FAS obligated “NCSP” to transfer income from monopolistic activity to the federal budget

On 22 March 2017, FAS found that “Novorossiysk Commercial Sea Port”  PJSC (“NCSP” PJSC) violated the antimonopoly law by abusing dominance: fixing and maintaining monopolistically high prices for transshipment of ore, fertilizers, containers, ferrous and non-ferrous metals, oil and petrochemicals in the  Novorossiysk port (Clause 1 Part 1 Article 10 of the Federal Law “On Protection of Competition”).

The case against the stevedoring company was opened on 17 June 2016 upon monitoring prices for cargo loading-unloading in seaports of the Russian Federation. Following the orders of the President and the Government, FAS investigated the market of stevedoring services in Russian seaports in 2013 - 2016. The findings revealed that in most cases the tariffs for the services were set by stevedores in foreign currency and since the Federal Tariff service made a decision to abolish price regulation in 2013-2014, price in RUB for stevedoring services in Russian ports had increased on average by 2.5 times.

Investigating the case, the antimonopoly body received petitions from “Rosneft” NK” PJSC and “Russneft” NK” PJSC and brought them in as claimants on the case. “Russian railways” OJSC was brought in the case as an interested person.

FAS Commission established that “NCSP” PJSC fixed prices on the services in US dollars. “NCSP” PJSC increased the costs of services for cargo loading-uploading in the export-import segment from 1 January 2015.

The analysis of financial-and-economic operations of the natural monopoly showed that the end costs of its service increased without any objective reasons. Expenses of “NCSP” PJSC required for producing and implementing services for transshipment of ore, fertilizers, containers, ferrous and non-ferrous metals, oil and petrochemicals changes, however, those changes did not correspond to the increased stevedoring tariff. The composition of the buyers of the services of “NCSP” PJSC for transshipment of ore, fertilizers, containers, ferrous and non-ferrous metals, oil and petrochemicals changed insignificantly. The general conditions for circulation of goods (services) of “NCSP” PJSC did not change or the changes were not in proportion to the price changes.

The profit of “NCSP” PJSC in 2015 increased twofold (207%) in comparison with 2014 and cost–effectiveness rose from 56 to 300%.

FAS Commission concluded that “NCSP” PJSC, which ahs the dominant position and is a natural monopoly, did not have any grounds to increase rated in 2015. Therefore, the company abused its dominance fixing the monopolistically high price.

In FAS opinion, violations could be avoided if “NCSP” PJSC would not set the costs of services in US dollars and timely covert the rated from foreign currency into Russian Rubles.

Taking into account the case circumstances, FAS Commission submitted the case to FAS Presidium to consider the content of the injunction. The Presidium issued an injunction to “NCSP” PJSC to transfer the income gained through its monopolistic activity to the federal budget.