FAS ON THE SITUATION IN THE MARKET OF RAILWAY WHEELS

FAS monitors the environment on the railway wheel market due to demand – supply misbalance in Russia since 2017

According to the information in mass media, in 2019 “Vyksa Steel Works” JSC (the largest manufacturer of whole-rolled wheels in Russia) breaks long-term contracts with the purpose to re-conclude the earlier contracts at the current spot prices.

Under Russian law, such practice is unacceptable of consumers observe all contract conditions and can contain elements of abusing dominance through unreasonable refusals, avoiding contracts and imposing disadvantageous contract conditions.

If such practice is applied by the second market participant – “EVRAZ – Nizhny Tagil Integrated Iron-and-Steel Works” JSC, the conduct of “Vyksa Steel Works” JSC and “EVRAZ – Nizhny Tagil Integrated Iron-and-Steel Works” JSC can contain signs of concerted actions, which also is a violation of the antimonopoly law.

The growth of whole-rolled wheels prices in 2017-2018 is in the core of an antimonopoly investigation against “Vyksa Steel Works” JSC and “EVRAZ – Nizhny Tagil Integrated Iron-and-Steel Works” JSC opened in October 2018.

FAS is analyzing the impact of the actions undertaken by Russian manufacturers and the shortage factor in the growth of prices in the market. At the same time, according to the information available to FAS, the shortage on whole-rolled wheels markets was caused by various objective factors, including operation cycles on the market i of the rolling stock spare parts as well as the dynamics on the second-hand wheels market.

FAS will carry out market analysis in the course of the case investigation. Head of FAS Industry Control Department, Nelli Galimkhanova points out:

“Bt itself, a growth of prices for any products of a dominant entity cannot be classified as monopoly pricing if it is caused by objective factors that do not depend on the company with monopolistic position. At the same time, under the Russian law the valid contracts should be executed: unilateral unreasonable rupture of valid contracts with the purpose to review prices is unacceptable”.