FAS drew a line in a dispute between “RUSAL” and “Magnitogorsk Iron & Steel Works”

Metallurgical companies agreed upon mutually beneficial, non-discriminatory conditions for supplying coal-tar pitch

“RUSAL Trading House Integrated Company” JSC submitted documents to FAS Commission that confirm executing a warning issued at the end of 2016. The Commission terminated the case against the company.

The proceedings were initiated upon a complaint of “Magnitogorsk Iron & Steel Works” that “RUSAL” had been imposing disadvantageous contract conditions.

Electrode coal-tar pitch is the raw materials anodes that “RUSAL” needs to manufacture aluminum products. “RUSAL Trading House” is the dominant buyer on the market of electrode coal-tar pitch. “Magnitogorsk Iron & Steel Works” together with other producers has the dominant position on the pitch market.

Considering the complaint, FAS confirmed signs of abusing dominance by “RUSAL”, but also exposed sighs of violations committed “Magnitogorsk Iron & Steel Works”. At the end of 2016, both metallurgical companies were issued warnings to stop violating the antimonopoly law and conclude a contract with mutually beneficial conditions.

Head of FAS Department for Industry Control, Nelli Galimkhanova, commented the decision: “For the first time in its practice, solving a conflict between a monopsonist and a monopolist, FAS applied an unorthodox approach, simultaneously issuing two warnings – to the claimant and the respondent. It enabled to avoid breaching the balance of market power within the bilateral monopoly and develop a model for interaction between the participants of the coal-tar pitch market for future periods”.

“Investigating the case, the antimonopoly body had to deal with a bilateral monopoly when both parties to a contract can exercise the decisive influence upon the conditions of goods circulation on the market. Forcing each other to the most advantageous conditions for themselves, the parties created the risks for both companies”, said Stats-Secretary, Deputy Head of FAS Andrey Tsarikovskiy. “Probability of antimonopoly sanctions forced “Magnitogorsk Iron & Steel Works” and“RUSAL” to agree upon mutually beneficial conditions for long-term supplies of   coal-tar pitch. Overall, the found consensus will encourage favourable conditions for production of aluminum and furnace coke in Russia”.