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From this article you will learn:
- What is price dumping and what are its signs?
- What legislation regulates price dumping?
- What are the types of price dumping?
- What are the pros and cons of using price dumping?
- What are the ways to combat competitor dumping?
When a product is offered to consumers at minimal prices, sometimes even below cost, there are good reasons for this. Among them are attracting a consumer audience, sales growth, expiring product shelf life, and competitive advantage for winning a government contract. There is another most important reason for price dumping - the company’s management seeks to gain maximum financial resources in the event of probable bankruptcy. Using this method you can get very good profits, but a balanced approach is required here, since the risks are also very high.
Dumping refers to a phenomenon in economics when, for available reasons, a company artificially lowers the cost of its products so much that they become cheaper than the initial costs of them. Price dumping can be a tactical move against competition or a forced measure used when an organization is unable to pay taxes.
Do not confuse price dumping and lowering the cost of goods; these are different phenomena.
There are certain peculiarities, by which it is possible to understand that the company is currently implementing the specified policy:
There is a certain list of conditions for reducing prices under which they will not be considered dumping, For example:
Measures against price dumping in the Russian Federation come down to the collection of compensation for damage to Russian industry from the exporting entity in favor of the manufacturer, which is implemented through an additional duty.
Rates for such fees are set each time on an individual basis. It is not assigned automatically, but is collected only based on the results of an investigation in order to confirm the fact of price dumping, and most importantly, to identify economic damage from the importing party to the entrepreneur. The application of anti-dumping temporary duties is a kind of warning that more serious measures will be taken against the exporting entity. We are talking, for example, about a permanent fee; it entails significant losses for the company or its withdrawal from the market altogether. In addition to the listed anti-dumping measures, one is also used when the exporter undertakes to comply with the lowest price level (“normal cost”) or limit the quantity of products supplied. In a number of countries, price dumping is prohibited.
In order for consumers to be protected from unscrupulous performers, 44-FZ included provisions against price dumping by competitors. Unfortunately, government customers often faced situations where the supplier who won the tender received an advance payment and disappeared or simply did not fulfill the clauses specified in the contract. Since 2013, performers must confirm their own integrity and competence.
The winner of the auction under 44-FZ is selected based on a single criterion - low price. When the cost decreases from the initial maximum contract price (IMCP) by more than 25%, the following measures are applied:
If we are talking about food products, medicines, emergency and medical supplies, petroleum products, the executing person is obliged to provide justification for the contract amount in order to avoid price dumping. Otherwise, if the information was not provided, this organization is entered into the register of unscrupulous suppliers (RNP).
Article 37 helps reduce the risks of customers on the part of the state, but does not eliminate them. The number of unfulfilled contract agreements, legal proceedings included in the RNP of companies, services that were provided with inadequate quality (road repairs, construction works and the like), indicate that it is necessary to reconsider the criteria when choosing a supplier.
Nowadays in economics there is a distinction two kinds price dumping:
When we talk about a temporary measure, we mean a phenomenon in the economics of an enterprise when a cost reduced to the limit is set by the manufacturer for a short period of time: from a couple of weeks to several months. To achieve the main goal, this policy is ideal.
Permanent dumping means a situation where artificially low prices are set by the manufacturer for a long period of time: from a couple of months, but up to a maximum of a year, otherwise the company will simply go bankrupt.
In addition to the above types of cost regulation, there are also various forms, arising as a result of various circumstances, which will be discussed below.
Note that such types of price dumping as reverse and reciprocal are extremely rare. After all, the first can easily raise a wave of bewilderment, and the second can easily lead to the loss of one or both countries. For these reasons, such forms are used very rarely and when there is an urgent need, for example, during a financial crisis.
The dumping price is used due to:
Price dumping in government procurement is not just a deliberate reduction in the cost of a product, but also a kind of discrimination in certain niches, where the cost of one sales channel is significantly underestimated and at the same time overestimated in another. So, the use of such an economic tool as dumping leads to the monopolization of markets and the use of unreasonably increased prices.
Price dumping makes it possible, first of all, to ensure a win for the exporting organization, because it now has the opportunity to increase its share in international sales. In this case, all expenses are compensated in the domestic market. So, it turns out that the total sales volume is growing and the company receives additional profit.
The company enters a new region, and the market is already divided between local players - a price reduction in this case is justified. In practice, you can see how in large federal networks of household appliances, cosmetics, operators cellular communication The trust of buyers was won by the fact that organizations invested heavily in advertising and used dumping prices on competitors, conveying to the consumer that everything was offered for practically nothing.
This technique is used by organizations working in the B2B and B2G sectors. Unlike the B2C segment, especially in retail, where it is necessary to maintain the illusion of “low cost,” commercial and government demand has its own concepts of pricing.
Providing a product, providing a service or carrying out work for a key client provides an opportunity to gain trust, increase the rating and develop the company. Price dumping here can be implemented for the opportunity to provide a letter of gratitude from a serious corporation on the website or, for example, placing a logo in the “Work Experience” section.
Gold mining companies, oil and gas companies, large federal structures often purchase goods from medium and small businesses at minimal prices.
There are very strong business connections that are dear to the seller. In these cases, price dumping is not uncommon. Despite the fact that selling a product or service at a reduced cost may cause losses, the supplier does not give the client to another organization.
The company incurs certain costs for storing goods. It happens that the planning department recruits a category of goods that is sold extremely slowly. Sometimes it becomes more profitable to sell stale products cheaply by dumping prices rather than wait better times. This tactic is often used by food manufacturers, and it is also used by software distributors.
During periods of crisis, entrepreneurs in small businesses have to get out of their way to fully secure their bank account with funds. If we analyze purchases under 44-FZ, we will notice a tendency towards price dumping by 50-70% from small businesses (SMB). Typically, young companies with an annual turnover of up to 30 million rubles resort to this method.
When the market is already saturated, the assurance that it is possible even cheaper than now attracts retail customers. Let us take as an example the now very popular online store of Chinese products, which, when entering our territory a couple of years ago, greatly reduced the cost of non-food products, that is, used price dumping. Souvenirs, clothing, shoes, children's toys, household appliances and so on were delivered to residents of the Russian Federation for virtually nothing. Over time, prices rose, but the consumer who came from American and European online stores remained.
It may seem that price dumping is a useful phenomenon in the economy from any perspective. Lowering the cost of goods allows people to purchase items that they could not afford before.
