PRICES OF “KOVDOR MINING AND PROCESSING WORKS” JSC ARE FAR FROM MONOPOLISTIC
Cassation Court supports the decision of the antimonopoly body that the price for iron-ore concentrate was formed in view of the product circulation conditions on the market
Earlier FAS opened an antimonopoly case against “Kovdor Mining and Processing Works” JSC, which, as stated by “Severstal” PJSC, had fixed monopolistically prices for iron-ore concentrate with the iron content (Fe) 64 (+/-2)% (IOC) [ 1]. An investigation showed that there were no violations in the actions of “Kovdor Mining and Processing Works” JSC.
To analyze whether prices for iron-ore concentrate were monopolistically high, FAS applied “the costs approach” and Part 8 Article 6 of the Federal Law “On Protection of Competition”, that require to take into account on- and off-exchange price indicators on the international markets of the like products.
“Using the costs method, the Antimonopoly Service carried out multivariate analysis of the market environment to assess the sum of the costs necessary for production and sale of iron-ore concentrate, as well as profit-making”, explains Maria Babikiova, Deputy Head of FAS Department for Industry Control. “For example, we took into account if there is a representative price indicator on the market of iron-ore concentrate [2]”.
The antimonopoly body establish the presence of an off-exchange indicator reflecting the level of prices for iron-ore concentrate on the world markets - Iron ore fines Fe 62% CFR China, which is a generally accepted representative source, used by most consumers and producers of iron-ore concentrate in Russia. Neither producers, nor consumers in the Russian Federation can influence the world prices for iron-ore concentrate and the above index.
The analysis of prices of “Kovdor Mining and Processing Works” JSC showed that changing prices by the company was in line with the index dynamics.
“Severstal” PJSC disagreed with the FAS decision and filed a lawsuit. The company won at Court of First Instance, by Appeal Court and Cassation Court agreed with the arguments put forward by the antimonopoly authority.
Reference:
[1] Clause 1 Part 1 Article 10 of the Federal Law “On Protection of Competition”
[2] Under Part 8 Article 6 of the Federal Law “On Protection of Competition”, to determine monopolistically high prices of goods, on- and off-exchange price indicators on the international markets of the like products must be taken into account.