actions:

• Disposal of more than 50% of the total number of votes attached to the voting shares (interests) constituting the authorized capital of the legal entity;
• Exercise of the functions of the executive body of the legal entity.

Previously, there was extensive judicial practice in which these indicators of a group of persons were interpreted broadly. Specifically, judicial instances recognized the existence of family ties between participants or heads of legal entities as a ground for exemption from liability. [15] However, according to the Clarification of the Presidium of FAS Russia No. 16 "On the Application of Parts 7 and 8, Article 11 of the Law on Protection of Competition", approved by the Protocol of the Presidium of FAS Russia No. 2 dated March 13, 2019, a broad interpretation of the provisions of Part 8, Article 11 of the Law on Protection of Competition is impermissible where family ties exist between the founders, shareholders, or sole executive bodies of Economic Entities.

The existence of family ties may serve as a ground for including such Economic Entities in one group of persons based on the indicators provided for in Clause 7, Part 1, Article 9 of the Law on Protection of Competition (which provides an exhaustive list of group indicators). Nevertheless, entering into anti-competitive agreements will be permissible between such Economic Entities only if at least one of the control criteria established by the aforementioned Part 8, Article 11 of the Law on Protection of Competition is met. [16]

An additional ground for exemption from liability for entering into a cartel agreement is the conclusion of a trust management agreement for property and cooperation agreements. In several court decisions, courts have concluded that it is not mandatory to enter information into the Unified State Register of Legal Entities (the "USRLE") regarding the conclusion of a trust management agreement for an interest in the authorized capital of a company suspected of participating in a cartel conspiracy.

Specifically, in a decision by a court of first instance on Case No. A40-107482/19-149-942, the court concluded that under current legislation, a trust management agreement for an interest in a company's authorized capital must be concluded in simple written form. Such agreements require mandatory notarization only if the parties have agreed to conclude it in a notarized form. Regarding the antimonopoly authority's argument about the obligation to enter information into the USRLE concerning the trust manager of the company's interest(s), the court stated the following. Pursuant to Subclause "d", Clause 1, Article 5 of Federal Law No. 129-FZ dated August 8, 2001, On State Registration of Legal Entities and Individual Entrepreneurs, the USRLE contains the following information and documents about a legal entity: "information on the founders (participants) of the legal entity; for joint-stock companies, also information on the holders of their shareholder registers; for limited liability companies—information on the size and nominal value of the interests in the company's authorized capital belonging to the company and its participants, on the transfer of interests or parts of interests as a pledge or other encumbrance, and information on the person managing an interest transferred through inheritance". Consequently, the obligation to enter information into the USRLE regarding a trust manager is established only in relation to the management of an interest transferred through inheritance. [17]

However, there is also opposing judicial practice. In the Resolution on Case No. A63-7245/2018, the Arbitration Court concluded that the arguments of the appellate claim regarding the existence of a trust management agreement as a circumstance excluding an anti-competitive agreement were not subject to satisfaction for the following reasons: according to the trust management agreement for the interest in the authorized capital, the transfer of the interest to trust management does not entail the transfer of ownership of the interest to the trust manager. Thus, the owner of the interest remained the owner of the property (Part 1, Article 209 of the Civil Code). It is the owner who is entitled to exercise all rights provided for by Part 2, Article 209 of the Civil Code, namely to perform any actions at their discretion in relation to the property belonging to them that do not contradict the law and other legal acts and do not violate the rights and legally protected interests of others, including alienating their property to others, transferring to them the rights of possession, use, and disposal of the property while remaining the owner, pledging the property and encumbering it in other ways, or disposing of it in any other manner. Therefore, the transfer of property to trust management is a form of the owner exercising their power of disposal. A trust management agreement, like any agreement on the disposal of property, expresses the dialectical relationship between the absolute right of ownership and the obligatory right of trust management. Furthermore, according to Clause 7 of Sheet D of Form No. R14001, approved by Order of the Federal Tax Service of Russia No. MMV-7-6/25 dated January 25, 2012, On Approval of Forms and Requirements for the Completion of Documents Submitted to the Registering Body for the State Registration of Legal Entities, Individual Entrepreneurs, and Peasant (Farm) Households, provision is made for entering information into the USRLE concerning the trust manager of the company's interest(s). [18]

