COURT UPHELD FAS IN THE CASE OF REFUSAL OF CONSTRUCTION PERMIT IN NOVOROSSIYSK

City Administration and the City Duma have limited competition in the residential construction market

FAS Russia received a complaint from SZ Stroy-Resurs LLC. The company applied to the Department for Architecture and Urban Development of Novorossiysk for permission to build two interconnected objects – apartment complex and multi-story parking, but was refused.

City Administration referred to decision of the City Duma to suspend issuance of permits for construction of residential facilities, except in certain cases, including complex development of territories.

The developer did not conclude an agreement with the City Administration on integrated development of the territory. However, according to the Urban Planning Code of the Russian Federation*, the absence of such agreement is not grounds for refusal to issue construction permit.

For this reason, the Commission of FAS Russia recognized the complaint of SZ Stroy-Resurs LLC as justified and issued to the Department for Architecture and Urban Development of Novorossiysk a mandatory order to cancel the refusals.

Besides, signs of violation of the Law on Protection of Competition** were identified in the actions of the City Duma, which fixed the provisions restricting competition in the Rules of Land Use and Development of the city. FAS Russia issued a warning to the Duma, which the municipal body did not comply with. On this basis, the authority has initiated an antimonopoly case.

City Duma of Novorossiysk tried to challenge the FAS’s warning, but the Moscow Arbitration Court refused to satisfy the claims.

* Article 51 of the Civil Code of the Russian Federation

** In accordance with Part 1 of Article 15 of the Federal Law of July 26, 2006 No. 135-FZ "On Protection of Competition"