OREANDA-NEWS. January 14, 2007. Chelyabinsk Office of the Federal Antimonopoly Service (OFAS Russia) recognized that "International Moscow Bank" CJSC and 15 insurance companies - "Ingosstrakh" Open Joint-Stock Insurance Company, "AlphaStrakhovanie" OJSC, "AIG Insurance and Reinsurance Company" CJSC, "Rossia" Open Joint-Stock Insurance Company, "Soglasie" Insurance Company" Ltd., "Surgutneftegaz" Insurance Corporation" Ltd., "ROSNO" OJSC, "Zurich-Rus" Insurance Company" CJSC, " Progress-Garant" Insurance Company" CJSC, "NASTA" Insurance Company" Ltd., "Military-Insurance Company" OJSC, "Renaissance Insurance Group" Ltd., "Rosgosstrakh-Ural" Ltd., "RESO-Garantia" Open Joint-Stock Insurance Companyand "Sogaz" OJSC breached Part 2 Article 11 of the Federal Law "On Protection of Competition", reported the press-centre of FAS Russia.

The antimonopoly case was initiated upon two petitions: A.Sakharov claimed that "International Moscow Bank" CJSC refused to conclude a credit agreement to loan the funds for purchasing a vehicle from "Reginas" Ltd. and restricted his choice of insurance companies; and "TRUST INSURANCE COMPANY" OJSC complained that the bank, in the person of its Chelyabinsk branch, did not allow Mr Sakharov to insure the vehicle purchased with credit funds in "TRUST INSURANCE COMPANY" OJSC in favour of "International Moscow Bank" CJSC on the grounds that "TRUST INSURANCE COMPANY" was not accredited in the bank.

In course of the case consideration, the bank presented the Executive Order of the Acting Chairman of the Board of "International Moscow Bank" CJSC of 28.12.2006 "On Introducing New Conditions for Offering Credits to Physical Persons for Purchasing New-Made Foreign Cars (Nissan, Renault and Infiniti Brands)".

The Executive Order introduced additional conditions for insuring the subject of pledge under the following programmes: "Nissan Finace" and "Renault Credit": "Stand Art"; "Nissan Finace" and "Renault Credit": "0% Down Payment "; "Nissan Finace" and "Renault Credit": "Streamlined Document Package" - permanent insurance was allowed only in one of organizations suggested by the bank.

Chelyabinsk OFAS Russia did not accept the bank arguments regarding the need to check financial situation of insurance companies, since the Instruction of the Central Bank of 12.12.2006 "On Amendments to the Regulations of the Bank of Russia of 26.03.2004 "On Procedures for Creating Bad Debt Reserves by Credit Organizations (principal receivable and equivalent debt)" abolished mandatory requirement to evaluate financial situation of an insurance company which offers an insurance policy for a subject of pledge to a borrower in favour of a credit organization.

Moreover, the Antimonopoly Office established that criteria for selecting insurance companies were unavailable for the public; information on cooperation with insurance companies regarding insurance of collaterized property was not published in the media; information about conditions of cooperation agreements was of rather confidential nature; and what's more, the insured parties were unaware of their selection criteria.

Rendering the decision, Chelyabinsk OFAS Russia took into consideration that insuring collaterized property, the borrower, being the insured party, should independently decide upon favorable terms of insurance, that is, select the insurance company. Insurance companies may include insurance organizations other than those selected by the bank.

Therefore, in some cases by concluding the agreements, the bank and the insurance companies imposed disadvantageous conditions of an insurance agreement upon the third parties.

Having considered the case, Chelyabinsk OFAS Russia concluded that as a result of cooperation agreements between the bank and the above insurance companies, the insurance organizations, whose insurance terms and conditions had not been accepted by the bank or its branch, had restricted capabilities on the financial services market as a result of unilateral adverse impact of the bank actions upon general conditions of insurance services, and not as a result of their independent activities.

The bank actions on concluding cooperation agreements and offering credits under the condition of obtaining insurance from the insurance companies offered by the bank, eliminate rivalry among insurance companies, when their independent actions directly restrict possibility of each of them unilaterally influence general conditions of pledge insurance services.

Explanations given by "TRUST INSURANCE COMPANY" OJSC and "YUZHURAL-ASCO" Insurance Company" Ltd. that the bank did not allow the borrowers to insure collaterized property in insurance organizations, registered as legal persons and located in the Chelyabinsk region, were indicative of competition restriction on the insurance market in the Chelyabinsk region.

The form and content of all cooperation agreements determine them as agreements between financial organizations that give unjustified advantages to a limited number of insurance companies and exclude participation of other insurance agents, in particular, "TRUST INSURANCE COMPANY" OJSC и "YUZHURAL-ASCO" Insurance Company" Ltd., that are not parties to the agreements. Therefore, the y possibility to participate on equal terms in insurance of collaterized property, transferred to the bank in the person of its Chelyabinsk branch, is completely eliminated.

Part 2 Article 11 of the Federal Law "On Protection of Competition" forbids agreements between economic entities or other concerted actions of economic entities, if such agreements or concerted actions lead or may lead to restriction of market competition.

Chelyabinsk OFAS Russia directed the bank and insurance companies terminated competition-restricting agreements by 15th January 2008. By the same deadline, the bank must exclude from the above Executive Order the condition of insuring collaterized property only in the insurance companies included in the bank list, and shall not include the above condition into any other programmes of crediting both physical and legal persons.

The Antimonopoly Office is considering initiating an antimonopoly case against the violators under Article 14.32 of the Code of Administrative Violations of the Russian Federation: legal persons - economic entities, that entered into competition-restricted agreements, forbidden by the antimonopoly legislation of the Russian Federation, can be imposed administrative fines - from one hundredth to fifteen hundredth of the proceeds gained by the violator by selling goods (works, services) on the market where the violation occurred.