OREANDA-NEWS. October 01, 2008. The Federal Antimonopoly Service (FAS Russia) recognized that Bank VTB 24 (CJSC) and 17 insurance companies violated Clauses 1 and 4 Part 1 Article 11 of the Federal Law "On Protection of Competition" (prohibiting anticompetitive agreements), reported the press-centre of FAS Russia.

The list of insurance companies: "Ingosstrakh" Open Joint-Stock Insurance Company, "Military-Insurance Company" OJSC, "VTB Strakhovanie" Insurance Company" Ltd., "Rosgosstrakh - Stolitsa" Ltd., "Rosgosstrakh - Povolzhye" Ltd., "Rosgosstrakh - Severo-Zapad" Ltd., "Rosgosstrakh - Sibir" Ltd., "Rosgosstrakh - Tatarstan" Ltd., "Rosgosstrakh - Ural" Ltd., "Rosgosstrakh - Centre" Ltd., "Rosgosstrakh - Yug", "Rosgosstrakh - Dalny Vostok" Ltd., "Rosgosstrakh - Accord" Ltd., "Russky Mir" Insurance Company" OJSC, "PARI" Insurance Company" OJSC and "Kuzbass regional Insurance Company".

The bank and insurance companies violated the antimonopoly laws by entering into co-operation agreements on mortgage crediting, which resulted (could have resulted) in fixing insurance rates as well as economically and technologically unjustified refusals to sign contracts with certain buyers and sellers.

In course of the case investigation, under Clause 1 Part 1 Article 48 of the Federal Law "On Protection of Competition", the bank and insurance companies presented documents confirming voluntary elimination of the antimonopoly laws.

For instance, they have removed the fixed and minimal rates for life, property or title insurance from the agreements, which insurers were to use in the package mortgage insurance. The have also added Clauses that none of the agreement terms and conditions means that the bank and the insurance companies must agree upon the prices, rates, discounts or otherwise fix the mutual costs of their services for the third persons.

To prevent unjustified refusals to sign credit agreements because the borrowers have chosen a particular insurance company, the bank has devised and made available to public on its website:

- the bank requirements to insurance companies (general requirements and financial stability);

- the bank requirements to insurance agreements for mortgage crediting;

- the list of documents to be presented by insurance companies in order to verify compliance with the above requirements;

- information on possibility for the borrowers to enter into insurance agreements with any insurance companies if the bank verifies that it complies with the bank requirements.

Since the bank and the insurance companies voluntarily eliminated the antimonopoly violations and their consequences, FAS Russian concluded that there were no grounds to issue a determination to the bank and the insurers requesting them to terminate the competition-restrictive agreements and exercise actions towards supporting the competitive environment.

However, establishing the fact of violating Article 11 of the Federal Law "On Protection of Competition" constitute the grounds for imposing administrative charges upon the violators under Article 14.32 of the Code of the Russian Federation on Administrative Violations.

Under the Notes to Article 14.32 of the Code of the Russian Federation on Administrative Violations, a person that voluntarily reports to the antimonopoly body on entering into a competition-restrictive agreements, prohibited by the antimonopoly legislation of the Russian Federation, and refused to participate or further participate in such an agreement and presented the available information (data) that facilitate establishing the fact of such an agreement, is relieved from administrative liability.

The case was initiated upon voluntary statements by the bank and insurance companies on refusal to further participate in the signed competition-restrictive agreements, forbidden by the antimonopoly laws of the Russian Federation. FAS Russia will consider possibility to relieve the bank and the insurers from administrative liability in accordance with the procedures specified in the Code of the Russian Federation on Administrative Violations.

At the same time, investigating the case, FAS Russia found that the bank and the insurers breached not only Clauses 1 and 4 Part 1 Article 11 of the Federal Law "On Protection of Competition" but also Clause 5 Part 1 Article 11 of the Federal Law "On Protection of Competition" in terms of entering into agreements that lead (or can lead) to imposing unfavourable conditions of the mortgage credit agreements upon borrowers that are not relevant to the subject matter of the agreement.

Apart from insuring the mortgage property, the co-operation agreements on mortgage crediting between the bank and the insurance include mandatory insurance of life and title, which can be considered as an unfavourable condition of the mortgage credit agreements or a condition irrelevant to the subject matter of the agreements.

Accordingly, FAS Russia found that the actions of the bank and insurance companies on the market of banking services were in breach of the antimonopoly legislation.

Under Part 3 Article 40 of the Federal Law "On Protection of Competition", violations committed by credit organizations in the market of banking services are processed by the Commission that includes on parity basis representatives of the Central Bank of the Russian Federation.

According to the procedures specified in the Administrative Regulations on the State Function for Initiating and Processing Cases on Violating the Antimonopoly Legislation of the Russian Federation, the Commission requested the Department for Control over Financial Markets to prepare the relevant documentation on the discovered antimonopoly violations.

Therefore, the final decision whether Bank VTB 24 (CJSC) and 17 insurance companies have violated Clause 5 Part 1 Article 11 of the Federal Law "On Protection of Competition" will be made by the joint Commission of the FAS Russia and the Bank of Russia.