FAS AND THE MINISTRY OF TRANSPORT SHALL FOCUS JOINT EFFORTS TOWARDS DECARTELIZATION

The agencies shall form a Working Group

On 5 August 2019, FAS held talks with representatives of the Ministry of Transport to discuss execution of instructions of the President of the Russian Federation of 5 August 2017, the Order of the President “On the main directions of the state policy for competition development”, and 2019 - 2023 Interdepartmental programme on exposing and suppressing cartels and other competition-restricting agreements, approved by the Government of the Russian Federation.

Representatives of FAS Anti-Cartel Department informed, in particular, that anticompetitive agreements on the market of passenger transportation were revealed in 28 regions of Russia.

Overall, FAS has opened 50 cases against cartels and other anticompetitive agreements in the field of passenger transportation since 2016. Typically, such cases concern agreements on increasing or maintaining carriage prices, preventing market entry of other companies, giving preferences, and also agreements with the authorities.

In view of the representatives of the Ministry of Transport, it shows absence of proper control from regional executive bodies in Russia.

For example, in February 2018 Chelyabinsk OFAS found that four economic entities had violated Clause 1 Part 1 Article 11 of the Federal Law “On Protection of Competition”: they simultaneously increased tariffs for passenger transportation from 20 RUB to 25 RUB. FAS established that there were no economic factors underlying the increase of the tariffs. The economic entities have been held administratively liable and the travel costs are reduced. Courts supported OFAS decision and order.

In October 2018, Tyumen OFAS found that “Tyumenavtotrans” Ltd. and “Tyumenavtoline” Ltd. had violated Clause 2 Part 1 Article 11 of the Federal Law “On Protection of Competition”. The anticompetitive agreement between the companies resulted in maintaining prices at the auctions for works related to regular carriage at regulated tariffs. The economic entities were administratively liable.

In 2017, Marii El OFAS found that nine economic entities had violated Clause 1 Part 1 Article 11 of the Federal Law “On Protection of Competition”: they simultaneously increased tariffs for passenger transportation from 18 RUB to 20 RUB. According to OFAS estimates and in view of other carriers’ tariffs, it was established that the costs of carriage were not consistent with the respondents’ calculations. Court of First Instance, Court of Appeal and Cassation Court upheld the OFAS decision.

Stats-Secretary, Deputy Head of FAS Andrey Tsarikovskiy commented: “Anti-competitive collusions in the social realm are always more sensitive because they directly affect consumers. FAS is already undertaking robust efforts to de-cartelize road construction, and we intend to pay equally close attention to decartelization of passenger transportation. It should give a positive effect on the costs of travel by passenger transport”.

“Unreasonably increasing a transportation tariff even for 1 Ruble means millions of unlawful cartel income per year”, emphasized Head of FAS Anti-Cartel Department Andrey Tenishev. “Exposing and suppressing such violations undoubtedly is a necessary vector in the work of the antimonopoly authority”.

Dmitry Zverev, Stats-Secretary, Deputy Minister of Transport of the Russian Federation, pointed out that “the joint Working Group will analyze the enforcement practice and facts of anticompetitive practices in road construction; it is necessary to determine the clear criteria in view of the industry specifics and the specifics of the market of competent contractors of infrastructure facilities”. The Ministry of Transport also informed about collaboration with the Ministry of Construction of the Russian Federation in this area.

Analyzing the enforcement practice will enable FAS, together with the Ministry of Transport, to draft proposals on amending the federal law with the aim to not only tighten liability but also prevent anticompetitive practices and unreasonable price increases. One of such measures is a draft Federal Law “On amendments to Article 34 of the Federal Law “On organizing regular passenger and luggage transportation by motor transport and urban ground-based electric transport”. It is designed to improve the current system of estimating payments for the services of transport infrastructure facilities related to passenger transportation by buses. The Law is drafted by the Government of the Russian Federation and adopted by the State Duma in the first reading in July 2019.