First of all, let's see what there are advantages of dumping:
However, price dumping of competitors also has its own minuses:
If you, as a current or potential contractor, were informed by the customer about dumping prices from competitors before concluding a contract, this is very good. This means that for this client you are more than an ordinary supplier of some product, and he strives to maintain or improve relations with you. Let's see how partners can react to a competitor's lower prices than yours.:
Apparently, this client is not yours. Or you simply don’t know how to work with customers.
There can be a number of reasons for these extremely difficult situations. In one case, your client is sufficiently qualified and reasonably demands that you dump prices. Without serious consequences for himself, he may simply stop cooperating with you either in the long term or right now. When you do not have reasonable, significant counterarguments to the fact that in the foreseeable future it will be unprofitable for this client to do business with you, then most likely these are your previous shortcomings in your relationship with this partner. In the same case, when for the customer your product is no better than the competitor’s product, your miscalculations are also the reason.
It's always nice when a client is constructive. After all, a clear, business-like point of view makes it possible to correctly position yourself in relation to a competitor and lay the foundation for strong relationships.
In this case, your relationship with the client is so favorable that price dumping from competitors will not be a problem for you.
Rule #1. Don't lower your prices just because everyone around you is doing it. However, reality should not be ignored. Typically, sales managers are the first to be informed about a price collapse by their company's clients, and they suggest that their superiors take countermeasures. In this case, management first checks the accuracy of the data received.
For example, ask your customer: “Which company and how much did they reduce the cost?” In the case where the client does not name the company, such information about dumping prices of a competitor should be considered unreliable. And if the buyer pointed to the organization, we need to further find out the truth.
It is worth talking with other consumers, analyzing the dynamics of their purchases from the company (has their volume dropped?). You can also use competitor intelligence techniques, for example, try to communicate with them on behalf of a fictitious company. If the information is confirmed and when other methods are not suitable, then price dumping is inevitable.
Rule #2. Be creative when it comes to lowering prices. The creative approach does not involve any algorithms, but there are some working ideas, for example, the principle of asymmetry. It can be implemented in dumping in the following way: the company reduces the price not of the same product as that of a competitor, but of one that brings him the greatest profit. By doing this, you will strike at the basis of your opponent’s financial stability, and he will be forced to think about how advisable it is to continue this price war.
Rule #3. It concerns the sale. Each sale must have an objective reason, and it must also be strictly limited in time. Otherwise, your customers perceive reduced prices not as temporary, but as permanent. It will be very difficult to increase them in the future.
Rule #4. Reduce prices only in mature markets. We can talk about unsettled economic relations in the case when suppliers have not been identified, there are no regular buyers yet, and there are no channels for distributing information between them. Dumping prices in such a situation is extremely unreasonable: the consumer will not know about your actions in a timely manner.
Rule #5. Make sure the end user gets the benefit. This, however, is not often achieved with price dumping. But if possible, try to ensure that the discounts do not end up with intermediaries. Your partners should receive them in order to increase the purchasing volume by attracting new customers and increasing sales to their regular customers.
In other words, you need to ensure that the intermediary, that is, your client, earns money from turnover and not from profit.
It is also worth paying attention to the following. When the price of a certain product in the market is steadily decreasing due to price dumping by some competitors or for other reasons, then you are probably forced to lower it as well. However, before you do this, try to come to the following option with the customer: the amount of your contract remains unchanged, but you will increase the quantity of products. If your partner agrees to such conditions, you increase sales volumes in the company and improve the sales structure for this client.
By understanding the motivation of the company applying this strategy and the reaction of consumers to this situation, it is possible to predict the most likely consequences. Price dumping can lead to both negative and positive results.
The strategy to counter price dumping depends more on the motivation of the company using this method than on the perception of the reduction in the cost of goods by your customers. After all, buyers do not always have the opportunity to quickly change suppliers, despite their interest in doing so. They are not so often able to quickly obtain data on new interesting offers. As a rule, customers do not accept quick solutions, since they are interested in stability of supplies and long-term cooperation. However, sellers, as a rule, quickly receive information about the affairs of competitors, including price dumping, and they are simply obliged to predict the further course of events several steps ahead, trying, if possible, to avoid turns that are unpleasant for the company.
Therefore:
When developing your strategy, pay full attention to how customers perceive your competitor's price dumping and your company as a supplier with a higher cost bar. Ask your customers for what reasons they are currently cooperating with you and whether they have plans to continue the relationship in a year, two, three. Of course, your goal in this case will be to ensure that price is not the main factor influencing the client. This will give you the opportunity to not only look at the problem of price dumping by your competitors as a given, but will also bring stability to the overall development of your organization.
To differentiate your products from identical ones without greatly reducing your profit margin, it is important to understand what exactly the client values in their relationship with you, not counting the product or service itself. You can then convert this value into additional income. This kind of work needs to be done gradually, while continuously analyzing the relationship between your competitors and their clients.
Methods for eliminating the problem of price dumping have already been created and are available to most successful organizations. And if it still bothers you in some way, then it’s probably time to stop working according to the usual patterns. It's time to take a closer look at the customer collaboration technologies used by market leaders.
Many companies, especially those working in the trade sector, encounter dumping in their activities. They often talk about dumping and countering it at the state level. In this article we will talk about what dumping is, what its strategy is, in what cases it is used, and what to do if dumping is done against you.
Dumping is the sale of goods at a deliberately reduced cost in order to gain a larger market share and displace competitors. In most developed countries, dumping is considered unfair competition, but this does not prevent companies from using it periodically.
The term itself has been used since the 30s of the twentieth century. Some experts associate it with the British word dumping ("unloading", "dumping"), others suggest its origin from the Norwegian dumpa ("fall heavily"). One way or another, the meaning is conveyed in both versions: a sharp drop in price.
Initially, the concept of “dumping” was applied to stale goods that were sold at a reduced cost, but later the term acquired new meaning.
Price reductions are not uncommon in economic relations. However, promotions and other marketing ploys, as well as cheaper goods due to lower costs or the use of new technologies, have nothing to do with dumping.
In the case of dumping we're talking about It's not about attracting customers' attention to a product or maintaining profitability at a reduced price. No, the goal here is only a brutal conquest of the market, including through deliberate work at a loss for a certain period of time.
At the same time, the buyer only benefits from dumping - at least in the short term. As long as there is competition in the market, you can safely buy cheap goods. In the future, there is a risk of monopolization and price increases, but the end consumer cannot influence this process.
The main reason for using this controversial economic instrument is the desire to occupy a niche in a new market - and preferably, a fatter niche. If the market is competitive, the technologies used are publicly available, and the pricing policy of the participants is stable, to achieve a quick result, a new player can make only one knight move: a sharp price reduction. This will allow you to lure away customers, and in the future, even if the cost increases to an economically justified price, some of the customers will remain.