Similar conclusions were reached in a Ruling of the Supreme Court of the Russian Federation on Case No. A40-22931/2014, according to which the transfer of property to trust management does not entail the transfer of ownership to the trust manager; consequently, there is no fact of the trust manager having the ability to dispose of more than 50% of the total votes attached to the interests constituting the authorized capital of the legal entity at their own discretion. [19]

Therefore, all arguments by parties regarding exemption from liability for a cartel conspiracy are subject to individual evaluation by the court based on the factual circumstances of the case.

Thus, the fight against cartels has always been and remains a priority for FAS Russia. Amendments are regularly made to antimonopoly legislation aimed at increasing the efficiency of procedures for detecting and suppressing cartels, and leniency programs operate for those who assist in the detection and disclosure of cartels. Strengthening liability for cartels (which requires bringing the provisions of the CC RF and antimonopoly legislation into alignment), introducing a register of participants in anti-competitive agreements, and introducing amendments to counteract "digital" cartels are all declared methods of struggle.

In addition to improving legislation to counteract cartels in public procurement, other measures include implementing electronic bidding systems with technical barriers that prevent collusion during the bidding process, as well as the correct formation of the IMCP.

Based on the foregoing, we believe that when qualifying the actions of procurement participants, it is extremely important to consider all factors and criteria used to detect antimonopoly violations manifested in the conclusion of cartel agreements, as well as all grounds that allow for the exemption of procurement participants from liability. It is the maintenance of a balance between private and public interests that can ensure the adequate preservation of competition in Russian markets.

Criminal Liability for Participation in Anti-Competitive Agreements

Article 178 of the Criminal Code of the Russian Federation establishes liability for the conclusion by competing Economic Entities of agreements that restrict competition and result in the following consequences: the infliction of large-scale damage (more than 10 million rubles) to citizens, organizations, or the state, or the extraction of income on a large scale (more than 50 million rubles). Qualifying indicators include the use of one's official position, the destruction or damage of another's property (or the threat thereof), the infliction of especially large-scale damage (more than 30 million rubles), the extraction of income on an especially large scale (more than 250 million rubles), or the use of violence (or the threat thereof).

The punishments applicable for committing a crime under this article (without the aggravating circumstances mentioned below) include:

• A fine ranging from 300,000 to 500,000 rubles or in the amount of the convict's salary or other income for a period of 1 to 2 years;
• Compulsory labor for a term of up to 3 years with the deprivation of the right to hold certain positions or engage in certain activities for up to one year or without such;
• Deprivation of liberty for a term of up to 3 years with the deprivation of the right to hold certain positions or engage in certain activities for up to one year or without such.

This article provides for several aggravating circumstances that may lead to harsher punishment. These include: actions committed by a person using their official position; actions involving the destruction or damage of another's property (or the threat thereof) in the absence of signs of extortion; or the infliction of especially large-scale damage or the extraction of income on an especially large scale. Such acts are punishable by compulsory labor for up to five years with the deprivation of the right to hold certain positions or engage in certain activities for up to three years or without such; or by deprivation of liberty for up to six years with a fine of up to one million rubles or in the amount of the convict's salary or other income for a period of up to five years or without such, and with the deprivation of the right to hold certain positions or engage in certain activities for a term of one to three years or without such.

In practice, these cases are initiated based on the results of audits by the controller. When issuing a decision in which the actions of Economic Entities are recognized as a cartel agreement, the controller decides to refer the case to law enforcement agencies for consideration. [20]

It should be noted that a large part of the business community agrees that liability for participating in cartels should be decriminalized, with an emphasis placed on preventive regulation, increasing economic sanctions, conducting market analysis, developing a unified approach to the concept of a "cartel", and raising standards of proof. According to businessmen and public representatives, criminal liability does not contribute to effective legal regulation in this sphere and creates obstacles for the normal functioning of small and medium-sized businesses. One suggested measure is to increase the thresholds for large-scale and especially large-scale income and damage for criminal prosecution (to 500 million rubles and 1 billion rubles for income, and 100 million rubles and 300 million rubles for damage, respectively).

