Millions in the shadows: FAS discovered a cartel in catering in schools
Employees of the office of the Federal Antimonopoly Service of Russia for the Chelyabinsk region revealed collusion at auctions for catering in educational institutions in the region. The agency found violations in the amount of about 90 million rubles. Such collusion is not uncommon, but it is much more dangerous that they disguise themselves as legitimate competition, experts point out. What threatens to create a cartel is in the Izvestia material.
Fictitious competition
Employees of the Office of the Federal Antimonopoly Service of Russia in the Chelyabinsk region found violations during tenders for public procurement. We are talking about catering in educational institutions in the region. Five companies and two individual entrepreneurs colluded during the bidding process. This is reported in the press release of the regulator.
The participants of the cartel were JSC Ural Food Processing Plant, LLC Children's Public Catering — DOP, LLC Food Processing Plant, LLC Cardinal, LLC Dialogplus and two sole proprietors, whose names were not disclosed.
The Agency revealed violations of the law on protection of competition in 27 procurements. The actual income of the participants in the conspiracy was about 90 million rubles. The customers were educational organizations of Chelyabinsk and the region.
The Antimonopoly Service managed to establish that the business entities jointly participated in the bidding from 2022 to 2024 using the anticompetitive models of "sole supplier" and "sole winner". The purpose of the collusion is to ensure that a particular company wins the auction and maintains the required price.
The FAS found that the participants used a common infrastructure: IP addresses, identical phone numbers and email addresses in applications for the issuance of EDS. They had a long-term stable relationship and shared management decisions.
All cartel members who violate the law on protection of competition will be brought to administrative responsibility. The materials of the antimonopoly case will be transferred to law enforcement agencies to confirm the presence of signs of a crime under Article 178 of the Criminal Code of the Russian Federation ("Restriction of competition").
Collusion at auctions related to the social sphere is an area of increased attention for antimonopoly authorities, said Anna Kozlova, Head of the Chelyabinsk Federal Antimonopoly Service of Russia. As the anticompetitive behavior of the participants leads to both negative economic effects and serious threats to the quality of catering in schools.
The social catering market has been one of the leaders in the number of anti-competitive agreements identified for several years, the FAS press service told Izvestia.
The implementation of the cartel agreement involves the use of a certain model of bidding behavior. Unscrupulous market participants use such schemes as "battering ram", "carousel", "the only winner", "leveling the price criterion" and so on.
In the Chelyabinsk region, business entities have applied a model in which imaginary applications create the appearance of competition, the department clarified. The cartel members abandoned the competition and determined the winner in advance.
— For concluding a cartel agreement, participants face administrative fines, as well as criminal liability, taking into account income in the amount of more than 90 million rubles. The cartel is the only antimonopoly article for which criminal liability is provided," the regulator warned.
Popular Suppliers
Izvestia studied the cards of the defendants in the antimonopoly case on Rusprofile. The OKVED code for most companies is "activities of catering enterprises for other types of catering".
All companies are actively involved in public procurement. The Ural Food Processing Plant Joint Stock Company, in particular, was a supplier in 689 government contracts in the amount of 2,842,810,767 rubles.
Among the company's largest customers are five schools: MBOU Secondary School No. 116 in Chelyabinsk (5 contracts for 136,024,699 rubles), MBOU Secondary School No. 68 in Chelyabinsk (8 contracts for 123,845,545 rubles), MBOU S(K)OSH No. 11 in Chelyabinsk (6 contracts for 71,986,295 rubles), MBOU Secondary School No. 55 in Chelyabinsk (9 contracts for 69,715,865 rubles) and MBOU Secondary School No. 28 in Chelyabinsk (7 contracts for 69,333,443 rubles).
Children's Catering — DOP LLC, in turn, acted as a supplier for 61 customers. Of these, 31 schools have been awarded with 69 contracts worth more than 176 million rubles. The company's largest customer among educational organizations is MBOU "Special (correctional) School No. 29 of the VI type" (11 contracts for 34,279,894 rubles).
Meanwhile, Food Processing Plant LLC has 17 customers, including eight schools. Educational organizations in the region have signed 14 contracts for 106.6 million rubles over the entire period. The largest customers include MBOU Secondary School No. 116 in Chelyabinsk (2 contracts for 68,478,441 rubles) and MBOU Secondary School No. 71 in Chelyabinsk (2 contracts for 7,984,101 rubles).
At the same time, Dialogplus LLC provided services to 383 customers, 93 of whom were schools in Chelyabinsk and the Chelyabinsk region. We are talking about 213 contracts worth more than 357.5 million rubles. However, not a single educational organization in the region is included in the top 5 customers of the company.
Izvestia has sent requests for information to these companies. No responses had been received at the time of publication.
A dangerous disguise
The problem of fraud in the market of supplies to social institutions has existed for a long time, said Valery Alekseev, head of the Bureau of Investigation of the Popular Front.
"When we first started monitoring school catering in 2017, we discovered serious fraud amounting to almost 25 billion rubles in dozens of regions of the country," he recalls.
In recent years, there has been an increase in the number of identified cases of such violations, which is confirmed by the statistics of antimonopoly investigations and the results of FAS inspections throughout Russia, recalls Alexander Perfiliev, CEO of Gospartner LLC.