Dumping is also used to force competitors out of the market. So a federal retail chain enters a small town and sharply reduces prices on the most hot goods, squeezes out local retail outlets, then begins to dictate its pricing policy.
Euroset example:
The third reason for using dumping is “old school”: you need to sell a product with an expiration date, or you are going to update your assortment and need to clear your warehouse of illiquid items. The price drops sharply - the product is sold out.
From the point of view of the scope of dumping, there are two types:
More often used in foreign markets. A seller of products from one country, due to lower costs (for example, labor or raw materials), exports his goods to other countries at a lower price than local producers can offer. Such expansion has been carried out, for example, by China since the mid-90s. Although Russian companies - in particular, metallurgical companies - did not disdain their advantages when entering the US market in the mid and late 2000s, this example will be discussed in detail below.
Within one country, price dumping is used by manufacturers from regions where there is cheaper access to raw materials, materials, labor resources. For example, retail chains, due to large volumes of transportation and more stringent conditions for suppliers, have the opportunity to open their stores in remote areas, only slightly increasing prices compared to usual ones, which is impossible for local sellers due to high transport and other costs.
The most aggressive type of dumping is when a company, in order to conquer the market, trades for some time at prices equal to or even lower than its cost. To take such a measure, you need accurate calculations, otherwise you can burn out without having time to displace your competitors. It is companies that underestimate production costs that are under special attention from antimonopoly services.
Constant dumping– sale of goods at cost (or cheaper) throughout the entire sales period. This type of dumping is used for marketing purposes as part of promotions to stimulate sales of other goods. For example, furniture store can sell a sofa with a regular price of 30,000 rubles for 15,000, but subject to the simultaneous purchase of three more pieces of furniture at the regular price. Compensation for the dumping price of the “bait” product is included in the cost of other goods.
Mutual dumping– sale of goods at a reduced price by two countries to each other. This can be the same product (and then we are talking about fierce competition for markets) or different (and then in some cases we can talk about mutually beneficial cooperation).
Reverse dumping– sale of goods on the domestic market at lower prices than for export to maintain internal economic stability. A striking example is gas, gasoline, electricity, and other energy resources, which within the Russian Federation are sold at prices below the world average. However, such dumping has reverse side: Exporters are motivated to sell goods at a better price abroad, which is why shortages periodically form in the domestic market and prices begin to rise.
Deliberate dumping– targeted actions to oust a specific competitor from the market in order to increase its share. Effective in a low-competitive market, it does not work at all where one competitor can take the place of another.
"Pirate" dumping– targeted actions to destroy the business of all competitors in the market. The most irresponsible type of dumping, when the stability of an entire industry can be sacrificed for the sake of dominance in the market.
Sporadic dumping– a short-term price reduction in order to sell off warehouse surplus or illiquid goods.
Evgeniy, owner of a youth clothing store
We sell clothing from youth brands, such as jeans, sweatshirts, pullovers, down jackets, etc. In our business, you never know what will go well and what will remain on the shelves. To maintain our assortment, we purchase a variety of products. Some of the copies may become stale and then we have to get rid of them at a price below the purchase price. We, of course, can keep such products for a year or two, maybe someone will buy them. But why? I’d rather free up the shelf for something more profitable, where the markup is 100-200%. These things will completely pay for the losses that I will incur by selling illicit goods at half price.
Dumping can have different consequences - depending on how correctly the strategy of the dumping company was chosen, how competitors and government agencies reacted to it, and how widespread the campaign was.
These may be the case for companies that achieve their goal and gain the desired market share or displace competitors. A textbook example is the famous John Rockefeller and his company Standard Oil, which, through dumping prices, conquered region after region, and in the second half of the 19th century became a monopolist in the fuel production market in the United States. Equally successful was the strategy of Sony, which suppressed its competitors in the American market by selling televisions at half the price of those in Japan.
The USSR did not disdain dumping either, supplying Zhiguli cars in the 70s of the twentieth century, for example, to Canada at a price of 2,600 rubles (about 5 thousand Canadian dollars). In the Soviet Union at that time the same car cost 8,400 rubles. Now it looks funny, but back then Canadians were not amused. This country never managed to fully establish its own automobile industry, not least because of Soviet dumping. Over 20 years, more than 300 thousand VAZ cars of the 6th and 7th models were sold to Canada.
More modern example- the strategy of Nissan, which exported not only inexpensive cars to Europe, but also built factories there. Due to the technology of organizing enterprises that was more advanced at the end of the 90s and the beginning of the 2000s and competent dumping, the Japanese were able to increase sales tenfold, seriously displacing German concerns.
In this case, the affected party may be one or more companies, or entire states.
Russia felt the impact of dumping in the early 90s of the last century, when goods from other countries began to be supplied to the country, in many cases at deliberately low prices. The first victims of such dumping were domestic light and food industry which have not yet fully recovered. Mechanical engineering, aircraft manufacturing, shipbuilding and other industries were hit hard.
Dumping impedes economic growth, since a general decline in prices in the market leads to a drop in the profitability of entire industries.
If we talk about individual companies, then a clear example could be an attempt by Russian metallurgists to enter the US and EU markets on a larger scale. If in the mid-2000s this was possible through the purchase of foreign assets and the sale of Russian steel through them (and due to lower costs for wages and Russian metal raw materials were obtained significantly cheaper than American or European ones), then by the mid-2010s, unprecedented anti-dumping duties were introduced in the United States (up to 240%), and in 2017, Russians were also “pressed down” by the Europeans. This sharply reduced the profits of metallurgists and did not cause a crisis only because the difference in the cost of domestic and American/EU products is large, and even a sharp increase in prices did not cause failure, although the market share of Russian companies in the US and EU decreased several times.
Sometimes dumping leads to unexpected consequences for the economy, as evidenced, for example, by the story of manufacturers of wheels for railway cars. In 2016, the Eurasian Economic Commission established anti-dumping duties of 32% on wheels from the Ukrainian company Interpipe, supplied to Russia and other countries of the Customs Union. Russian OMK and Evraz, which asked for this, immediately after the reduction in the volume of Ukrainian supplies, sharply increased the prices for their railway wheels, taking advantage of the decrease in the competitor’s share. Now the FAS is investigating the conspiracy of monopolists.
An error in calculations during dumping also quickly causes negative consequences. In 1997, the management of Vnukovo Airlines decided to use dumping prices to squeeze out KrasAir and Sibir, their main competitors. As a result, even before August 1998, the economic indicators of Vnukovo’s employees collapsed far below the expected values, and the jump in the dollar exchange rate finally finished off the company.
