OREANDA-NEWS. September 03, 2008. The Bashkortostan Office of the Federal Antimonopoly Service (OFAS Russia) finalized 44 cases against the Ministry of Labour and Social Security of the Republic of Bashkortostan and "UralSib" Bank" Ltd., reported the press-centre of FAS Russia.

The Ministry signed a contract with the bank for servicing the "Bashkortostan Social Card". The contract restricts competition and prevents entry of other credit organizations to the market.

Individuals have been sending complaints to the Bashkortostan OFAS Russia requesting explanations why they cannot exercise their right to choose a credit organization, through which they can receive social security payments, or why they cannot be served by the organizations where they have opened the bank accounts.

Inspection carried out by the Bashkortostan OFAS Russia revealed that normally welfare benefits in the Republic are paid through "Sberbank" OJSC, branches of "Russian Post", "Sotsinvestbank" OJSC and "UralSib" Ltd., with over 95% payments made through the post offices or "Sberbank". However, the Ministry signed an additional contract with only one bank, simultaneously making twofold increase of the budgetary payment for the bank services (from 0.5% to 1%) and giving mandatory instructions to the local social security agencies on signing similar contracts with "UralSib" Ltd.

Furthermore, the Ministry sent an instruction to their divisions (departments) on accepting application forms from pensioners for granting the "Bashkortostan Social Card" to the benefit of just one bank - "UralSib" Ltd. As it turned out, the bank devised the application form, and the Ministry approved it and collected the applications.

The application form, which must be personally signed by a pensioner, stated that an individual "has read and understood the "UralSib" Ltd. rates" and shall observe them; however, the information about the rates was not given to the pensioners. Therefore, the pensioners were deprived of the right to choose a bank and effectively become "hostages" of their own signatures.

The Commission of the Antimonopoly Office, which includes representatives of the Central Bank of Russia on a parity basis, concluded that the consequences of monopolistic servicing of the social card may result in multifold increase of the bank rates and a flow of welfare payments, followed by pension payments, to a single bank.

The Bashkortostan OFAS Russia issued a determination to the Ministry to stop lobbying the interests of a particular bank. The Ministry, social security departments and the bank must terminate the concerted actions and launch the mechanism of engaging other credit organizations in servicing social cards. Furthermore, the Ministry received a determination to send personal notifications to the citizens who already signed the application forms that they can choose a credit organization at their discretion.

The Ministry of Labour and Social Security of the Republic of Bashkortostan and "UralSib" Ltd. violated Articles 15 and 16 of the Federal Law "On Protection of Competition", which prohibits competition-restrictive acts and actions of the authorities as well as concerted actions between the authorities and economic entities, aimed at restricting market access for other economic entities.

Under Article 14.32 of the Code on Administrative Violations, the punishment for such violations is for economic entities - a turnover fine up to 15% of the proceeds gained in the preceding year on the market where the violation occurred, and for officials - a fine 17000- 20000 Rubles.

Reference:
The Republic of Bashkortostan is implementing the project on introducing the "Bashkortostan Social Card" automated information system. Under its Concept, the social card will make services offered in health clinics and hospitals more "user-friendly" for pensioners, and simplify travel privileges, payments for housing services and utilities and tax payments.

According to the National Bank of the Republic of Bashkortostan, 39 banks operating in the Republic are members of the MasterCard Worldwide international payment system. 10 of them have expressed their interest in participating in the project.