OREANDA-NEWS. May 31, 2008. The Federal Antimonopoly Service (FAS Russia) continues inspecting compliance with the antimonopoly legislation on the markets of oil products in the Russian Far East and Siberia. Moreover, FAS Russia monitors prices weekly, throughout the whole territory of Russia, reported the press-centre of FAS Russia.

For instance, the monitoring organized by FAS Russia, showed considerable increase of prices for oil products in January - April 2008 in some areas of the Far East and Siberian Federal Districts, exceeding the average rates of growth of prices for oil products in the Russian Federation.

In particular, since the beginning of 2008, retail prices in the Russian Far East have been increased: for А-76 petrol - from 16,2% (Primorsky province [krai]) to 19,1% (Amur region), for АI 92 - from 12,2% (Irkutsk region) to 13,1% (Khabarovsk province [krai]), for diesel fuel (DT) - from 16,2 % (Primorsky province) to 19,8% (Irkutsk region).

At the same time, the average growth of retail prices for the same oil products in Russia were: А-76 – 8,3%, АI-92 – 6,8%, АI-95 – 5,6%, DT- 9,2%.

Also, the absolute prices for oil products are the highest in Russia: for АI-95 - 26-27 Rubles per liter (the average price in the Russian Federation – 23,3 les per liter), for DT - 25-26,5 Rubles per liter (the average price in the Russian Federation – 21,6 Rubles per liter), for АI-92 - 25-26 Rubles per liter (the average price in the Russian Federation – 21,95 Rubles per liter).

In follow-up of the inspections, the antimonopoly bodies undertake measures to penalize the antimonopoly violations.

In certain cases the antimonopoly bodies discovered cartel collusions on the market of oil products.

For instance, the FAS Russia Office (OFAS Russia) in the Khabarovsk province, jointly with the Commercial Crime Unit of the Department of Interior in the Khabarovsk province, organized a comprehensive inspection to verify whether pricing for the oil products of "Alliance-Khabarovsk" Ltd., "Khabarovsknefteproduct" OJSC and "RN-Vostoknefteproduct" Ltd. were in compliance with the Federal Law "On Protection of Competition". The inspection was organized due to increased wholesale and retail prices on the markets of oil products in the Khabarovsk province in January-April 2008. As a result of the inspection, OFAS Russia initiated a case for violating Part 1 Article 11 of the Federal Law "On Protection of Competition" against "Khabarovsknefteproduct" OJSC and "RN-Vostoknefteproduct" Ltd. - anticompetitive concerted actions.

The FAS Russia Office (OFAS Russia) in the Khabarovsk province recognized that "Kamchatskaya Fuel Company" Ltd., sole trader I. Zanik and sole trader P. Zhurov violated Clause 1 Part 1 Article 11 of the Federal Law "On Protection of Competition". These three economic entities violated the law because they simultaneously fixed the same disbursing prices for АI-92 petrol at their petrol stations at 35 Rubles per liter. Before the increase, the price per liter of АI-92 at "Kamchatskaya Fuel Company" Ltd. was 27 Rubles, at the petrol stations of sole traders I. Zanik and P. Zhurov - 27 Rubles 70 kopecks and 28 Rubles accordingly.

Therefore, increasing petrol prices by 25-30%, the economic entities gained colossal extra profit, which fully met their interests. At the same time, numerous owners of other petrol stations prevented growing fuel prices. Having considered the case, the Antimonopoly Office brought administrative charges against the company and entrepreneurs in form of fines. For instance, "Kamchatskaya Fuel Company" Ltd. was fined 103087 Rubles, and I. Zanik and P. Zhurov - 18 500 Rubles each.

In April FAS Russia recognized that "Gazpromenft-Kuzbass" CJSC and "Tomsknefteproduct" OJSC violated Clause 1 Part 1 Article 11 of the Federal Law "On Protection of Competition". The companies violated the law by exercising concerted actions for fixing and maintaining prices on the market of retail sales of oil products in Tomsk. The case against the companies was initiated following the analysis of daily monitoring of retail prices for oil products. In accordance with the Code of Administrative Violations, "Gazpromenft-Kuzbass" CJSC and "Tomsknefteproduct" Oil Company" OJSC can be fined.

As explained by Deputy Head of FAS Russia Anatoly Golomolzin, the Antimonopoly Service discovered cartel collusions earlier: every year the antimonopoly bodies processed up to 10 similar cases. In 80%, the courts confirmed validity of the decisions of the antimonopoly bodies with regard to the violations. Mr Golomolzin believes that "efficiency of the work of FAS Russia and its regional offices increases with enforcing the sanctions system in form of turnover fines".

Processing an administrative case, initiated under Article 14.32 of the Code of Administrative Violations against "Gazpromenft-Kuzbass" CJSC and "Tomsknefteproduct" Oil Company" OJSC, on 20th May 2008 FAS Russia passed a decision on imposing penalties in the amount of 1 - 15% of the proceeds gained on the market where the violation was committed. "Earlier, companies in Stavropolye [the Stavropol region] were fined 75 m Rubles for similar violations. The Court confirmed validity of such sanctions", - reminded Deputy Head of FAS Russia.

Along with cartel collusions, FAS Russia reveals violations related to abusing dominant position on the markets. One of the cases was initiated by the Antimonopoly Services with regard to unjustified pricing on oil products sold by an Omsk refinery - "Sibneft - Omsknefteproduct" OJSC.

The FAS Russia Office (OFAS Russia) in the Irkutsk region initiated a case against "Rosneft" for violating Article 10 of the Federal Law "On Protection of Competition" in course of an auction. The Antimonopoly Office established that at the auction for purchasing car fuel, organized by "Rosneft", the company had failed to announce the initial price per ton of petrol. Therefore, wholesale buyers had been forced to offer it themselves, which resulted in increased retail fuel prices and infringed the interests of end-consumers of petrol in the Irkutsk region.

In this context, Anatoly Golomolzin stated that FAS Russia supports tenders on wholesale sales of oil products, but intends to eliminate the established practices of vertically-integrated oil companies with regard to unjustified pricing, restricting the access of independent companies to sales of oil products from oil refineries, and organizing closed tenders for selling oil products with discriminatory conditions for the bidders.

Such actions of vertically integrated oil companies manifest the signs of antimonopoly violations. Therefore, the antimonopoly bodies scrutinize activities of vertically integrated oil companies in the Russian Far East and Siberia, as well as in the rest of the country.

The situation can be radically improved by introducing and expanding the system of exchange trading.