CASSATION COURT PRONOUNCED LEGITIMACY OF FAS WARNING TO TVER AUTHORITY

The local authority attempted to assign the functions of a budget holder to an economic entity

Tver Authority passed a Decree [1], establishing the procedure of granting subsidies to non-profit organizations. Under the procedure, a non-profit organization (grant operator) could be determined on the tender outcome and assigned the powers for independent selection of other non-profit organizations and granting subsidies from the local budget.

Based on the results of a tender, recognized void die to the single bid, Tver Authority approached the antimonopoly body to obtain consent for granting a municipal preference - a 3,300,000 RUB subsidy to the grant operator – the “Institute of Regional Development” Association towards Civil Society Development. The Association was supposed to spend the money on tenders and give grants to other non-profit organizations.

FAS found that those actions had signs of violating the Federal Law “On Protection of Competition” [2], since budgetary funds in the form of subsidies (grants) are provided and their use is controlled exclusively by the authorities and local self-government bodies. Delegating these powers to any other persons, particularly, non-profit organizations, non-specified in the Budget Code of the Russian Federation and the federal laws is no allowed.

Based on the above, FAS issued a warning to Tver Authority to stop actions (omissions) that had signs of violating the antimonopoly law.

Tver Authority filed a lawsuit against issuing the warning by the antimonopoly body. Courts of three instances, however, confirmed legitimacy of the regulator’s actions. The Decree of Tver Authority is abolished, which means that the FAS warning is executed.