You can’t just go ahead and cut prices – you first need to think carefully and do the math. The first step is always marketing research of the most profitable product positions of competitors. Once these positions have been identified, you need to decide on your own strategy. When determining it, several factors should be taken into account important factors:
Taking into account all of the above, we note several rules for competent dumping:
If you feel that a player who is seriously dumping has entered your market segment, there may be several response options.
Dumping in the Russian Federation is an act bordering on illegal, so contacting the regional department of the Federal Antimonopoly Service would be logical. You can find the contacts of your FAS. It is necessary to write a statement in which you describe in detail the actions of the competitor, give arguments for the deliberate reduction of prices compared to usual ones, and describe the consequences of such actions (a drop in industry profitability, tax revenues). Separately, it is necessary to dwell on the evidence that we are talking about a planned act, and not about a one-time short-term marketing campaign.
It is difficult to prove intent to undermine the position of competitors in the actions of a particular company; the FAS begins proceedings only in egregious cases. But trying is not torture. If dumping is proven, the FAS will issue a fine to the violator for unfair competition.
This is the easiest way, but sticking to a passive role only makes sense if you are absolutely confident in your position in the market and in the loyalty of your customers. Companies that are not prepared for a long struggle for a buyer often start dumping - and in the end they lose. When you feel that the dumping competitor has begun to run out of steam and is already thinking about his gloomy prospects, you can offer to buy out his business on terms favorable to you and thereby expand your market share.
If you feel that there is no way to fight a dumping competitor, try reformatting your business to a higher price segment. Explore products with higher added value, develop new packaging, conduct a good marketing campaign, focus on quality, exclusivity. Clients who are not interested in the segment of cheap goods will come to you - and here you will be reliably protected from dumping.
If the market is low competitive, or you have personal contacts With the owners of dumping companies, you can try to agree on “non-aggression” - for example, you leave the segment that is most interesting to your partner, and he leaves you the segment where you make the most profit. This strategy works well if companies have a wide range of product lines, but the key goals are different.
Selling at a reduced price the same product as that of a dumping competitor, but not on its own, but in combination with after-sales service, an extended warranty, and additional services. It is clear that all other items, except for the main product, are sold at a price that can compensate for the promotional price. A variation of this strategy is package offers, which, for example, mobile operators love so much. Along with the vital 300 gigabytes of Internet you need, the package includes a certain number of SMS messages, the cost of which is calculated at double price. And the trailer to specified quantity minutes, outgoing intercity calls are charged at triple cost.
If in the previous strategy the price of one product is reduced, but the cost of related services is increased, then in this strategy the cost of the main product remains the same, but the cost of related services is reduced. Or they are included in the price of the main product. For example, you are engaged in tire fitting. A competitor opens nearby and starts offering tire fitting cheaper. Instead of reducing the price to the same level as a competitor, you add to the price, for example, a coupon for free tire inflation for 6 months and free tire bags. Some clients may go to a competitor, but other clients will appreciate the innovation, become your followers and bring new clients through recommendations and word of mouth. After some time, the competitor will not be able to work with low margins or at a loss and will disappear from the horizon.
This is not a strategy to fight, but a way to solve a problem. If you understand that you cannot resist the expansion of a competitor, one of the reasonable options is to try to profitably sell your business to him and try your hand in a different direction.
State competitive procurement, which is carried out within the framework of federal laws No. 44-FZ and 223-FZ, is especially vulnerable to dumping. An unreasonably sharp reduction in the starting price for the sake of winning the auction often led to non-fulfillment of the contract: the supplier simply did not meet the amount declared by him. The work was not carried out in full, the goods were supplied of inadequate quality - this caused damage to the customer, forced contracts to be terminated in court, and time wasted on new tenders. As a result, to protect against unfair competition, special legislative measures were adopted, which, although they do not protect 100% from dumping, still pose a serious barrier to it:
Another way of government regulation of dumping is through measures taken within the Customs Union. At the request of domestic companies, a special commission recommends that the governments of the CU member countries introduce one or another duty on imported goods. The duty can be protective (very high, its purpose is to completely block access of goods to the country by economic means) or protective, which leaves the opportunity for importers to trade, but strengthens the competitive position of local producers.
A purely Russian method of protection against unfair imports is Federal Law No. 165-FZ (“On special protective anti-dumping and countervailing measures for the import of goods”). It provides for investigations into the sale of goods on the territory of the Russian Federation that harm the country’s economy or impede the development of economic sectors due to the deliberate uncompetitiveness of domestic analogues. Based on the results of the investigations, anti-dumping duties are also imposed.
Like any method of promoting a product or company to the market, dumping has positive and negative sides. Let's try to summarize them in one table.
| Pros of dumping | Disadvantages of dumping |
| A product or company can be promoted to any market, regardless of the level of competition in it. | At the first stage, the financial performance of the company drops sharply. |
| This effective tool, which, when used correctly, significantly strengthens the company’s position in the market. | Public opinion and professional communities are not very supportive of dumping firms. |
| Dumping in itself is a powerful marketing tool, so it significantly saves the budget for marketing and advertising. | Without a competent assessment of the market, you can lose your main client, since in the mass consciousness, a low price for some goods and services is a sign of poor quality. |
| At the right approach The range of clientele is significantly expanding. | We constantly have to be wary of anti-dumping procedures, which can undermine the position of a business. |
The term “dumping” in economics is surrounded by a negative halo. And not by chance. This method of market promotion walks a fine line between fair and unfair competition. Its essence is that the price of a product or service is deliberately lowered - in some cases below cost - in order to lure customers away from competing firms, gain a larger market share and displace competitors.
In contrast to the usual price reduction, dumping uses a sharp, radical drop in the value of a product, against all norms and customs. It is not justified by increased production efficiency or lower prices for raw materials. This is a purely voluntaristic, conscious action.
There are many forms of dumping, each of which is used to achieve different goals: destroying a competitor's business, gaining a larger share in a market segment, achieving favorable agreements with competitors, improving sales of related products, and so on.
The result of dumping can be either the conquest of a new market share or the ruin of your own company - it all depends on the specific conditions and proper planning of the dumping campaign.
If dumping is done against you, you can use various strategies - from calmly waiting to leaving the market. The most popular strategies are counter-dumping, promotions and package offers, and contacting the FAS.
The state does not interfere too actively in the market struggle of economic entities (every suspicion of dumping has to be carefully proven), but it takes its interests seriously. As part of government procurement, protective measures have been established against contractors who win auctions by sharply reducing prices. The FAS is also attentive to dumping attempts by foreign exporters.
