Case on an anticompetitive agreement on Vladivostok passenger transportation market will be reviewed

Primorie OFAS defended a review of the case against Vladivostok Authority, “No.1 VPOPAT” Vladivostok Municipal Enterprise and “Flagman-Avto” Ltd. at the Arbitration Court of the Far East District.

Since 2008, 19 commercial carriers have operated on Vladivostok passenger transportation market, competing with each other. Vladivostok also had “No.1 VPOPAT” but it did not operate on the market in the absence of carriage stock.

In May 2008, Head of Vladivostok Authority initiated reorganization of the city route network and modernization of the bus fleet. In 2009 he decided to restore municipal carriers and purchase municipal transport.

To this purpose Vladivostok Authority exercised actions contrary to the antimonopoly law:

- Concluded contracts for regular passengers transportation with “No.1 VPOPAT” without tender procedures

- A considerable part of vehicles were acquired by increasing the authorized capital of municipal enterprises and payments from the city budget

- Municipal guarantees for purchasing buses and subsidies for compensating some costs were granted to municipal enterprises only.

Since 2010 Vladivostok Authority granted “No.1 VPOPAT” and “No.3 VPOPAT” Municipal Enterprise over 500 million RUB from the budget on preferential conditions.

“Flagman-Avto” Ltd. (a company affiliated with Head of Vladivostok) had an important role in the case, becoming the official and the only one MAN dealer in the Primorie region. It gained economic advantages using administrative resources Vladivostok Authority.

On 3 July 2015 the Commission Primorie OFAS found that Vladivostok Authority, “No.1 VPOPAT” and “Flagman-Avto” Ltd. violated the antimonopoly law by concluding an agreement that restricted competition.

OFAS requested Vladivostok Authority to eliminate the competition-restricting agreement and perform actions aimed at supporting competition.

Vladivostok Authority disagreed with the conclusions reached by Primorie OFAS and filed a lawsuit.

The Court of First Instance and the Appeal Court found the arguments of Primorie OFAS unlawful.

Insisting on its position, OFAS filed a claim to the Arbitration Court of the Far East District that reversed the judicial acts on 29 March 2017 and forwarded the case for reconsideration.