Federal Arbitration Court of the Moscow District

FEDERAL ARBITRATION COURT

OF THE MOSCOW DISTRICT



18, Academician Sakharov Avenue,107078, Moscow,



COURT DECISION

№ КА-A40/11271-04



Moscow

December 14, 2004 Case №A40-11699/04-2-77



The judicial disposition pronounced on December 6, 2004.

The complete text of the decision produced on December 14, 2004



The Federal Arbitration Court of the Moscow District

composed of:



The Presiding judge- Agapov M.R.

Judges- Borzikin M.V. and Popovchenko A.A.

With participation in the proceedings:

from the Claimant OAO «Severstal»- Belova V.A. by the power of attorney of 10.11.03, attorney Eremenko V.G. by the power of attorney of 30.11.04

№ 050/м/-01124Д;

from the respondent of the FAS of Russia- Lomanova N.V. by the power of attorney of 29.11.04 № ИА/9268, Fonariova N.E. by the power of attorney of 24.11.04 № ИА/8969, Doronina S.V. by the power of attorney of 14.05.04 №ИА/636, Mishakova O.G. by the power of attorney of 14.05.04 №ИА/632, Bashlakova-Nikolayeva I.V. by the power of attorney of 11.06.04 № ИА/1612;

from the Third Party OAO «MMK»- Biketova T.A. by the power of attorney of 16.09.03 №16 юр-361, Varenov V.A. by the power of attorney of 22.04.04 №16юр-158,

having considered on December 6, 2004 at the Court proceedings the cassation appeal of the respondent the FAS of Russia

to the decision of May 27,2004

of the Arbitration Court of Moscow

passed by judge Makhlayeva T.I.

on the decision of August 18, 2004 № 09АП-324/-АК

of the Ninth Arbitration Court of Appeals

passed by judges Bliznets V.G., Lee I.D. Sviridov V.A.

on case №А40-11699/04-2-77

on the petition by the OAO «Severstal»

on vacating the decision, order to the FAS of Russia

The Third Party: OAO «MMK».





HAS FOUND:



The Open Joint Stock Company «Severstal» (hereinafter referred to as OAO «Severstal») addressed the Arbitration Court of Moscow with the petition on vacating the decision of the commission of the FAS of Russia of January 14, 2004 on case № 1 06/175-03 on the violation of the antimonopoly legislation and the order of January16, 2004 on the termination of violations of the antimonopoly legislation issued on the basis of the above decision.



The Open Joint Stock Company Magnitogorsk Metallurgical Combine» (hereinafter referred to as OAO «MMK») was invited to participate in the case as the Third Party.



By the decision of the Arbitration Court of Moscow of May 27, 2004 left without alteration by the resolution of the Ninth Arbitration Court of Appeals of August 18, 2004, the contested decision and the order of the FAS of Russia are adjudicated as invalidated.



The FAS of Russia by its cassation appeal requests to repeal the decision and the resolution because they were passed in violation of the norms of the substantive law, and in particular of item 1 of Article 6 of the Law of the RSFSR of March 22, 1991 № 948-1 «On competition and restricting the monopolistic activities on commodity markets» (hereinafter referred to as the Law of the RSFSR of 22.03.1991 № 948-1), inferences of the Arbitration Court do not correspond to the actual circumstances of the case and the proofs contained in the case. The FAS of Russia considers that the absence of written agreements (accords) cannot be the proof of the nonexistence of the collusion if the actual deeds of the subjects were carried out in coordination. The Arbitration Court did not take into consideration that the hike in prices on steel strip was conducted simultaneously, and as a result of this the competition on that market was restricted. Furthermore, the absence of the OAO «Severstal» and the OAO «MMK» in the register of the monopolists is not a sufficient ground for passing a judgment that they are not the economic agents which have the share of more than 35% of the market of the corresponding products.

On the grounds of the above the contested decision and order of the FAS of Russia were passed lawfully, and they correspond to the antimonopoly legislation in force.



In their response the OAO «Severstal» and OAO «MMK» take an exception to the satisfaction of the arguments of the cassation appeal and request that the appealed decision and resolution should be left without alterations. Prices increase on a market cannot be the ground for the conclusion on concerted actions. The FAS of Russia did not prove the unlawful purpose of the collusion- restriction of competition.



In the Court proceedings the representatives of the FAS of Russia sustained argumentation of the cassation appeal and requested to repeal the decision and resolution as passed unlawfully and groundlessly, while the representatives of the OAO «Severstal» and the OAO «MMK» objecting to the satisfaction of the claimed argumentation requested to keep the appealed judicial deeds without alterations.



Having examined the correctness of application by the Arbitration Court of the first and appellate instances of the norms of substantive law, and having discussed argumentation of the cassation appeal and objections to it the Arbitration Court of the cassation instance does not find grounds for the repeal of the appealed decision and resolution.



Having examined comprehensively, entirely and impartially the case evidence the Arbitration Court has found that by the decision of January 14, 2004 on the case № 1 06/175-03 on violations of the antimonopoly legislation the MAP of Russia determined to issue to the OAO «Severstal» and OAO «MMK» the order of January 16, 2004 № АУ/482 on terminating violations of item 1 of Article 6 of the Law of the RSFSR of 22.03.1991 expressed in concerted actions aimed at raising prices for strip which are used for manufacturing pipes of the oil and gas range of products.