In general, dumping has both pros and cons; experts advise using it with great caution and, if possible, using less radical methods of competition.
Video for dessert: 10 abandoned places that no one knows about
When conducting procurement, Law No. 44 Federal Law establishes anti-dumping measures.
Dumping is the sale of goods at artificially low prices.
Anti-dumping measures - this is a whole range of measures against those who do not like fair play.
Dumping brings absolute harm to both contractors and customers. Contracts with artificially low prices most often mean fraud: the dumping contractor takes the advance payment, and the work remains uncompleted. On the other hand, the imposition of unfavorable conditions, and this is precisely what dumping inevitably leads to, contributes to a general decline in the level of work and the quality of supplied products.
What is the result? Unscrupulous contractors profit while new, truly low-cost suppliers are prevented from entering the market. To stop the emerging trend, Article 37 of Federal Law 44 on anti-dumping measures appeared.
Let us examine in more detail what mechanisms Article 37 of 44-FZ provides for combating unscrupulous contractors.
So, first of all, in Art. 37, Federal Law No. 44-FZ clearly states how and in relation to which contracts the law applies.
Thus, paragraph 1 states that if the initial, or maximum, contract price is higher than one and a half tens of millions of rubles, and the contractor offers a cost with a difference of a quarter from the initial one, then to conclude a contract it will be enough to provide security in an amount one and a half times higher than that specified in documentation of the security amount.
Cases when we are dealing with contracts whose maximum (initial) price is less than one and a half tens of millions are specified in paragraph 2 of Art. 37. And it says there that either the participant must provide guarantees in the amount of 1.5 times more than the initially specified security indicated in the documentation (but not less than the amount of the advance, if provided), or the participant will have to prove his integrity according to the mechanism provided for in paragraph 3.
The fact is that anti-dumping measures under 44-FZ provide for a unique selection of bona fide contractors. If the proposed cost is a quarter less than the initial price, then the contract will not be signed until the supplier confirms its reliability. IN similar situation he must provide information confirming:
execution of 3 or more contracts within a year prior to the application without penalties or interest;
or, conclusion and execution, within 2 or more years before the application, of 4 or more contracts, and 3/4 of them must be performed without penalties and penalties;
or, within 3 or more years prior to the application, execution of 3 contracts without penalties or interest.
In this case, the amount specified in one of the contracts must be at least 25% of the cost of the contract, for the conclusion of which the company confirms its good faith.
Advice: the supplier must remember that for confirmation it is enough for him to provide register numbers by which the customer can independently find the specified contracts in a single register. The customer has no right to demand any copies of documents or a certain form of confirmation.
Also, the Ministry of Finance explains that if prices fall by a quarter or more, anti-dumping measures do not apply in cases where the procurement is carried out according to unit price goods, work or service. This method is used when the final volume of GWS under the contract is not known in advance.
Compared to the same period in 2015 number of contracts concluded using anti-dumping measures, increased by 14.2%.
At the same time, the average decline the initial maximum price was by 52.8%.
There was almost 40% more than in 2015 contracts terminated concluded using anti-dumping measures - 79 thousand contracts by 51 billion rubles.
Documents on securing the application and confirming the good faith of the participant are submitted as part of the application for participation. Further, they must be included in the package of contract documents when signing it. If, by the time the contract is signed, the participant has not provided the required list of documents confirming its reliability, then he is recognized as “Avoiding the conclusion of the contract.” This is how the application of anti-dumping measures is expressed.
According to the developers of this article of the law, such measures will scare away unscrupulous contractors even before the start of the competition or auction.
In order to determine in advance a purchase, the probability of which will be carried out in bad faith will be high, you need to know several rules. Guided by them, you can quite accurately learn to identify purchases in which dumping and collusion of participants will be present. You can find details about this and much more in our State Order training course.
Application of anti-dumping measures in 44-FZ
In some cases, contracts for carrying out the following are subject to the conditions of anti-dumping measures regarding a 25 percent difference between the initial and proposed prices:
research;
consultations;
developments.
Naturally, in everything related to scientific activity, the cost of work is not always the decisive criterion. In these cases, the customer has the opportunity to identify factors that are important to him. At the same time, the evaluation system may be different for those who offer a price with a difference of less than a quarter of the initial price or more.
In addition to all anti-dumping measures, 44-FZ, paragraph 9, in the case of contracts relating to vital items (medicines, food, emergency aid), requires the provision of documents justifying low price and guaranteeing the possibility of timely delivery. Naturally, the question arises: in what case will anti-dumping measures not be applied? Only if we are talking about the purchase of medicines from the list approved by the Government of the Russian Federation.
OOO ICC"RusTender"
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One of the widely used means of promoting goods to foreign markets is dumping, which is the most striking manifestation of price competition.
Dumping- mass sales of goods abroad at deliberately low prices (below their “normal price”) in order to force competitors out of the market.
In foreign trade practice, dumping refers to the sale of goods abroad. at prices lower than the sales prices of goods in the domestic market of the exporting country causing or threatening to cause material damage to a sector of the economy created in the territory of the importer’s country, or significantly delaying the creation of such. The scale of its application is evidenced by the prevalence of anti-dumping practices in the world (see Table 7).
Table 7
Statistics of anti-dumping proceedings in 1997-98.
|
Quantity proceedings |
Quantity proceedings |
||
|
Australia | |||
|
EU countries | |||
|
EU countries | |||
|
Republic |
Brazil | ||
|
Argentina |
Australia | ||
Source: BIKI - 1999. - No. 60. P.1.
Dumping can be carried out both at the expense of the resources of individual firms seeking to take over the foreign market for their products, and through government subsidies to exporters. In commercial practice, dumping can take one of the following forms:
constant dumping;
predatory (robbery or deliberate) dumping;
random (sporadic) dumping;
reverse dumping;
counter (mutual) dumping.
Constant dumping- constant export of goods at a price lower than fair, i.e. when price reduction is permanent.
Predatory (robbery or deliberate) dumping- temporary deliberate reduction of export prices in order to oust competitors from the market and the subsequent establishment of monopoly prices.
In practice, this may mean exporting goods at prices not only lower than those on the domestic market, but even lower than production costs.
Random (sporadic) dumping- temporary, occasional sale of goods on the foreign market at reduced prices.
This happens when domestic production volumes exceed the capacity of the domestic market or producers accumulate large inventories of goods. The company faces a dilemma - either not to use part of the production capabilities at all and not produce the product, or to produce the product and sell it at a lower price than the domestic one on the foreign market.
Reverse dumping- sale of goods within the country at prices lower than export prices.
