The unreasonably low price of the offered goods, works or services rightly arouses the suspicion of the buyer. Moreover, some organizations use price dumping not in order to qualitatively fulfill the terms of the contract, but in order to get rid of unnecessary competition, while obligations under the won tender are performed improperly.
Just in order to minimize such negative consequences, the legislation establishes measures that prevent price reduction. Unfortunately, these measures are not a panacea, and unscrupulous participants still disrupt purchases.
However, for conscientious companies that are able to offer a quality product at a low price, it is necessary to know some of the features of the application of anti-dumping measures against. The same applies to Customers who must comply with all legal requirements when signing contracts.
Anti-dumping measures in open competition
It should be taken into account that when holding an open tender, the application of anti-dumping measures begins from the moment of filing an application for participation. As established by law, the participant, as part of the application, attaches documents to confirm the good faith in the application.
For tenders with a maximum contract price of less than fifteen million rubles, such, as you know, are executed contracts that meet the requirements of part 3 of article 37 of 44-FZ.
By submitting an application for participation in the tender and offering a price 25% lower than the initial one, the participant must decide which method of making a security for performance will be chosen by him in the future.
In the event that one and a half security is not the chosen method, the participant is obliged to provide the mentioned contracts in the application. Otherwise, these documents are not attached to the application.
In this case, the Customer should pay attention to the fact that such an application cannot be rejected, since at the date of opening the envelopes and conducting the assessment, he does not know how to confirm the good faith of the participant.
If, however, when signing the contract in the future, the participant still did not provide increased security, the contract cannot be concluded, and the participant is recognized as a evader.
Auction for the right to conclude a contract
We are talking about those cases when the participant "goes into the red", that is, the decrease is less than 0.5% of the NMCC. Some Customers at this stage make the mistake of applying anti-dumping measures to such a participant.
The legislator expressly states that in this case it does not apply to the rules established by Article 37, and the security is paid in the usual amount. Moreover, the presence of executed contracts is also not required.
Procedure for depositing security
Due to inattention or due to legal illiteracy, the winner who offered the dumping price makes a security in the usual amount established in the auction documentation without attaching the relevant contracts.
Unfortunately, in this case, after the payment order is published or published in your personal account, nothing can be done. If only all the same send the necessary contracts to the Customer.
The functionality of the site does not provide for the placement of several payment orders for one contract. Of course, such a case also leads to the fact that the winner is recognized as evaded and runs the risk of being included in the register of unscrupulous bidders.
What to look for in attached contracts
First of all, one of the main conditions, which, unfortunately, is sometimes overlooked by Customers when considering contracts confirming good faith, is their placement on the official website. Of course, the winner of the purchase is not to blame for the fact that the previous Customers did not enter the contract or information about its execution in the appropriate register (which, by the way, threatens with administrative liability).
But the fact remains that at the date of consideration, information about such contracts should be on the official website of the EIS.
Anti-dumping measures are applied when making purchases that are carried out by competitive methods. Their goal is to prevent dumping, i.e. artificial reduction of the final price of the contract by 25% or more. Such discounts are fraught with restriction of competition by unscrupulous participants, as well as the risk for customers to receive a low-quality product or service.
Of course, there are cases when even honest suppliers can bring down the price even below the cost, for example, for the sake of entering the market. So they look forward to promising work. But, as practice shows, more often such schemes are aimed specifically at eliminating competitors.
As a precautionary measure, the winning bidder either provides an increased or proof of good faith. In some cases, he may be required to justify the final cost.
Differences in 44-FZ and 223-FZ
If dumping manifested itself in time, the winner must confirm honest intentions with documents, attaching them to the signed contract. Otherwise, it may end up in .
If increased security is chosen, the participant is obliged to present it before concluding the contract.
Anti-dumping measures under 223 FZ are applied somewhat differently. The text of the law does not mention them. However, Part 2 of Art. 2 223-FZ gives the Regulations on Procurement the right to regulate all procurement activities of the customer, including the preparatory stages. From this we can conclude that the customer has the right to introduce his own rules regarding the fight against dumping. They may be the same as in the law on the contract system, or different.
