“LUKOIL-ASTRAKHANENERGO” LTD. VIOLATED THE ANTIMONOPOLY LAW

The company was avoiding a contract on heat energy transmission

In December 2018, FAS received a statement from “Kolos” Astrakhan Municipal Unitary Enterprise that “Lukoil-Astrakhanenergo” Ltd. had refused to conclude a contract for heat energy transmission.

Under the Law on heat supply (No.190-FZ) and the Rules for organizing heat supply in the Russian Federation between a heat network and an integrated heating supplier (IHS), in specified cases a contract for heating energy transmission services is mandatory.

The Ministry of Energy assigned IHS status to “Lukoil-Astrakhanenergo” Ltd. The company has the dominant market position.

Having considered a statement of “Kolos” Astrakhan Municipal Unitary Enterprise, FAS exposed signs of violating the antimonopoly law and issued a warning to “Lukoil-Astrakhanenergo” Ltd. Within 15 days the company had to offer a contract to “Kolos” for heating energy transmission services under the conditions specified in the law. In addition, FAS sent explanations on executing the warning to “Lukoil-Astrakhanenergo” Ltd. and extended the period for executing it.

The company failed to execute the warning within the designated period. “Lukoil-Astrakhanenergo” Ltd. filed a lawsuit; however, the Court of First Instance and the Appeal Court confirmed legitimacy of FAS warning.

If an economic entity fails to execute the warning of the competition authority, FAS opens an antimonopoly case.

FAS initiated antimonopoly proceedings against “Lukoil-Astrakhanenergo” Ltd. in May 2018. On 29 August 2018, FAS Commission found that the company violated the Federal Law “On Protection of Competition” (Clause 5 Part 1 Article 10). Such violations are punishable under Article 14.31 of the Code on Administrative Violations. The size of the fine will be determined later upon the outcome of the administrative case.

Deputy Head of FAS Vitaly Korolev commented: “The importance of including a special antimonopoly Article in the Law on heating supply is already corroborated. Last year we undertook a lot of legislative efforts, the results of which was introducing specific control and prompt FAS remedies against unlawful actions of integrated heating suppliers”.