Motion on re-consideration in the process of appeal of the Moscow Arbitration Court verdict
[on the letterhead of the Federal Antimonopoly Service]
05.10.2004 No. IA/6576
Higher Arbitration Court of the Russian Federation
101000 Moscow, Maliy Kharitonievsky per. 12
Applicant: OAO «Vnukovo Airport»
119027 Moscow
1st Reysovaya st. 12
State Body Which Adopted the Act Being Disputed: Russian Federation Ministry for Antimonopoly Policy and Support of Entrepreneurship
123995 Moscow, D-242, GSP-5
Sadovaya Kudrinskaya st. 11
Third party: OOO «Provider Service»
113035 Moscow
Kosmodamianskaya st. 40-41 bldg. 3
MOTION
on re-consideration in the process of appeal of the Moscow Arbitration Court verdict of 17 November 2003 on the case No. A-40-38117/03-92-410, the Moscow Arbitration Court verdict of 25 March 2004 on the case No. A-40-38117/03-92-410 and the Federal Arbitration Court of the Moscow District verdict of 5 July 2004 on the case No. КA-40/5362-04
The Moscow Arbitration Court (judge Utochkin I.N.) verdict of 17 November 2003 (hereinafter the «Court Verdict») invalidated the decision and injunction of the MAP of Russia of 30 July 2003 on the case No. 1 05/69-03 (hereinafter - the decision and injunction - the MAP of Russia).
The Moscow Arbitration Court (chairman Maslennikov A.V., judges Ternova L.V., Kiseleva O.V.) verdict of 25 March 2004 (hereinafter the «Appeal Resolution») affirmed the Court Verdict and dismissed the appeal of the MAP of Russia.
The Federal Arbitration Court of the Moscow District (chairman Agapov M.R., judges Letyagina V.A., Tubolets I.V.) verdict of 5 July 2004 (hereinafter the «Cassation Resolution») affirmed the Court Verdict and the Appeal Resolution and dismissed the appeal of the Federal Antimonopoly Service.
MAP of Russia got an application from OOO «Provider Service» of 23 October 2002 No. 058 with the request to examine the activities of administration of OAO «Vnukovo Airport» in terms of compliance with the Russian antimonopoly regulations.
In accordance with clause 2.1 of the Rules of Consideration of Cases on Violation of Antimonopoly Legislation, approved by the MAP of Russia Order No. 91 of 25 July 1996, by the order of the MAP of Russia No. 98 of 8 April 2003 there was established a Commission on consideration of a case with respect to OAO «Vnukovo Airport» on suspicion of violation of Article 5 of the RSFSR Law of 22 March 1991 No. 948-1 «On Competition and Restriction of Monopolistic Activities in the Commodity Markets» (hereinafter the «Competition Law») and on the same day there was issued a resolution on instituting proceedings on the case No. 1 05/69-03 against OAO «Vnukovo Airport».
While considering the case the Commission has found out the following:
OAO «Vnukovo Airport» is the natural monopoly and under resolution of the Board of the MAP of Russia No. 16/1 of 28 April 1998 has been included into the Register of Natural Monopolies on Transport in the field of airport services.
While providing airport services OAO «Vnukovo Airport» interacts with air companies providing services (airport services) to them, while tariffs on these services are regulated by the State represented by the Federal Tariff Services (as of the moment of consideration of the case No. 1 05/69-03 by the Commission - FEK of Russia).
Airport services do not include services on provision of catering at aircrafts - they are provided to air companies in the territory of Vnukovo airport by catering shops OOO «Alazani-Edem», ZAO «Vnukovo-Evrest», OOO «Grand Service», ZAO «Restaurant at MA Vnukovo». OAO «Vnukovo Airport» has permanent effective long-term contracts with these legal entities on provision of catering services at aircrafts.
While concluding such agreement with a catering shop, OAO «Vnukovo Airport» follows mainly the requests of air companies having agreements with the relevant catering shop in the territory of Vnukovo airport.
By conclusion of such agreement a catering shop gets permanent unimpeded access to the restricted zone of the airport and can place its production facilities on that territory.
If the air company gets flight meals from a supplier which does not have such a contract with OAO «Vnukovo Airport», then the access to the restricted area of the airport would be granted on the basis of one-time passes.