How to apply
When anti-dumping measures 44 FZ are applied, the contract performance security increases by 1.5 times compared to that specified in the documentation, if the NMTsK is higher than 15 million rubles. With NMTsK less than or equal to 15 million rubles. the participant, at his choice, provides either one and a half security, or documents confirming good faith.
It is important to note that when purchasing scientific, design or technological works through a competition, the customer can evaluate applications with a normal decrease (up to 25%) according to one criteria, and with dumping - according to others (parts 7 and 8 of article 37).
Also, if food, fuel, items for emergency and emergency medical care are purchased, then the participant with the dumping offer is obliged to provide the customer with a price justification. For these purposes, you can use:
- Warranty letter from the manufacturer of the product.
- Documentary confirmation of the availability of goods.
- Other papers confirming the possibility of delivery.
When anti-dumping measures are not applied
First, anti-dumping measures under 44 FZ or do not affect. That is, during such procedures, you can greatly reduce the price without negative consequences.
Secondly, the rules under consideration are not applicable to procurement, where it is impossible to determine the final volume of spare parts, services or works (), since not only the NMTsK is reduced, but also the price of a unit of production (letter of the Ministry of Economic Development No. D28i-3262 dated 12/13/2016).
Thirdly, they do not apply to the purchase of medicines, provided that the offer of the participant should not be lower than the maximum selling price of the goods by 25% or more (part 12 of article 37).
In the struggle for profit, entrepreneurs use various means, which in fact come down to two directions: the struggle for money () or for the client (competition). These trade "wars" often use a powerful tool, the name of which sounds like a shot - dumping.
What is a dumping price, when and for how long it is advisable to apply it, why dumping is considered illegal and still sometimes applied, you will learn from this article.
Dumping: let's understand the concept
The English word dumping means "dumping" or "dumping" in translation. term "dumping" in entrepreneurial activity, it is customary to call the sale of goods or services at a price less than spent on their production or sale.
FOR EXAMPLE. The cost of 1 kg of butter from a farm organization is 300 rubles. The company participates in a tender for the supply of butter and wins it, declaring the opportunity to sell its product for 280 rubles, including packaging, transportation, taxes and other costs.
FOR YOUR INFORMATION! The legislation of some countries prohibits dumping and government measures are taken against it.
Characteristic signs of dumping:
- price below cost;
- temporary application;
- conditionality of strategic planning;
- neglect of quality control and level of service;
- deliberate material damage;
- application in competition.
The difference between dumping and price reduction
Prices going down are not always dumping. The pricing policy of an enterprise is determined by many factors, among which are the costs of production, transport, wages, etc. But the “normal” price, unlike the dumping one, no matter how low it may be, will never fall below the level of profitability. Attention, this is not dumping:
- prices have fallen due to savings in production costs;
- the company has lowered its prices because selling expenses have been reduced;
- the product is positioned differently due to a marketing move;
- the price is promotional.
Purpose of dumping
Voluntary abandonment of profitability, that is, selling at a loss - what is the economic sense in this? Why would an entrepreneur voluntarily reduce the price without giving production the opportunity to recoup its output? There are certain tasks that can be solved in this way, applying it for some time:
- Conquest of a market niche. If a new actor appears in a certain region or area of activity, it may try to “squeeze” into the market by “poaching” potential customers with reduced prices.
- Fight for a solid client. For the sake of "poaching" a serious partner in order to win on the volume of supplies or use his name in advertising, you can work at a loss for some time.
- Bonus for valuable partners. In order for strategically important customers to remain loyal to the company, it can organize special conditions for them for some period, including reduced prices “to the point of obscenity”.
- "Clearing debris". If the organization has accumulated a large number of unsold goods, it makes sense to sell them even at a loss in order to make room for new products and increase turnover.
- "With the world on a thread." To attract retail customers, you can periodically introduce dumping prices that are pleasant for them.
- State policy. Power, seeking to reduce, for example, the interest on mortgages, creates companies or banks with state participation, as a result of which commercial banks will also be forced to reduce the interest.
- Down with the "small fish". Large companies, by dumping, can afford to "clear" the market from a large number of small competing firms.
