The Supreme Court drew a line in a dispute between Voronezh OFAS and the Regional Unified Processing-Service System

On 5 September 2016, the Supreme Court of the Russian Federation dismissed a claim of “the Regional Unified Processing-Service System for the Housing-and-Utility Sector of the Voronezh Region” JSC to transfer the judgment of Voronezh Regional Arbitration Court and the ruling of the Arbitration Court of the Central District for consideration by the Judicial Collegium on Economic Issues.

Last year Voronezh OFASinvestigated a case in violating the antimonopoly lawupon complaints from physical persons – owners of premises in multi-apartment  blocks as well as Office of the Federal Security Service in the Voronezh Region against the “Regional Unified Processing-Service System” JSC and 16 managing companies in Voronezh under Clause 1 Part 4 Article 11 of the Federal Law “On Protection of Competition” (prohibiting competition-restricting agreements on imposing disadvantageous contract conditions upon counteragents or irrelevant to the contract subject). Investigating the case, the antimonopoly body established that the “Regional Unified Processing-Service System” JSC and 16 managing companies in Voronezh concluded agreements for supporting informational and technological interaction for settlements with the owners and residential property tenants as well as utility suppliers. The economic entities - participants to the agreements – made arrangements to receive all collected funds for the utility services rendered by the managing companies on the account of the “Regional Unified Processing-Service System” JSC rather than accounts of managing companies. Collecting funds on its account, the “Regional Unified Processing-Service System” JSC acts in its own right.

Under Clause 3 Part 3 Article 162 of the Housing Code, the utility payment procedure is among substantial provisions of the contracts for managing apartment blocks.

Part 7 Article 155 of the Housing Code of the Russian Federation, Clause 63 (Paragraph 2) of the Rules for rendering utility services to the owners and tenants of premises in apartment blocks, approved by No. 354 Decree of the Government of the Russian Federation of 06.05.2011 and contracts for  managing apartment blocks concluded by Voronezh managing companies with consumers of housing-and-utility services, established the payment procedure for housing-and-utility services, in accord with which owners (tenants) of premises in apartment blocks pay for housing-and-utility services directly to the service provider: in the case in question, to a particular managing company or  a payment agent, acting upon its instructions or a bank paying agent.

Under the Federal Law “On operations for accepting payments from physical persons, performed by payment agents”, when accepting payments the payment agents must use a special bank account(s) for making payments. The Law also prohibits putting cash accepted as payments from physical persons to a special bank account and suppliers receiving funds, accepted by payment agents as payments, on bank accounts that are not special bank accounts.

The Court of First Instance and the Cassation Court established that the funds from physical persons for the housing-and-utility services were received directly on the “Regional Unified Processing-Service System” JSC rather than on a special bank account for settlements with resource suppliers, which is in breach of the Law on accepting payments from physical persons.

The objective of normative regulation of housing relations is to ensure settlement transparency in the field of housing-and-utility services.

Therefore, including another person in the payment system - the “Regional Unified Processing-Service System” JSC, not specified by the current housing law, and when no decisions were made by the owners with regard to that person, restricts competition on the market of services for managing apartment blocks in Voronezh. Implementing the arrangements, the “Regional Unified Processing-Service System” JSC and the managing companies in Voronezh unreasonably changed the general conditions for circulating housing-and-utilities services in the market of managing apartment blocks in Voronezh by establishing a new procedure for making  payment for housing-and-utility services to the “Regional Unified Processing-Service System” JSC – a person that is not a party to the contracts for managing apartment blocks and a provider of housing-and-utility services or a payment agent.

Ultimately, the Supreme Court ruled that the agreement on making payments for housing-and-utility services and the actual procedure for executing it directly affect the rights and interests of the physical persons who make the payments. The Court of First Instance and the Cassation Court reasonably concluded that changing the procedure for transferring the funds for utility services by the agreement unlawfully imposes disadvantageous conditions upon residents, which is contrary to Clause 1 Part 4 Article 11 of the Federal Law “On Protection of Competition”.

The “Regional Unified Processing-Service System” JSC and managing companies attempted to challenge the decision and determination of Voronezh OFAS on the case in Voronezh Regional Arbitration. The Court, however, fully dismissed the claim and confirmed legitimacy and reasonableness of the legal approach taken by Voronezh OFAS applying the antimonopoly law on the market of housing-and-utility services.

Now the Supreme Court has given the final legal evaluation of the actions undertaken by the “Regional Unified Processing-Service System” JSC.