Cartels and Bid Rigging: Detection, Evidence and Liability in Uzbekistan

1) What evidence do antitrust authorities use to prove a cartel if there is no written agreement?

Even in the absence of a written agreement, Competition Promotion and Consumer Protection Committee (the “antimonopoly authority”) may establish the existence of a cartel on the basis of both direct and indirect evidence under annex 4 of the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan “On the approval of regulatory legal acts on antimonopoly regulation in commodity and financial markets” No.256 dated May 1, 2024 (the “Resolution No.256”).

Direct evidence includes telephone conversations, communications through social media, letters, minutes, invoices, delivery notes, price lists, payment orders, internal records and notes, as well as statements from cartel participants and third parties with knowledge of the arrangement.

Indirect evidence includes oral or electronic exchanges of information, unnecessary public price announcements, identical or synchronized market conduct, simultaneous or sequential price changes without objective justification, parallel pricing despite differing costs, unjustified output reductions, restrictions on supply in particular regions, excessive prices, meetings or visits between suspected participants, and external instructions affecting undertakings' commercial conduct. In tender procedures, indirect evidence may further include bid rotation schemes, unjustified bid withdrawals, refusal by winning bidders to conclude contracts, subcontracting between bidders, identical or coordinated bid prices, sharp price movements following the entry of a new bidder, and identical calculations, templates, or errors in tender documents.

The antimonopoly authority may also rely on additional evidence identified through market analyses and investigations of commodity and financial markets. 

2) How do competition authorities detect bid rigging in public and private tenders?

The antimonopoly authority detects bid rigging in public and private tenders through the review of complaints and applications received from market participants, as well as through monitoring and analysis of information available on electronic procurement and information portals. In addition, Committee also conducts investigations and monitoring exercises based on data obtained from special information portals and other available sources relating to tender procedures.

3) Which types of information exchange between competitors may constitute an antitrust violation?

Any type of information exchange between two or more parties in a commodities or financial market that results in, or may result in, the restriction of competition or harm to the rights and legitimate interests of consumers may constitute a violation of antitrust legislation. The key consideration is whether the exchange of information, interactions, or agreements between competitors have as their object the restriction of competition or have the effect of restricting competition.  

4) What types of interactions with competitors are permissible under antitrust laws, and where is the line drawn between legitimate cooperation and unlawful coordination of competitive conduct?

There is no restriction under antitrust laws on interactions or communications between competitors. Here, too, the key consideration is whether such interaction has as its object or effect the restriction of competition and whether it adversely affects the rights and legitimate interests of consumers. 

5) What are the most common red flags indicating possible bid rigging?

The most common red flags indicating possible bid rigging are the existence of relationships between the participants in a tender or procurement process. During investigations, antimonopoly authority examines whether the participating companies have common directors, shareholders, beneficial owners, employees, affiliated or related persons, etc.  

6) What liability may a company and its executives face for participation in a cartel or bid-rigging arrangement?

Regarding cartels agreements, Article 178 of the Code of the Republic of Uzbekistan on Administrative Responsibility provides that the conclusion of anti-competitive agreements and engagement in concerted practices, as well as the abuse of a dominant position in a commodity or financial market and violations of requirements aimed at preventing the restriction of competition in bidding procedures, shall entail the imposition of an administrative fine ranging from three to five times the basic calculation values (the “BCV”) for individuals and from five to ten  BCV amount for officials.

Repeatedly committing this offence within one year after the imposition of an administrative penalty for the same offence, the relevant instruments of the offence may be confiscated and administrative fines ranging from 5 to 10 BCV for individuals and from 10  to 20 BCV for officials will be imposed.

Regarding bid-rigging, the antimonopoly authority has the right to bring a claim before the court, and the results of the tender may be declared invalid and financial sanctions may be imposed by the court.

7) Could participation in industry associations, working groups, or market information exchange forums give rise to antitrust risks?

Generally, participation in industry associations, working groups, or market information exchange forums does not directly rise antitrust risks. However, if such interactions are aimed at restricting competition, or cause harm to the rights and legitimate interests of consumers, they may be considered as evidence of anti-competitive coordination and may constitute indirect evidence of a cartel agreement.  

8) What should a company do if it discovers potential cartel conduct during an internal audit or investigation?

A company is not obliged to report potential cartel conduct identified during an internal audit or investigation. However, if the company voluntarily reports the cartel conduct to the authorized body, it may qualify for full exemption from the administrative penalties provided under Article 178 of the Code of the Republic of Uzbekistan on Administrative Responsibility. 

9) Are there any leniency or cooperation programs that allow companies to reduce or avoid penalties?

Yes, according to the information published on the official website of the Competition Promotion and Consumer Protection Committee, a person who is the first to report the existence of a cartel agreement to the antimonopoly authority and who, as a former participant in the cartel, has voluntarily withdrawn from such agreement may be fully exempt from the administrative sanctions prescribed under Article 178 of the Code of the Republic of Uzbekistan on Administrative Responsibility.   

10) What elements should an effective antitrust compliance program include to minimize cartel risks?

To minimize cartel risks, the antitrust compliance program should ensure that the company refrains from engaging in any conduct that may constitute direct or indirect evidence of a cartel agreement. Any agreement or interaction with competitors should not be aimed at restricting, preventing, or distorting competition, or harming the rights and legitimate interests of consumers.

Where agreements are entered into with competitors, the parties' legitimate business interests and the commercial purpose of the agreement should be clearly documented, and the terms of the agreement should not result in restrictions on competition or harm to consumers.

To minimize bid-rigging risks, companies should participate in tenders fairly, independently, and without coordination with competitors. In particular, companies should avoid participating in the same tender with entities having common directors, shareholders, beneficial owners, affiliated persons, or other related persons, because such relationships may be treated by competition authorities as indicators of possible bid rigging. 

Authors: Javokhir Abdumalikov, Junior Associate; Anora Turakhujaeva, Советник