OOO «Provider Service» has sent letters to OAO «Vnukovo Airport» asking to conclude a permanent contract. However, OAO «Vnukovo Airport» has refused to do arguing that the needs of air companies are being satisfied by four catering shops operating in Vnukovo airport.
On the basis of the above, the MAP of Russia concluded that actions of OAO «Vnukovo Airport» violate clause 1 Article 5 of the Competition Law, namely creation of conditions of access to the market of flight meals supply for passengers of aircrafts in Vnukovo airport, which disadvantage OOO «Provider Service» in comparison with other business entities, which have contracts with OAO «Vnukovo Airport» on flight meals supply for passengers of aircrafts flying to/from Vnukovo airport. After consideration of the case the MAP of Russia has issued a resolution and injunction.
I. While acknowledging the resolution and injunction of the MAP of Russia invalid, the first instance court pointed out on the following circumstances.
1. Delivery of flight meals onboard of the aircraft is not within the scope of activities of natural monopolies and is not subject to the requirements of Article 5 of the Competition Law.
2. MAP of Russia did not provide evidence certifying that OAO «Vnukovo Airport» impedes OOO «Provider Service» to deliver flight meals onboard of the aircraft of the air company, with which OOO «Provider Service» has a contract.
II. The court of appeal dismissing the Court Verdict provided the following argument in addition to those made by the first instance court: access of legal entities to the airport territory in order to deliver the flight meals to aircrafts cannot be classified as airport services related to the field of activities of natural monopolies. The set restrictions on access of individuals and legal entities to the airport territory are not monopolistic activities but the activities aimed at ensuring safe flights therefore such activities are not subject to antimonopoly body regulation.
III. The cassation court agreed with the said arguments of both the first instance and appeal courts and also made the following conclusions.
1. Availability of a certificate, license and a direct agreement with air carrier are the conditions for accessing the flight meals market in Vnukovo airport.
2. There were no evidences certifying that OAO «Vnukovo Airport» holding a dominant position at the airport services market and having the exclusive right to use the airport infrastructure was refusing or hindering OOO «Provider Service» from its use in light of performance of its obligations on delivery of flight meals under direct agreements of OOO «Provider Service» with air carriers being serviced in Vnukovo airport.
3. The antimonopoly body did not prove with evidence the refusals of air carriers from conclusion of the agreement, request to terminate agreements due to absence of a permanent agreement on accessing the Vnukovo airport territory between OOO «Provider Service» and OAO «Vnukovo Airport».
4. Airport servicing presumes preliminary agreement with airport services of the time of arrival and departure of aircrafts of the particular air companies, while the antimonopoly body did not prove the existence of an obligation of OOO «Provider Service» to deliver flight meals to the particular air company's aircraft in case of unscheduled landing due to weather conditions or force majeure events in Vnukovo airport.
The Federal Antimonopoly Service considers that by adopting the said Verdict and Resolutions the courts have violated and misused provisions of the material law.
I. 1. The main characteristics of a dominant position regardless of the market type is the ability of a business entity to unilaterally:
- make a decisive influence on the general conditions of circulation or provision (turnover) of goods, works, services;
- impede access to the market for another business entities.
Article 5 of the Competition Law prohibits actions (inaction) of a business entity holding a dominant position, which result or might result in creation of conditions of accessing the commodity market, exchange, consumption, purchase, production, sale of goods, which disadvantage one or several business entities compared to other business entities (discriminatory conditions). The Competition Law does not require that the dominating business entity impedes access to the same market, on which it works and dominates himself.
Therefore, OAO «Vnukovo Airport» being a natural monopoly holds dominant position at the market of airport activities, hence it may create and creates conditions of access to the markets in the field of airport activities adjacent to the market of airport activities. It also depends on the fact thin the territory of Vnukovo airport is a territory with restricted access and it is OAO «Vnukovo Airport» which regulates the procedure for granting access thereto.
2. The first instance court did not take into account in its decision that OAO «Vnukovo Airport» refuses to conclude a permanent contract with OOO «Provider Service» on the basis of one-time passes, which substantially hinders and obstructs employees of OOO «Provider Service» to be engaged in contractual relations with air companies related to delivery of flight meals to the aircrafts.