Varieties of dumping
The sphere of sales divides dumping into types according to the features of its implementation:
- price dumping implies the sale of export goods in the domestic market at a reduced price;
- cost dumping- when the price is deliberately lowered by the exporter himself.
In commerce, dumping is classified according to the time of application, the degree of involvement in the activities of the organization and its partners:
- intentional– applied in accordance with the calculated strategy and plan;
- episodic (sporadic)- is used from time to time to get rid of surpluses of manufactured products;
- constant- profitability is achieved through quality and unacceptable cost reduction;
- negotiable- artificially adding prices to export products through taxes and fees to protect the domestic producer;
- mutual- when organizations unite to create a market monopoly.
Since a significant proportion of the costs that affect the cost are transportation costs, the possibility of their constant reduction allows you to “play” with the prices of goods with virtually impunity. This type of dumping is called "chip trip". It is aimed at ousting local producers from the market, "filling up" them with cheap imported products.
Dumping in international trade
Also dumping refers to the creation of such an economic situation in which an export product is sold cheaper than a similar one in the host country. This situation is extremely unpleasant for the importing country, as it undermines domestic production.
The fair value of the analogue product in the importing country is called normal price. It is determined by the average cost of such a product within the importing country. If such a product is not sold in the importing country, it is necessary to consider the cost characteristics of the closest analogue. If there is no similar product on the domestic market at all, you can determine the normal value in the following ways:
- to take as the norm the highest price for similar products intended for export from the country where the goods are going to be imported;
- Add up the cost of producing the product and add the selling expenses.
A price that differs from the normal one in a smaller direction is considered dumping and discriminatory, states are struggling with this phenomenon with the help of anti-dumping duties.
What are the disadvantages of dumping prices
In general, the use of dumping is considered harmful to the economy. If all spheres of activity try to reduce the cost of products for the consumer, regardless of real costs, this will have a very negative impact on the welfare of the country. Unreasonable cheapness of goods easily gives rise to:
- low wages of production workers;
- increase in staff turnover, unemployment;
- constant deterioration in product quality;
- saving on necessary costs;
- inability to develop production;
- unprofitable investment.
Anti-dumping
Developed countries are taking measures against the uncontrolled use of dumping prices by adopting special legislative acts, such as, for example, the Federal Law “On the contract system in the field of procurement of goods, works, services to meet state and municipal needs” dated 05.04.2013 No. 44-FZ . Anti-dumping duties are applied in the field of international trade.
Global manufacturers are also entitled to take anti-dumping measures by setting an acceptable price level for distributors and dealers of their products and imposing sanctions in case of dumping:
- money penalty;
- termination of partnerships;
- curtailment of powers, etc.
ATTENTION! Despite the general economic hazard, the dumping method can be useful if used judiciously and dosed to win partners, attract clients and gain useful experience. However, in the long run, competition must be conducted in cleaner ways.
The fight against dumping in public procurement appeared relatively recently, and, as current practice shows, not all participants in the contract scheme know how to apply certain provisions of certain legal norms. In particular, many entrepreneurs do not know what an anti-dumping measure is, how it is used and for what reasons.
What it is?
Dumping in economic theory is the sale of goods at too low prices, which were artificially low. An anti-dumping measure can be applied if the indicated value is significantly lower than the market value, but at the same time it has no value. In some situations, such understatements reach the point that is lower than the cost of a particular service or product.
In government tenders, an anti-dumping measure can be used if the supplier wants to enter the procurement market for the needs of the country and oust competitors in unfair ways. In particular, it is used if, when concluding a contract with a supplier, he understates the price too much by participating in the tender.
The problem of dumping has spread significantly during open tenders in electronic format. Suppliers from all regions of Russia were given the opportunity to participate in the auction, as a result of which they began to offer prices below market prices. Sometimes there were situations when the NMC was lowered to zero by the participants, and then a tender was already held to increase the price.
What are they needed for?
An anti-dumping measure is used because the consequences of artificially low prices can be quite serious, namely:
- Obligations under the drawn up contracts are ultimately not fulfilled. Quite often it happens that after an unreasonable reduction in NMC and a contract is drawn up, suppliers begin to realize that they are not able to provide services or supply goods at the originally proposed cost.