It occurs extremely rarely, usually as a result of unforeseen sharp fluctuations in exchange rates, causing a discrepancy between the price of a product in the domestic market of the exporting country and the price in the market of the importing country.
Counter (mutual) dumping- mutual supplies (countertrade) of the same goods between two countries according to dumping prices.
This type of dumping is also rare: in conditions of high monopolization of the domestic market for a certain product in each country.
The economic meaning of dumping is that it necessarily represents not a simple reduction in prices, but price discrimination.
Price discrimination- selling the same product in different markets at different prices.
In this case, prices are reduced in one market, while the same product is sold in other markets at higher prices. In fact, the meaning of the practice of dumping is that it is closely related to the monopolization of markets and the use of monopoly high prices. Due to the fact that a particular company occupies a monopoly position in certain markets (most often this is the domestic market of the company’s home country or the market of the country where the main production facilities are located), it is able to sell its products in this market at inflated (monopoly high) prices. Thus, the dumping firm receives additional (monopoly) profit.
The ability to earn additional profit at the expense of one market makes it possible to pursue a policy of artificially low prices in other markets in order to displace competitors from them. Using underpricing as a means of competition in a particular market makes economic sense only when that supplier has a monopoly in some other market. This reveals the discriminatory nature of dumping practices.
The consequences of foreign dumping on the market of the importing country should be considered both from the point of view of consumers of this product and local producers of similar products. The attitude of consumers of goods in the importing country towards foreign dumping is ambiguous. If the sale of a product at low prices is regular, then it is obvious that consumers (both individual and industrial) can benefit by purchasing such a product. At the same time, if the foreign supplier's market share increases significantly and other suppliers are forced out of the market, the foreign firm will be able to secure monopoly control over the foreign market. This may create a threat that the foreign supplier, having suppressed competitors, will switch to a policy of monopolistic high prices. Thus, dumping is a tool for suppressing competition in the export market and a prerequisite for market monopolization. In the latter case, consumers will suffer losses in the future when the policy of low prices is replaced by a policy of monopolistic high prices.
Manufacturers of goods in the importing country always suffer damage from foreign dumping. They experience severe price competition from foreign suppliers. At the same time, local firms find themselves at an extreme disadvantage. On the one hand, they are forced to respond by reducing prices, and on the other hand, they do not have the opportunity to compensate for the resulting losses by selling goods at inflated prices in any other market. Therefore, they are forced to either incur large financial losses or cede their market share to a foreign supplier.
A means of protecting the domestic market of the importing country from the import of goods at reduced prices is an anti-dumping policy or anti-dumping measures. There are two main ways to eliminate the adverse economic consequences of dumping:
introduction of anti-dumping duties(including in the form of preliminary measures - temporary anti-dumping duties);
acceptance of price obligations by exporters implying refusal to supply goods at reduced prices.
Anti-dumping duties- duties applied as part of anti-dumping measures on a temporary basis and aimed at eliminating the economic consequences of dumping. They are charged above the base rate of customs duty.
Since the action of anti-dumping measures is aimed at neutralizing the effect of underpricing, to the extent numerically, anti-dumping duties are equal (in some cases less) to the amount of such understatement.
To apply anti-dumping measures ( anti-dumping procedures) a number of conditions must be met:
establishing the fact of dumping based on relevant criteria and methodologies;
presence of dumping difference, i.e. the excess of the normal value over the price at which the goods are exported, and determining the amount of underpricing ( dumping margin);
presence of actually proven material damage or threat of material damage to the industry of the importer’s country and determining the amount of material damage;
the existence of a cause-and-effect relationship between the fact of sale at dumping prices and the occurrence of damage.
In accordance with global practice, the Federal Law "On measures to protect the economic interests of the Russian Federation in foreign trade in goods" defines two options for establishing anti-dumping measures. Moreover, if several manufacturers and/or exporters of dumped imports from the same and/or different states are involved in an anti-dumping investigation, the final results for each of them may not coincide. Anti-dumping measures are applied:
in relation to the product that is the subject of dumped import of goods, all producers (exporters) of this product of the relevant foreign state (union of foreign states);
on an individual basis in relation to the goods that are the subject of dumped imports, specific manufacturers (exporters) of this product or associations of such producers (exporters).
The trade and political meaning of anti-dumping procedures is to eliminate the economic consequences of damage caused by dumping and price discrimination (see Fig. 7).
Establishing the fact of dumping involves comparing the prices at which the goods are sold in the country of production and in the country of export (where they are imported), i.e. normal value And export price (export price).
Normal cost of goods- the price of a product at which it is sold in the country of production (exporting country) in the normal course of trade in such a product.
Export price- the price at which the dumped product is imported into the country of export.
Normal value is defined as the price of a similar or directly competing product in the country of the manufacturer or exporter of the product. Most often, domestic prices in the country of production are used as the normal cost. In the practice of applying anti-dumping measures, there are cases when actual prices cannot be used in determining the normal value. For example, trade transactions between related companies or within trade agreements should be excluded from consideration.
In cases where the internal price cannot be used for comparison, alternative methods of establishing the normal value must be sought. Among them, the most commonly used methods for determining the normal price are:
based on the highest price for a similar product intended for export to a third country;
based on estimated prices - the sum of production costs in the country of origin with the addition of moderate administrative, trading and general costs;
application of domestic prices in a third country ( surrogate country method).
As the practice of anti-dumping investigations shows, the choice of a surrogate country is most often arbitrary. This approach to determining the normal price applies to countries with full, or essential features a complete monopoly of trade, in which all domestic prices are set by the state. In other words, direct comparison with domestic prices in such a country may not always be justified. Historically, this method originated in trade with countries with centralized economies. The basis for its use in this case was that the domestic prices of these countries could not be considered economically justified and accordingly used for comparison.
When choosing a surrogate country, specialists strive to find a country with similar technology and similar production standards. In this case, only the technical level of production is formally taken into account, and not the economic factors that determine the competitive advantages of a particular country.
Currently, this method is applied to goods from some transition countries, defined as countries with non-market economies, in particular Russia. Of course, this approach is openly protectionist and discriminatory in nature, since in Russia in the 90s, prices were formed under the influence of market factors and especially not on the basis of administrative decisions.
It is noteworthy that in Lately Additional provisions have been introduced into the anti-dumping legislation of the EU and the USA. They allow businesses accused of dumping to request normal value treatment on an individual basis based on actual prices if the country in which they are located generally applies the surrogate country method (these provisions apply to China and Russia). However, in this case, these enterprises have the additional burden of proving that they set their prices freely based on market factors. So they are still discriminated against.