While considering the case on violation of clause 1 Article 5 of the Competition Law the Commission of the MAP of Russia did not have to prove the fact of preventing from delivery of flight meals, since this circumstance is not a qualifying characteristic of violation of the antimonopoly legislation, but should have found out that the business entities have unequal conditions of access to the market of supply of flight meals to the aircrafts, therefore, some of them conclude a contract with OAO «Vnukovo Airport», while the others do not have such. The Commission of the MAP of Russia have identified these facts and their evidence have been provided to the court.
Therefore, the conclusions of the first instance court are not based on actual circumstances of the case and are made in the result of wrong interpretation and implementation of material law.
II. The Commission of the MAP of Russia considered an issue of creation of unequal (discriminatory) conditions of access to the market via refusal from concluding of a contract on the right to supply flight meals to the aircrafts. The injunction of the MAP of Russia contains requirements aimed at ensuring equal conditions for competing business entities but not at regulation of the procedure for granting access to the airport territory.
Based on the above, the Appeal Resolution violates public interests connected with the state antimonopoly control since such practice allows business entities dominating at one market to negatively influence on competition at the adjacent market, thus creating prerequisites for undue antimonopoly regulation and actual impossibility to carry out public controlling functions of antimonopoly body.
III. 1. The conclusions of the cassation court are made on the basis of the analysis of only one standard agreement on airport services for regular flights (clause 2.2.22) concluded by OAO «Vnukovo Airport» and carriers (hereinafter the «standard agreement»).
At the same time the antimonopoly body presented two standard agreements to the court. On the basis of the analysis of clause 2.2.24 of the second standard agreement, one may notice that only OAO «Vnukovo Airport» or handling companies specifically contracted by OAO «Vnukovo Airport» are entitled to supply flight meals to the carriers, which conclude agreements on airport servicing of regular flights with OAO «Vnukovo Airport».
2. Flight meals suppliers which do not have a contract with OAO «Vnukovo Airport» on supplying / delivering flight meals to air companies may have one-time access to the airport territory to supply / deliver flight meals to aircrafts only upon preliminary inquiry of the air company, which has to be submitted beforehand.
Therefore, if for some reason (technical mistake, loss, etc.) such preliminary inquiry of the air company is not available, a one-time pass to the flight meals supplier will not be granted.
In these circumstances OOO «Provider Service» cannot have guarantees of timely receipt of one-time pass to the airport territory, which is an obstacle for performance by the catering shop of OOO «Provider Service» of its obligations on delivery of flight meals under direct contracts with air carriers in the territory of Vnukovo airport.
3. Clause 1 Article 5 of the Competition Law prohibits actions of a business entity holding dominant position, which result or may result in prevention, restriction, elimination of competition and/or infringe the interests of other business entities.
Absence of a permanent contract between OOO «Provider Service» and OAO «Vnukovo Airport» may result in refusals of air carriers to conclude agreements with OOO «Provider Service» or requests to terminate earlier concluded agreements.
Thus, the actions of OAO «Vnukovo Airport» expressed in the form of refusal to conclude a permanent agreement with OOO «Provider Service» may result in infringement of the latter's interests, which violates Article 5 of the Competition Law.
4. Aircrafts of air companies ZAO «Streamline OPS», ZAO «MAI-Service» and OOO «VIP service 2000» normally fly from/to Sheremetyevo airport.
At the same time, often there are situations when for some reasons aircrafts of these air carriers fly from/to Vnukovo airport. In these cases employees of the catering shop get access to the restricted area of the airport under one-time passes.
One-time passes allowing employees of the catering shop, including the employees of OOO «Provider Service», to enter the territory of Vnukovo airport are issued on the basis of inquiry of air carrier performing the flight from/to Vnukovo airport, which has to be filed 48 hours before the flight.
Clauses 2.1.1 and 2.1.10 of the agreements between OOO «Provider Service» and ZAO «Streamline OPS», ZAO «MAI-Service» and OOO «VIP service 2000» stipulate that OOO «Provider Service» is obliged to deliver flight meals for the aircrafts of the named air carriers, to provide services on delivery of the products to the airport and remove waste and non-used products after the flights.