However, the essence of the problem lies not in its ubiquity, but in the fact that collusion is almost always disguised as legitimate competition, says Sean Betrozov, a practicing lawyer at the Moscow Chamber of Lawyers and a member of the Russian Bar Association.
— In the practice of antimonopoly authorities, there are many cases in which it was possible to prove the coordinated actions of bidders. However, compared to the total volume of procurement activities, where hundreds of thousands of contracts are concluded annually, the proportion of identified collusion is insignificant, the expert draws attention to.
But each of them is capable of causing tens of millions of rubles in damage to the budget and excluding bona fide participants from the competition. In addition, it also leads to inflated prices and a decrease in the quality of goods or services.
— The main difficulty is that most of these schemes are well disguised. At first glance, everything looks legitimate: auctions have been held, there are participants, contracts have been concluded. Upon more detailed verification, signs of coordinated actions may surface, such as the participation in auctions of companies registered with the same people, the use of identical contact phone numbers and email addresses, and coincidences in accounting services," the lawyer lists.
Sometimes even technical details are revealed, such as access to electronic platforms from the same computer or Internet connection. But such connections are often difficult to confirm, especially if cartel members are carefully disguised.
It is the absence of formal traces that makes the fight against such schemes especially difficult. However, if there is a body of evidence, it is quite possible and effective, Betrozov emphasizes.
Call to account
Russian law clearly qualifies the cartel as a violation, he points out. The Law on Protection of Competition explicitly prohibits any form of agreements between market participants aimed at distorting trading conditions.
— If the antimonopoly service detects such actions, it has the right to initiate a case and, based on the results of its consideration, impose a fine. This is not a fixed amount, but a percentage of the company's revenue in the market where the violation was committed. Usually, the fine ranges from one to fifteen percent of the turnover, while separate calculation rules are provided for individual entrepreneurs," the lawyer explains the algorithm.
However, cartel conspiracy can be qualified not only as an administrative violation, but also as a criminal offense under Article 178 of the Criminal Code of the Russian Federation. In this case, the liability may be up to seven years in prison.
"This applies to cases where collusion led to major damage or was organized by a group of individuals," the Izvestia source notes. The court may also impose other measures, such as fines, mandatory work, or a ban on holding certain positions.
At the same time, a participant who voluntarily reported the fact of collusion to the antimonopoly authority may be released from liability if his information became the basis for initiating a case and he continued to cooperate until the decision was made, Betrozov clarifies.
Another aspect of responsibility for collusion is getting into the register of unscrupulous suppliers, which automatically deprives companies of the opportunity to participate in procurement for two years, he adds. For many, this means the loss of basic income, termination of contracts, and even the risk of bankruptcy.
— Responsibility in cases of collusion is always individual. It is being established who made the decisions, who submitted the applications, and who conducted the correspondence. However, the director of the company is not always responsible for the actions of the company. Sometimes employees of the tender departments, intermediaries or founders who acted in their own interests are found guilty," the expert explains.
The imitation game
Most often, collusion between bidders consists in the fact that they agree in advance on the distribution of wins among themselves, says Sean Betrozov. This can be done directly or through intermediaries.
— Sometimes companies that are formally competing with each other submit bids, but they do so in such a way that one of them is guaranteed to win. The rest allegedly participate, but they deliberately underestimate the points, make mistakes in the documents, or do not lower the price at all," the lawyer notes.
Such actions create an imitation of competition. The presence of coordinated actions in such cases is indicated by the regular victory of the same company over several purchases. This is especially noticeable if the losing organizations have no turnover or no employees, but there is registration at the same address, the expert points out.
A model is also possible in which companies divide purchases among themselves by geography or timing. If such coordination is proven, it will be recognized as a restriction of competition, Betrozov clarifies.
— In our practice, there have been cases of collusion, when participants divided contracts strictly by districts: "You win here, I'm there." The price was reduced by a formal half percent," Valery Alekseev gives an example.
Customers often participate in the schemes, who request commercial proposals to determine the starting price, form a technical specification, and accept work under the contract, he emphasizes. In this case, the terms of reference are structured in such a way that only one organization is suitable for it, adds Betrozov.
This type of collusion, according to Alekseev, is even more dangerous, because after winning at the maximum price, the company may try to save on the execution of the contract.
— There is a substitution of products, the use of cheaper recipes. The soup can be boiled in broth, or it can be boiled in water. In some cases, substandard products and counterfeit products are also used," the expert explains.
The creation of a cartel has a large number of negative consequences for the social institutions themselves, Alekseev draws attention. Among them, he highlights the embezzlement of budget funds, low salaries for chefs and the deterioration of the food infrastructure.
Cartel agreements cause serious and multi-level damage to schools, Alexander Perfiliev agrees. This is also dangerous because, in the absence of real competition, companies are not motivated to improve the quality of products and services by saving on ingredients and violating sanitary and technological standards.
And a decrease in the quality of nutrition in schools inevitably affects the health of students, since food in educational institutions is the basis of their physical and intellectual development, warns Perfiliev.
In these circumstances, parents, teachers and society as a whole have a distrust of the public procurement system and the authorities responsible for monitoring and conducting procurement procedures, he notes.
—The fight against cartels in educational institutions is one of the key areas of activity of the Federal Antimonopoly Service, as the consequences of such actions negatively affect not only the economy, but also society as a whole," the expert summarizes.
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