What Impact Does Antitrust Intervention Have on Competition? The Case of Public Drug Procurement in Russia

26 Pages Posted: 25 Jul 2013

See all articles by Maria Ostrovnaya

Maria Ostrovnaya

National Research University Higher School of Economics

Elena A. Podkolzina

National Research University Higher School of Economics

Date Written: July 23, 2013

Abstract

In this paper we study antitrust intervention in long-term relationships between public procurer and his preferred supplier in one of the Russian regions. We presume that antitrust control of auctions held by affiliated procurer increases the risks of implementing long-term relationships with his preferred supplier. However we found out that after the intervention of antitrust agency the number of bidders in the auctions increased, but relative contract prices remained the same.

We argue that procurer and preferred bidder invited firm with passive bidding strategy to decrease the risks of antitrust punishment. Thereby, antitrust intervention led to fake competition, but not to honest non-corrupt behavior in public auctions.

Keywords: public auctions, antitrust policy, pharmaceuticals, Russia

JEL Classification: H57, L40

Suggested Citation

Ostrovnaya, Maria and Podkolzina, Elena A., What Impact Does Antitrust Intervention Have on Competition? The Case of Public Drug Procurement in Russia (July 23, 2013). Higher School of Economics Research Paper No. WP BRP 32/EC/2013, Available at SSRN: https://ssrn.com/abstract=2297437 or http://dx.doi.org/10.2139/ssrn.2297437

Maria Ostrovnaya

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

Elena A. Podkolzina (Contact Author)

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

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