Dumping margin- the difference between the normal value of a product and its export price.
The value of the dumping margin indicates the amount of price reduction as a result of dumping. As a rule, it is calculated in relative quantities: the ratio of the dumping difference (the normal value of a product minus the export price of such a product) to the export price .
A prerequisite for applying restrictions on the import of dumped goods is to establish not only the fact of dumping, but also the existence of damage or the threat of such damage in connection with the import of goods at dumped prices, as well as the cause-and-effect relationship between them.
In this case, material damage or the threat of its occurrence is interpreted identically to the concepts of “significant damage to an economic sector” and “threat of causing significant damage to an economic sector” given when considering protective measures. With the only clarification that a significant general deterioration in the position of the industry occurs as a result of increased dumping imports of goods.
Example(one of the episodes in the case of supplies of crude magnesium to the EU from Russia and Ukraine).
Crude magnesium is mainly used in the production of aluminum. In 1993, the total consumption of this type of product in the EU amounted to 46 thousand tons. A total of 9 thousand tons were imported from Russia and Ukraine. For comparison, in 1991 the volume of imports from these countries amounted to 2 thousand tons, and in 1992 - 6 thousand tons.
According to the EU Commission, as a result of the fact that Russian and Ukrainian prices were 30-40% lower than prices for comparable European products, Russia captured 13%, and Ukraine - 7% of the EU market. The market share of the EU's only manufacturer, Pechiney, fell from 17% in 1991 to 7% in 1993, resulting in significant job losses. Pechiney tried to reduce the price of its products, but profitability fell so low that its viability was threatened. The EU Commission has recognized that in such a transparent market as the magnesium market, the price of imported products has a significant impact on the prices of the entire market. In other words, the EU Commission found that there was a causal link between the dumped imports of unrefined magnesium from Russia and Ukraine and the damage caused to the only EU magnesium producer.
If at least one of the specified prerequisites (the facts of dumping and the presence of damage or the threat of such damage, as well as the cause-and-effect relationship between them) is absent, the case is considered closed; if not, then the competent authorities continue the investigation to establish the volume of dumping and the damage caused.
It is noteworthy that in the United States, where anti-dumping procedures have a long history and extensive practice, in order to achieve greater validity in the application or non-application of anti-dumping measures, the functions of establishing the fact of dumping and determining material damage and the function of making a decision on the application of measures are differentiated. The decision on the validity of the complaint and the advisability of opening a procedure and the existence of dumping is made by a division of the Ministry of Trade. The presence of material damage is established by the International Trade Commission, which is an independent body. Those. The anti-dumping procedure consists of two parallel investigations carried out by independent authorities(see Fig. 6).
During the anti-dumping investigation, they may be applied as temporary measures. temporary anti-dumping duties.
Temporary anti-dumping duties- duties applied until the completion of the anti-dumping investigation in the event that continued import of goods at dumping prices until the completion of the anti-dumping investigation may lead to adverse economic consequences that cannot be eliminated.
At the same time, special rules are provided (including the refund of paid duties) in the event that the anti-dumping duties imposed after the completion of the anti-dumping investigation procedure differ from the temporary anti-dumping duties or the anti-dumping investigation reveals the absence of grounds for the application of anti-dumping duties. The temporary anti-dumping duty is not subject to transfer to the state budget until a final decision is made to impose an anti-dumping duty.
The investigation for the introduction of anti-dumping measures can be completed without the imposition of temporary or final anti-dumping duties, subject to the acceptance by foreign exporters of the following obligations, as a result of which the harm to domestic producers will cease:
voluntary obligation to refuse dumping prices, so-called price commitment on minimum selling prices;
voluntary commitment to reduce the volume of dumped imports.
In the absence of mutually acceptable price agreements, anti-dumping duties are introduced. They are calculated for each exporter who committed dumping, and their final size should not exceed the dumping difference. The duration of application of measures is limited to the time necessary to neutralize the damage caused by dumping, and should not exceed five years, after which it is expected that anti-dumping duties will be reduced.
In accordance with the Agreement adopted under the GATT, there is a rule that an anti-dumping investigation must be terminated if the relevant authorities determine that the dumping difference (dumping margin) is minimal ( less than 2% of the export price of the product) or that the level of dumped imports is insignificant ( the share of dumped imports from any country accounts for less than 3% of the import of such goods into the importing country).
Thus, anti-dumping procedures include the following main elements:
1) filing an application (complaint) on behalf of the national industry with a request to initiate the procedure. Multilateral agreements and legislation in most countries provide for criterion of sufficient representation for such a statement. As a rule, it is required that it be supported by more than 50% of the enterprises producing this product. However, an investigation is not started if the application is supported by less than 25% of such enterprises;
2) preliminary investigation, the purpose of which is to determine the general validity of the application and make a decision on the advisability of opening a procedure;
3) opening procedure with mandatory official publication and notification of interested parties;
4) collecting the necessary information. This stage involves sending out special questionnaires to all interested parties, visiting enterprises, etc.;
5)establishing the fact of dumping based on collected materials and determination of dumping margin;
6) establishing the fact of material damage or threats of such damage;
7) introduction of preliminary anti-dumping duties, if waiting until the end of the procedure may result in the damage being caused it will be impossible to repair. If, as a result of the investigation, it is revealed that there are no grounds for applying anti-dumping duties, the amounts paid are returned;
8) holding negotiations with exporters about acceptance of price commitments(cessation of dumping in exchange for suspension of the procedure);
9) establishing the existence of a cause-and-effect relationship between the fact of dumping and the fact of damage;
10) preparing proposals or making decisions on the application or non-application of anti-dumping duties.
In general, the procedure never lasts more than 18 months.
The application of anti-dumping legislation against Russian exporters by the world's leading countries is associated with a number of features. Firstly, Russia is not a member of the WTO and cannot claim to be unconditionally granted most favored nation treatment. Secondly, until recently, almost all developed countries classified Russia as a state with a non-market trading system (EU countries only excluded Russia from the list of countries with a non-market trading system for the purposes of anti-dumping policy in April 1998). These circumstances led to numerous anti-dumping investigations against Russian companies and the adoption of subsequent anti-dumping measures in the USA, Western Europe, and Southeast Asia.
The procedure of one of the anti-dumping investigations against Russian manufacturers, revealing not only the content of its main stages and specific anti-dumping measures, but also the most typical mistakes made by both companies and Russian government bodies that did not provide adequate support to domestic exporters, is examined using the example of a specific situation (case) "Russian metallurgical plants in the American steel market" (See Appendix 4).
