“RUSSIAN RAILWAYS” OJSC VIOLATED THE LAW FIXING A MONOPOLISTICALLY HIGH PRICE

As FAS determined, the heating generation costs are overrated significantly while the markets trends, the volume of steam production and the composition of sellers and buyers remain unchanged

FAS received a statement from “Rikwest-Service” Ltd. about actions of “Russian Railway” OJSC. The railway company unilaterally increased its price for heating energy in the form of steam, supplied for “Rikwest-Service” from a boiler-house in Samara that is on the balance sheet of “Russian Railways”.

According to the law, from 2019 relations between heat producers and (business) consumers are fully liberalized in the part of steam production. Heating energy price is an essential contract condition and it is set based on a mutual agreement of the parties [1].

Investigating the case, FAS arrived to a conclusion that “Russian Railway” OJSC had not had any intentions to agree upon the contractual price of steam with “Rikwest-Service” or review it upon a mutual agreement of the parties.

The Antimonopoly Service analyzed the costs of “Russian Railway” OJSC that had been taken into account in steam pricing in 2019 and found that the steam generation costs had been overrated significantly although the general market trends, the volume of steam generation, and the buyers-and-sellers composition remained unchanged.

Based on these conclusions, FAS recognized that “Russian Railway” OJSC violated the Federal Law “On Protection of Competition” [2] by fixing a monopolistically high price for heating energy in the form of steam for “Rikwest-Service” Ltd.

Deputy Head of FAS Vitaly Korolev pointed out: “FAS would like to draw attention of economic entities that to prevent violations of the antimonopoly law in the course of setting heating energy prices, it is important to observe the principle of non-discrimination and equality of conditions for similar groups of consumers. If a seller, that has the dominant market position, fixes or imposes a monopolistically high price, FAS will continue applying antimonopoly remedies”.

[1] Except prices for heat necessary to provide utility services to the population and equated categories of consumers

[2] Clause 1 Part 1 Article 10 of the Federal Law “On Protection of Competition”