EXCESSIVE PROCUREMENT REQUIREMENTS ARE THE REASON FOR MONOPOLIZATION OF THE MARKET FOR STORAGE AND TRANSPORTATION OF MEDICINES AND CARTEL AGREEMENTS IN THE MARKET

The market for storage and transportation of medicines and medical devices purchased by the state is monopolized by companies with a network of warehouses and distribution centers, despite the presence of 190 potential suppliers. This was established based on the results of an analysis of the state of competition in the relevant commodity market conducted by the Agency for the Protection and Development of Competition in 2023.

As part of ensuring a guaranteed volume of medical care, the state operator represented by SK-Pharmacy LLP annually purchases storage and transportation services for medicines and medical devices. The annual volume of purchases in 2022 amounted to 6.8 billion tenge.

According to the requirements of the antimonopoly authority, SK-Pharmacy LLP has increased the number of lots for the purchase of services, which provides access to them for a larger number of market participants.

So, if in 2009-2013 services were purchased in one lot throughout the Republic, then in 2019-2022 - 17, which increased the number of service providers from 1 to 6, and the number of procurement participants to 10 companies. 

Also, in order to attract more suppliers in 2023, measures were taken to differentiate the cost of lots depending on the regions of service, include cargo insurance costs in the cost of services and extend the terms of contracts from 1 to 3 years.

Based on the results of the analysis, other proposals were made, including on the division of purchases of storage and transportation services, which will allow attracting more than 200 transport organizations to purchase transportation services for medicines.

Work on taking systematic measures to demonopolize the market in terms of expanding access to new players and strengthening price competition will continue within the framework of the Roadmap approved with the Ministry of Health.

At the same time, antitrust measures are being taken to respond to the facts of the conclusion of cartel agreements by participants in this artificially created monopoly market.

Another antimonopoly investigation has been completed against KFK Medservice Plus LLP, Akniet LLP, Stopharm LLP (hereinafter referred to as Partnerships) on the fact of creating imaginary competition in the procurement of SK-Pharmacy LLP for storage and transportation of medicines. In particular, the victory in the competition was ensured by a slight price reduction (by 0.0006% or 0.50 tenge).

In cases of participation in the procurement of other entities not participating in the cartel, a different scheme was implemented.

At the first stage, the "competitor" offered a significant price reduction (up to 58%), and then refused to sign a long-term contract with SK-Pharmacy LLP due to circumstances that impede the quality of services.

In this regard, SK-Pharmacy LLP announced a repeat competition for the same amount, where the "necessary" Partnership was already the only participant.

The established facts of collusion were confirmed by the presence of business correspondence between the objects of the investigation about the creation of a fictitious competitive environment when participating in purchases, the location of storage warehouses at the same address and other circumstances.

By the decision of the Supreme Court of December 25, 2023, the violation of antimonopoly legislation in the actions of the Partnerships was confirmed.

Currently, the investigation materials have been sent to the Financial Monitoring Agency of the Republic of Kazakhstan.