According to the concluded agreements with air carriers, OOO «Provider Service» also undertakes to supply flight meals to aircrafts in case of unscheduled landing of the aircrafts of the said air carriers for any reason, with the exception of force majeure events, in the airports other than planned, including Vnukovo airport.
The procedures for issuing one-time passes stipulated by Vnukovo airport do not guarantee the catering shop of Vnukovo airport that it would fulfill its contractual obligations vis-a-vis air carriers in case of unscheduled landing of their aircrafts in Vnukovo airport.
Given the above, the interests of OOO «Provider Service» can be infringed due to the discriminatory conditions created by OAO «Vnukovo Airport» of granting access to the restricted area of the airport to OOO «Provider Service» (on the basis of one-time passes) in comparison with OOO «Alazani-Edem», ZAO «Vnukovo-Evrest», OOO «Grand Service», ZAO «Restaurant at MA Vnukovo» (on the basis of the permanent agreements), which violates clause 1 Article 5 of the Competition Law.
Therefore, the above position of the courts allows to make negative influence on competitive relations at the adjacent markets due to differentiated approach of the business entity holding a dominant position at one market while concluding agreements with business entities acting on the adjacent markets.
IV. The Russian Federation Higher Arbitration Court (hereinafter the «RF VAS») states in Clause 11 of the Review of Practice of Resolution of Disputes Connected with Implementation of Antimonopoly Legislation (Informational Letter of the Russian Federation Higher Arbitration Court No. 32 of 30 March 1998) that antimonopoly control over entities dominating at a certain market is limited by territorial and commodity borders of that market.
Such position of the RF VAS is illustrated with the example of compulsion of the rail carrier by the antimonopoly body to conclude an agreement on provision of services which are not within the scope of the carriage market, at which the rail carrier holds dominant position.
However, the example given by the RF VAS is slightly different from the situation with Vnukovo airport.
While in case with the rail carrier there is no factor of influence of the market, at which the rail carrier is recognized as dominating (market of freight traffic, passenger transport and carriage of baggage), on the market of forwarding services, delivery and removal of containers with luggage, i.e. these markets were not adjacent.
In this case the markets of airport services and catering are closely connected with each other (are adjacent), while OAO «Vnukovo Airport» being a natural monopoly at the market of airport services is also able to influence on the market of catering (delivery of flight meals).
This motion is filed by the Federal Antimonopoly Service due to the following reasons:
Under the Russian Federation Presidential Decree No. 314 of 9 March 2004 «On the System and Structure of the Federal Executive Authorities» the newly established Federal Antimonopoly Service (clauses 12, 13 of the Decree) got the functions of control and supervision, including the functions of the state control over observance of antimonopoly legislation, from the abolished MAP of Russia.
The RF VAS Chairman has clarified in the Letter No. S1-7/UP-905 of 19 July 2004 that the federal executive authorities, which have been granted with the relevant functions abolished bodies, should participate in the arbitration proceedings the instead of the abolished bodies.
On the basis of the above and Articles 292, 293, 299, 304, 305 of the Russian Federation Administrative Procedural Code, the Federal Antimonopoly Service
REQUESTS
to invalidate in full the Moscow Arbitration Court verdict of 17 November 2003 on the case No. A-40-38117/03-92-410, the Moscow Arbitration Court verdict of 25 March 2004 on the case No. A-40-38117/03-92-410 and the Federal Arbitration Court of the Moscow District verdict of 5 July 2004 on the case No. КA-40/5362-04 and to adopt new resolution on refusal to satisfy claims of OAO «Vnukovo Airport».
Attachments:
1. Copies of the contested court acts on 6 p. in 1 copy;
2. Copies of the agreements between OOO «Provider Service» and ZAO «Streamline OPS», ZAO «MAI-Service» and OOO «VIP service 2000» on 11 p. in 1 copy;
3. Copy of the letter No. S1-7/UP-905 of 19 July 2004 on 1 p. in 1 copy;
4. Copy of this motion on 7 p. in 3 copies.
[signature] I.Yu. Artemiev
Officer Romanenkova I.I.
253-9621