- The performance of any work, the supply of goods or the provision of services does not correspond to the declared quality. First of all, this applies to bidding for the supply of various food products, after which the winners of the tender began to supply expired or low-quality goods with the sole purpose of meeting the proposed price.
- The contract is terminated by court order.
- You have to spend time on re-tendering.
The introduction of a reform of the current legislation in the field of municipal and state tenders is designed to solve this problem. In particular, anti-dumping measures were introduced under 44-FZ, which are used in various tenders and auctions. This rule is enshrined in the 37th article of the current law on Anti-dumping measures under 44-FZ cannot be used in procurement by any other means, and in this case, suppliers have the right to file a complaint against such actions by the customer.
What are they like?
If the NMC of the contract is less than 15 million rubles, but at the same time the bidder offers a price that is more than 25% lower than the declared one, then in this case he must issue a security for the performance of this contract, which should be one and a half times the amount indicated in the documentation, or present any information that could confirm his good faith.
If the NMC exceeds this amount, and the participant offers a price that is more than 25% lower than the declared one, then, as federal law 44-FZ says, in this case, no information about his good faith is required, and he will have to provide security in any case.
What is this information?
Quite often, bidders cannot provide security, and therefore the law provides for the possibility of confirming good faith. Such information may include various information, which includes the register of contracts drawn up, as well as confirming that this company fulfills its obligations under the contracts. In particular, federal law 44-FZ provides for the possibility of providing the following information:
- During the year prior to the submission of the application for participation in the tender, the company has completed three or more contracts, and all of them were executed without applying any penalties to the participant.
- If the supplier has not previously been involved in municipal or government procurement during the year prior to the date of application, he may provide any information that could confirm the fulfillment by him of obligations under four or more contracts over two years, but more than 75% of them must be executed without the application of penalties and fines to it.
- In the three years prior to the submission of the application, the supplier has completed three or more contracts and has not been subject to any fines or penalties.
The only thing worth noting is that in such situations the cost of each of the contracts should be at least 20% of the one for which the supplier proposes to conclude a contract. For example, if the contract will be concluded at a price of 100 million rubles, then in this case the participant must provide information that in the previous period he executed a certain number of contracts, and at least one of them had a value of at least 20 million.
But, as mentioned above, if the NMC is more than 15 million rubles, and at the same time the participant offers the cost of concluding a contract 25% lower than the declared one, he loses the opportunity to use the alternative in the form of confirming his good faith with any information, and in any case he will need to provide increased security for the performance of their obligations.
How to provide this information?
The Procurement Commission may reject any application if the information received is found to be invalid. The decision to reject any bids must be recorded in the protocol indicating specific reasons, after which the information is communicated to the procurement participant who sent this application within a maximum of one working day following the date of signing the protocol.
If the participant, when drawing up the tender application, did not indicate any information that could confirm his good faith, then in this case the contract is drawn up with him only after the security provided. Today, such anti-dumping measures in the Customs Union are used in almost all procurement options.
Many customers do not know whether it is necessary to prescribe in the auction documentation that if the supplier wants to reduce the cost of the contract by more than 25%, he is obliged to provide a justification for such a price. In fact, this obligation is assigned to the supplier in any case in accordance with the current legislation, and if the customer did not even indicate the relevant requirements in the tender documentation, he retains the right to demand justification and calculation of the specified cost. He may also require the necessary documents or reject the application of a participant in case of their absence. But in any case, in order to exclude any disputes, it is best to foresee everything in advance and indicate in the documentation the condition and cases for providing justifications.
Contest
If a company intends to take part in the competition, then it must provide all relevant information during the application process. In practice, it looks like the supplier, after reviewing everything and calculating what can offer a price lower than the starting one, for example, by 30%, must provide a certain package of documents as part of the bid that could confirm his good faith in accordance with the list , approved after the introduction of anti-dumping measures.
When receiving an application, the customer must check the accuracy of information about the participant's good faith through the register of contracts, that is, look at:
- the existence of certain contracts;
- correspondence of the value to the specified value;
- the absence of any penalties, fines and other penalties assigned due to improper performance of obligations under the drawn up contract.
