OREANDA-NEWS. July 14, 2008. The Moscow Arbitration Court confirmed validity of the decision of the Federal Antimonopoly Service (FAS Russia) that the Nizhny Novgorod Regional Tariff Service (RTS) breached Part 1 Article 15 and Part 2 Article 17 of the Federal Law "On Protection of Competition", reported the press-centre of FAS Russia.

RTS violated the law by restricting participation in the tender for assigning the status of the provider of last resort, as well as granting this status to "Volgaenergosbyt" CJSC in breach of the current legislation.

The case against Nizhny Novgorod RTS was initiated upon a petition of "Nizhny Novgorod Sales Company" OJSC.

In June 2007, Nizhny Novgorod RTS decided to organize on 1st August 2007 the next set of open biddings for assigning the status of the provider of last resort in the Nizhny Novgorod region.

"Nizhny Novgorod Sales Company" OJSC submitted four bids to Nizhny Novgorod RTS. However, RTS informed the company in writing on rejecting its tender bids.

The bids were rejected on the grounds that "Nizhny Novgorod Sales Company" OJSC submitted the bids on four types of activities. According to RTS, it was in violation of the tender documentation and the Retail Market Regulations. Furthermore, based on the presented documents RTS could not conclude whether the sales company had an undercharged debt of the members of retail or wholesale markets. However, FAS Russia believes that failure to present such information does not constitute the grounds for rejecting the bids in accordance with the Retail Market Regulations. The Regulations do not impose restrictions on a number of bids.

Therefore, by rejecting the bids of "Nizhny Novgorod Sales Company" OJSC, RTS breached the Retail Market Regulations.

Under Part 2 Article 17 of the Federal Law "On Protection of Competition", executive bodies of constituent territories of the Russian Federation cannot set such restriction for participation in tenders.

The Antimonopoly Service also established that according to the tender outcome, the status of the provider of last resort was assigned to "Volgaenergosbyt" CJSC.

At the same time, according to the Decree of the Government of the Russian Federation, regular tenders for assigning the status of the provider of last resort should not be organized earlier than the Regulations on organizing such tenders come into force.

Until now, however, the Regulations have not been approved by the Ministry of Industry and Energy of the Russian Federation.

A tender for assigning the status of the provider of last resort gives the winning company certain additional rights and responsibilities and changes its legal status.

Thus, assigning the status of the provider of last resort to "Volgaenergosbyt" CJSC in contravention of the current legislation endangers competition on the market of electricity buying-selling (supplying).

Under Part 1 Article 15 of the Federal Law "On Protection of Competition", executive bodies of constituent territories of the Russian Federation cannot pass acts and (or) undertake actions (lack of actions), which lead or may lead to preventing, restricting or eliminating competition.

Nizhny Novgorod RTS disagreed with the FAS Russia's decision on violating the antimonopoly legislation and appealed to the Arbitration Court. The Court, however, found its argument groundless and confirmed the rightness of FAS Russia.