FAS Russia maintains a course toward strengthening criminal liability for competition violations, as it is in its interest to disclose conspiracies and punish the largest Economic Entities. At the same time, the controller also supports increasing the threshold values for income and damage to decriminalize small cartels. However, these ideas have not yet been codified into law, and the number of criminal cases initiated under Article 178 of the CC RF has been increasing recently.

____________________________

References

1. Speech by Igor Artemyev, Head of FAS Russia, at the State Council meeting on April 5, 2018. [Electronic resource] // Official website of FAS Russia, Home Page – Open Agency – News (accessed April 6, 2018).
2. Methods for Detecting Cartels in Electronic Auctions, M.A. Khamukov, Deputy Head of the Anti-Cartel Department // Official website of FAS Russia.
3. Decree of the Government of the Russian Federation No. 1314-r dated June 17, 2019.
4. Interview with Andrey Tenishev. Cartels: Results of the Work of FAS Russia for 2017 and Plans for 2018, March 6, 2018. [Electronic resource] // Official website of FAS Russia, Home Page – Open Agency – Press Service – FAS Russia in the Media (accessed April 6, 2018).
5. FAS in the Media: Number of Cartel Cases Involving Collusion with Officials Initiated by FAS in 2018 Grew by 47% // Official website of FAS Russia, Home Page – Open Agency – News (accessed July 16, 2019).
6. Samara Regional Court Announced a Verdict on Cartel Collusion // Official website of the Samara Office of FAS Russia, Home Page – News.
7. Decision of the Arbitration Court of the Samara Region dated April 20, 2018, on Case No. A55-10042/2017.
8. FAS Issued a Decision on the Conspiracy of Medical Equipment Suppliers, March 29, 2018. [Electronic resource] // Official website of FAS Russia, Home Page – Open Agency – News (accessed April 6, 2018).
9. Robotic Cartels — A New Reality, March 19, 2018 // Official website of FAS Russia, Home Page – Open Agency – News (accessed April 6, 2018).
10. Decision of the Arbitration Court of the City of Moscow dated April 20, 2017, on Case No. A40-37124/17-121-341.
11. Decision of the Arbitration Court of the City of Moscow dated March 5, 2018, on Case No. A40-177996/2017.
12. Decision of the Arbitration Court of the City of Moscow dated August 21, 2017, on Case No. A40-35064/2017.
13. Review of Judicial Practice of the Supreme Court of the Russian Federation No. 5 (2017), approved by the Presidium of the Supreme Court of the Russian Federation on December 27, 2017.
14. Clarification of the Presidium of FAS Russia No. 3 "Proving Impermissible Agreements (Including Cartels) and Concerted Actions in Commodity Markets, Including Tenders", approved by the Protocol of the Presidium of FAS Russia No. 3 dated February 17, 2016.
15. Resolution of the Arbitration Court of the North-Western District dated October 10, 2018, on Case No. A52-3855/2017.
16. Clarification of the Presidium of FAS Russia No. 16 "On the Application of Parts 7 and 8, Article 11 of the Law on Protection of Competition", approved by the Protocol of the Presidium of FAS Russia No. 2 dated March 13, 2019.
17. Decision of the Arbitration Court of the City of Moscow dated July 12, 2019, on Case No. A40-107482/19-149-942.
18. Resolution of the Sixteenth Arbitration Appellate Court dated January 29, 2019, No. 16AP-4729/18, on Case No. A63-7245/2018.
19. Ruling of the Supreme Court of the Russian Federation dated March 24, 2016, No. 305-KG16-1421, on Case No. A40-22931/2014.
20. Decision of the Lipetsk Office of FAS Russia dated June 11, 2019, on Case No. 1.