St Petersburg Property Relations Committee is warned not to “give out” hostels without competitive bidding

On 20 October 2016, St Petersburg OFAS issued a warning to the Property Relations Committee (PRC) that actions, which can result in violating the antimonopoly law, are unacceptable.

“The Delovoi Peterburg” business newspaper “(St Petersburg) published an article: “The new PRC Head, Alexander Semchukov, is ready to give out premises for hostels without competitive bidding”. The article reports on PRC intentions to give the owners of hostels and mini-hotels a possibility to get state non-residential premises without open tender procedures.

The newspaper quotes PRC Deputy Chairman: “We have already handed over to the Investment Committee the first 20 addresses of the premises that can be used for hostels and mini-hotels; they will be allocated without competitive bidding”.

St Petersburg OFAS warns PRC that its planned actions can lead to breaching Part 1 Article 15, Part1 Article17.1, and Part 1 Article 20 of the Federal Law “On Protection of Competition”.

Under Part 1 Article17.1 of the Federal Law “On Protection of Competition” contracts providing for transfer of the rights of possession and use of state property can be concluded only upon the outcome of a tender or an auction. In its explanations FAS emphasizes that if state or municipal property is transferred, the owner must take into account Article 15 of the Federal Law “On Protection of Competition”, which, in its turn, prohibits competition-restricting acts and actions by the authorities of the subjects of the Russian Federation.

At the same time, under the Federal Law “On Protection of Competition” state preferences may be granted, in particular, to support small and medium business (Article 19 of the Federal Law “On Protection of Competition”). In this case, however, it is mandatory to publish a list of property intended for allocating to small and medium companies.