Having created a legislative framework to protect the interests of domestic producers in foreign trade, Russia intends to intensify its activities to protect the most important sectors of the national economy. The basis for this is numerous facts of dumping imports to Russia, in particular, the import of food from European countries at dumped prices, the supply of cheap Ukrainian steel, and steel pipes.
Example. In the fall of 2000, the Russian government sent an official notification to the Ukrainian Ministry of Economy of its intention to introduce anti-dumping sanctions against the import of Ukrainian-made steel pipes. According to Russian statistics, Ukraine accounted for up to 80% of the total volume of pipes imported to Russia. As a result, Ukraine occupied 30% of the Russian pipe market. At the same time, supplies to Russia grew steadily: during 2000 they more than doubled. Experts argued that the quality of Ukrainian pipes was lower than that of Russian ones, and supplies were at dumping prices. A similar situation arose not only with pipes. Shortly before the Russian government's demarche of its intention to introduce anti-dumping sanctions against Ukrainian pipe manufacturers, the largest Russian metallurgical plants - Magnitogorsk Iron and Steel Works and Severstal - announced their intentions to initiate anti-dumping proceedings against Ukrainian producers of hot-rolled sheets, reinforcing steel and long products, citing the fact that that the supplied Ukrainian metal products are 10% cheaper than Russian ones.
Meanwhile, it cannot be said that the import of cheap Ukrainian steel into Russia plays a completely negative role. Of course, Russian metallurgists are incurring certain losses. However, on the other hand, according to machine builders, it was the presence of cheap Ukrainian imports that restrained Russian metallurgists from raising prices for their products to the world level, which undoubtedly benefited consumers of steel products.
Russia's appeal to a civilized way of resolving a conflict with one of its trading partners through an anti-dumping procedure indicates that it has entered a new stage of trade relations - the actual implementation of a policy of protectionism in accordance with generally accepted international rules.
An unscrupulous supplier who submitted a lower price to the customer in an auction or competition could win. But after the adoption of the law described, anti-dumping measures were taken, which means that each performer will be checked if he offered a price lower than other participants.
Art. 37 of Federal Law 44 consists of 12 points. The last changes to the article were made on June 4, 2014, with the adoption of Federal Law No. 140. When latest changes clause number 12 was added to the article. Article 37 describes the implementation and use of anti-dumping measures during procurement auctions and tenders.
First point. When the monetary amount of the contract is estimated at 15 million rubles or more, and the procurement participant (buyer) proposes to change the price by 25% lower, an anti-dump is applied. measures. This means that the contract can be signed and implemented only if the participant who proposed the price reduction guarantees the implementation of the order by increasing the monetary guarantee by one and a half times. The conditions are described in detail in the contract. If the contract specifies an advance, the amount should not be less than it.
In Part 2 of Art. 37 law 44 The same situation is described as in the first paragraph. When the NMCC is 15 million rubles or more, and the buyer offers a price lower by 25% or more, anti-dumping measures are applied. In contrast to the information provided in paragraph one, in paragraph two, instead of a monetary guarantee, the participant is asked to provide special documentation confirming his good faith. The papers must be new and current at the time of signing the contract.
In the third point The article described contains information about the securities provided by the participant in the transaction to confirm his good faith. The information that he provides to the other party to the transaction must be recorded in a special register and satisfy certain requirements.
Among these requirements:
The third paragraph states that the main requirement of anti-dumping measures is the ratio of the cost of one contract equal to the cost proposed by the supplier of at least 20%.
In the Federal Law 44 parts 4 art. 37 information is provided that if the customer is holding a competition, then the information described in paragraph three must be attached along with the application for participation in the competition. If the information included with the application is not officially confirmed, the inspection commission has the right to reject the supplier’s request. However, the commission is obliged to explain to the competition participant the reasons for rejecting the application and describe them in the inspection protocol. After signing the protocol, the commission is obliged to notify the supplier of the rejection of the application within one working day. This paragraph also confirms the information provided in paragraph 1. If the supplier did not provide information about his own integrity, then he is obliged to pay a monetary guarantee of 1.5 times the amount of security for the fulfillment of the contract for participation in the competition.
Fifth point. This paragraph says that if the customer organized not a competition, but an auction, the information described in paragraph three is provided by the supplier to the customer at the time of transfer of the signed contract. If the contractor did not provide the buyer with information about his own integrity when transferring the signed contract or if the verification commission determined that the information provided by the auction winner is unreliable, then the supplier will be recognized as having evaded signing the contract and fulfilling obligations. All information will be entered into the protocol by the commission and added to the appropriate register.
Sixth point. This clause describes that the information or payment included in clauses 1 and 2 must be provided by the contractor before the conclusion of the contract. As in the fifth paragraph, failure to comply with this provision of the law is considered an evasion of concluding a contract and fulfilling one’s own obligations. According to the described Article 37, information about the supplier is recorded by the commission in the protocol and sent to the register, all participants in the competition or auction are notified.
In the seventh paragraph of Article 37 information is provided separately for orders that require scientific, research, design, scientific and technical work and consulting services. Thanks to anti-dumping measures, the customer has the right and opportunity to formalize methods for assessing the order in a competition or auction.
The customer has the right to this only in cases where:
In the eighth point information was issued that anti-dumping measures will be applied to contracts where the price offer was higher than 25% below the contract's NMC. In such cases, the decision was to assign a price offer in the amount of 10% of the amounts of other evaluation criteria formalized in the contract.
In Part 9 of Art. 37 law 44 information on the application of anti-dumping measures in contracts for the supply of goods has been compiled. If, in the case of an order for any product, the price for execution is proposed to be more than 25% lower than the NCM, then the participant who proposed the price must provide confirmation of it.
The supplier provides the following list of papers:
Tenth point. The tenth paragraph specifies cases where, when introducing anti-dumping measures, a participant is obliged to provide confirmation of the price he offers for fulfilling the obligations of the contract:
At point 11 The described article states that anti-dumping measures and liability are applied to the participant in full, without concessions, if he was recognized by the commission as having evaded concluding a contract.
According to latest edition 37 articles, it was added point number 12 . It states that anti-dumping measures do not apply to participants purchasing medicines that are vital for the population.
Article 37 of Federal Law No. 44 was adopted to regulate and control contract prices. This article regulates the processes and measures that prevent artificial underestimation or overestimation of the value of contracts during auctions or competitions. For a more detailed study of procurement opportunities, it is recommended to read the described law.
You can download the text of the Federal Law of 04/05/2013 N 44-FZ “On the contract system in the field of procurement of goods, works, services to meet state and municipal needs”