Invalidating the appealed decision and resolution the Arbitration Court reasoned that the FAS of Russia did not prove violation on the part of OAO «Severstal» and OAO «MMK» of item 1 Article 6 of the Law of the RSFSR of 22.03.1991 № 948-1 and coordination in actions of the said enterprises with the aim of restricting (making inadmissible) the competition.



Pursuant to item 1 of Article 6 of the Law of the RSFSR of 22.03.1991

№ 948-1 it is forbidden to conclude an accord, any deal, agreement or implementing concerted actions by the economic agents acting on the single product market (of the substitutable products) which are leading or may lead to:

establishing (supporting) prices (tariffs), discounts, premiums (additional payments), surcharges;

increasing, decreasing or supporting prices at auctions or tenders;

market sharing according to the territorial principle, to the volume of sales or purchases, to the range of the products sold or the circle of sellers or buyers (customers);

constraining access to the market or eliminating other economic agents from it as sellers of certain products or their buyers (customers); ставить

refusing to conclude contracts with certain sellers or buyers (customers).



From the above Article and from the general meaning of the Law of the RSFSR of 22.03.1991 № 948-1 it follows that an agreement is an arrangement reached by the economic agents on coordination of one or other aspects of business activities the results of which are (may be) the restriction or elimination of competition on the corresponding market and restriction of the rights of consumers. Agreed actions are concerted or wrongful actions of the economic agents who deliberately put their behaviour into dependence on the behaviour of other market participants the result of which is the restriction or elimination of the competition at the corresponding market.



The Arbitration Courts of the first and the appellate instances have rightfully determined that no proofs of the concerted actions of the OAO «Severstal» and OAO «MMK» were introduced into the case materials.

The dynamics schedule of the ex-mill prices on strip of the OAO «Severstal», OAO «MMK» and Open Joint Stock Company «Nosta» (hereinafter referred to as OAO «Nosta») examined by the Arbitration Court shows that the price increase at certain periods (July, September 2002 and January 2003) was observed with all the three producers. In November 2002 the prices of the OAO «Severstal» did not grow while the OAO «MMK» significantly raised the ex-mill prices. In February 2003 prices of the OAO «Severstal» were falling while those of the OAO «MMK» were growing dramatically. Furthermore, achieving a similar price only once in March of 2003, with the examined period being 8 months, is the evidence of the absence of concerted actions.

The FAS of Russia did not analyze the level of the world prices for strip and the prices of strip selling on the Russian market by foreign producers.



The Arbitration Court did rightfully also determine that the price growth did not result in the restriction of competition on the market.

Due to the fact that the OAO «Severstal» and OAO «MMK» had higher prices within the period of from December 2002 until March 2003 more favourable conditions were created for other market participants such as OAO «NOSTA» and foreign producers for promoting their products. график

From the diagram of the «Volume of sales» examined by the Arbitration Court it follows that the volumes of the strip deliveries in the period from July 2002 up to October 2003 were growing with all the producers with those of the OAO «NOSTA» being higher than others.



Furthermore, according to the argumentation of the FAS of Russia the share of the OAO «Severstal» of the strip products market amounts to 60%. Nevertheless, neither the contested deeds nor other documents presented by the FAS Russia contain the reasoning why in order to influence the market prices such a significant producer should coordinate its actions with the producer OAO «MMK» whose market share amounts to less than 10%.



According to part 5 of Article 200 of the Arbitration Procedural Code of the Russian Federation the responsibility for proving the compliance of the contested non-normative act with the law or any other normative legal act, lawfulness of passing the contested decision, execution of the contested actions (inaction), availability with the body or person of the appropriate powers for adopting the contested act, decision, execution of the contested actions (inaction) as well as circumstances which served as the basis for adopting the contested act, decision, execution of the contested actions (inaction) is entrusted with the body or person which adopted the act, decision or executed actions (inaction).



In this connection the Arbitration Court of the first and the appellation instances on the basis of the comprehensive, complete and impartial examination of the proofs contained in the case rightfully came to the conclusion that the FAS of Russia did not prove neither the existence of the concerted actions or that the competition on the corresponding market was restricted as a result of the rise in prices in the period from July 2002 until March 2003.



Argumentation of the cassation appeal not proving violation by the Arbitration Court of the first and appellation instances of the norms of substantive and procedural law which reduces to the reevaluation of the proofs contained in the case and not substantiating unlawfulness and groundlessness of the arguments of the Arbitration Court on adjudicating as invalid the contested decision and resolution of the antimonopoly body cannot serve as the basis for vacating the contested decision and resolution.



Being guided by articles 284-289 of the Arbitration Procedural Code of the Russian Federation the Federal Arbitration Court of the Moscow district



DECIDED:



to leave without alteration the decision of the Arbitration Court of Moscow of May 27,2004 on case № А40-11699/04-2-77 and without satisfaction the resolution of the Ninth Arbitration Appellation Court of August 18,2004 № 09АП-324/04-АК and the cassation appeal of the FAS of Russia.



Presiding Agapov M.R.



Judges Borzikin M.V.



Signatures Popovchenko A.A.