OREANDA-NEWS. October 03, 2008. The Federal Antimonopoly Service (FAS Russia) finalized the case initiated against "Raiffeisenbank" CJSC, "RK-Garant" Insurance Company" Ltd., and "Military-Insurance Company" OJSC for breaching Article 11 of the Federal Law "On Protection of Competition", reported the press-centre of FAS Russia.

As the bank and the insurance companies voluntarily eliminated the antimonopoly violation and its consequences, FAS Russia has concluded that there are no grounds to issue a determination to the bank and the insurers on terminating the competition-restrictive agreement and exercising actions towards supporting competition.

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.

FAS Russia will consider relieving the bank and the insurers form administrative liability in accordance with the procedures specified in the Code of the Russian Federation on Administrative Violations.

The case was initiated following the agreements singed between "IMPEKSBANK" OJSC with the above insurance companies in 2006 in order to develop co-operation on mortgage crediting.

"IMPEKSBANK" OJSC terminated its activities due to joining "Raiffeisenbank" CJSC. FAS Russian initiated the case against insurance companies and "Raiffeisenbank" CJSC as the legal successor of "IMPEKSBANK" OJSC.

Investigating the case, FAS Russia examined the cooperation agreements with the insurance companies singed by "IMPEKSBANK" OJSC as well as by "Raiffeisenbank" CJSC before and after "IMPEKSBANK" OJSC joined it.

Before the investigation started, "Raiffeisenbank" CJSC had forwarded a statement to FAS Russia where it had admitted antimonopoly violations, particularly coordinated rates specified in the cooperation agreements, closed tenders for selecting insurance companies and lack of publicity in the requirements to the insurance companies.

"Raiffeisenbank" CJSC voluntarily admitted antimonopoly violations; at the same time it petitioned to FAS Russia for relieving from administrative liability for entering into competition-restrictive agreements under Article 14.32 the Code of the Russian Federation on Administrative Violations.

At the first session of the Commission, "Raiffeisenbank" CJSC was supported by insurance companies that submitted similar petitions to FAS Russia. Furthermore, in course of investigating the case on competition-restrictive agreements signed by "IMPEKSBANK" OJSC and "Raiffeisenbank" CJSC, "AlphaStrakhovaniе" OJSC and "ROSNO" OJSC voluntarily reported to FAS Russia. The insurance companies were respondent parties to the case.

Having investigated the case, FAS Russia concluded the following:

- The agreement singed by "Raiffeisenbank" CJSC with "RK-Garant" Insurance Company" Ltd. breached Article 11 of the Federal Law "On Protection of Competition" as it led (could have lead) to fixing the rates for insurance services;

- The agreements singed by "IMPEKSBANK" OJSC with the "Military-Insurance Company" OJSC, "RK-Garant" Insurance Company" Ltd. and "AlphaStrakhovaniе" OJSC breached Clause 4 Part 1 Article 11 of the Federal Law "On Protection of Competition" as they resulted (could have resulted) in economically and technologically ungrounded refusal to enter into agreements with particular buyers or sellers;

- The agreements singed by "Raiffeisenbank" CJSC with the "Military-Insurance Company" OJSC, "AlphaStrakhovaniе" OJSC and "ROSNO" OJSC breached Clauses 4 and 5 Part 1 Article 11 of the Federal Law "On Protection of Competition" as they resulted (could have resulted) in economically and technologically ungrounded refusal to enter into agreements with particular buyers or sellers as well as imposing unfavorable conditions of the insurance contract upon the borrowers.

In course of the case investigation, under Clause 1 Part 1 Article 48 of the Federal Law "On Protection of Competition" "Raiffeisenbank" CJSC and insurance companies submitted documentation confirming voluntary elimination of the antimonopoly violation.

In particular, the bank terminated or amended the agreements singed with the insurance companies to establish co-operation on the mortgage insurance programmes. 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.

Upon processing the case, FAS Russia also revealed the agreements that violated Clauses 1, 4 and 5 Article 11 of the Federal Law "On Protection of Competition". The agreements were between "IMPEKSBANK" OJSC and "Raiffeisenbank" CJSC with the insurance organizations that were not respondents to the case: "Zurich.Retail" Ltd., "Standart-Reserve" Closed Joint-Stock Insurance Company, "Renaissance Strakhovanie" Group" Ltd., "Progress-Garant" Insurance Company" OJSC, "Ingossrakh" Open Joint-Stock Insurance Company and "Rosgosstrakh - Stolitsa" Ltd.

Such agreements can be recognized as agreements that restrict competition on the insurance market as they lead to may lead to fixing the rates for the insurance services, economically or technologically unjustified refusal to enter into agreements with particular buyers or sellers, as well as imposing unfavorable conditions on the insurance contract upon the borrowers.

Due to the lapse of the period of legal investigation and, as a consequence, inability to ensure the legal rights of the persons - parties to the case (the right to present evidence, study the evidence, and present the arguments on all issues risen in course of the case investigation), the above insurance companies were not respondents to the case.

Furthermore, FAS Russia concluded that "IMPEKSBANK" OJSC, "Raiffeisenbank" CJSC and insurance companies - "Military-Insurance Company" OJSC, "AlphaStrakhovaniе" OJSC, "RK-Garant" Insurance Company" CJSC, "Zurich.Retail" Ltd., "Standart-Reserve" Closed Joint-Stock Insurance Company "Rosgosstrakh - Stolitsa" Ltd., "Renaissance Strakhovanie" Group" Ltd., "Progress-Garant" Insurance Company" OJSC and "Ingossrakh" Open Joint-Stock Insurance Company breached Clause 5 Part 1 Article 11 of the Federal Law "On Protection of Competition" in terms of entering into agreements that result (could result) in imposing unfavorable conditions of the mortgage credit contract that are not relevant to the subject matter of the contract.

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 unfavorable 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 joint Commission of the FAS Russia and the Bank of Russia will make the final decision whether "Raiffeisenbank" CJSC, being also as the legal successor of "IMPEKSBANK" OJSC, and "Zurich.Retail" Ltd., "Standart-Reserve" Closed Joint-Stock Insurance Company "Rosgosstrakh - Stolitsa" Ltd., "Renaissance Strakhovanie" Group" Ltd., "Progress-Garant" Insurance Company" OJSC and "Ingossrakh" Open Joint-Stock Insurance Company have violated Clauses 1, 4 and 5 Part 1 Article 11 of the Federal Law "On Protection of Competition" (in the part on restricting competition on the insurance market), as well as whether "Raiffeisenbank" CJSC, being also as the legal successor of "IMPEKSBANK" OJSC, and "Military-Insurance Company" OJSC, "AlphaStrakhovaniе" OJSC, "RK-Garant" Insurance Company" CJSC, "Zurich.Retail" Ltd., "Standart-Reserve" Closed Joint-Stock Insurance Company "Rosgosstrakh - Stolitsa" Ltd., "Renaissance Strakhovanie" Group" Ltd., "Progress-Garant" Insurance Company" OJSC and "Ingossrakh" Open Joint-Stock Insurance Company have violated Clause 5 Part 1 Article 11 of the Federal Law "On Protection of Competition" (in the part on restricting competition on the market of banking services).