Auction
In the case of participation in the auction, the company must provide data confirming its good faith in the process of sending the draft contract to the customer for signing.
The application of special protective anti-dumping measures provides for the provision by the participant with whom the contract is concluded, until the moment of its conclusion. If the supplier does not comply with this requirement, he is recorded as having evaded the contract, after which the evasion is documented in an official protocol posted in a single information system.
At the same time, it should be noted that if the information provided by the participant is recognized by the commission as unreliable, then in this case they cannot conclude a contract with him, and he himself, again, is recognized as having evaded drawing up the contract. In such a situation, the decision concluded by the bidding commission must also be formalized in the relevant protocol posted in the unified information system and brought to the attention of each participant within one working day following the date of signing the protocol.
Application features
In accordance with Art. 37, anti-dumping measures are applied in a special order in the process of special purchases. In particular, these include the organization of various competitions in which performers are recruited to conduct development, technological or research work, as well as to provide various consultations.
When conducting such tenders, the customer has the right to indicate in the tender documentation different values of the criteria for evaluating bids, if the participant wants to submit a bid with a cost that is lower than the declared one up to 25%.
If the price offer is lower than the NMC of the contract by more than 25%, then in this case, the application of anti-dumping measures is carried out as follows: the value of the significance of this criterion is set equal to 10% of the total sum of the significance of all the specified evaluation criteria.
If the main subject of the contract, for the conclusion of which a tender or auction is held, is the supply of any goods necessary for normal life support, then in this case, the participant offering the contract value more than 25% lower than the original one must provide the customer with a justification for such prices. In this case, anti-dumping and countervailing measures help to significantly improve the quality of the performance of their duties by the participants, “filter” unscrupulous performers, since in order to submit such an application, you need to provide:
- from the manufacturer, which will indicate the exact cost and quantity of the products supplied;
- documents that confirm that the procurement participant has the specified goods in stock;
- other documents and calculations that could serve as confirmation of the ability of the procurement participant to ensure the delivery of goods at the proposed price.
Features of the types of trades
Taking part in the competition, the applicant must provide a justification for participation in it as part of his application.
If the procurement committee, during the evaluation of the application, recognizes that the presence of this document is necessary, but it was not provided, the application may be rejected. The decision of the commission in this case, as a standard, should be recorded in the protocol of evaluation and consideration of applications for participation in the auction or consideration of a single application.
During the auction, a letter of guarantee or a package of documents is provided, which confirms the availability of a certain product. All this documentation must be provided to the customer in the process of sending an already signed draft contract. If the participant does not comply with these requirements, that is, does not send the required package of papers, then in this case, anti-dumping measures are applied to him in accordance with Law 44-FZ. At the same time, he is recognized as having evaded drawing up a contract.
Case Study
The winner of the competition evades drawing up a contract, as a result of which the customer offered to conclude it to the participant whose application received the second place, and he agreed, but the price he offered was 25% lower than the initial one. Thus, appropriate measures should be applied to this participant, namely: he must issue increased security or provide information that could confirm his good faith.
The participant did not comply with these requirements, as a result of which the antimonopoly authority included the company in the register of unscrupulous suppliers.
After applying to the arbitration court, the decision of the antimonopoly body was unchanged. If the participant who took second place in the competition agreed to conclude a contract, he is considered the winner, but if he does not comply with the requirements of Article 37 of the relevant law, such a winner is recognized as evading the conclusion of the contract.
When can they not be used?
Starting from June 2014, in accordance with the current legislation, there are several situations in which special protective anti-dumping and countervailing measures may not be applied. This happens in such cases when:
- Procurement of medicines included in the list of essential and vital medicines approved in advance by the government of the Russian Federation is underway.
- The procurement participant, with whom the contract is concluded, offers the cost of all purchased medicinal products, reducing it by more than 25% in comparison with their registered maximum selling price, established in accordance with the current legislation related to the circulation of medicinal products.
Thus, an agreement on anti-dumping measures may provide for their withdrawal from the participant if he complies with the above requirements.
