OREANDA-NEWS. February 04, 2009. Due to numerous enquiries from mass media, FAS Russia's Press Service explains the situation with "RZhD" OJSC and "Refservice" OJSC, reported the press-centre of FAS Russia.

On 26th December 2008, the Cassation Court upheld the ruling of 9th Arbitration Appeal Court and confirmed validity of the decision, made by the Federal Antimonopoly Service (FAS Russia) regarding the group of persons of "RZhD" OJSC and "Refservice" OJSC under Clause 5 and 8 Part 1 Article 10 of the Federal Law "On Protection of Competition".

Earlier FAS Russia found that the group of persons, including "Refservice" OJSC and "RZhD" OJSC violated Clauses 2, 4, 5 and 8 Part 1 Article 10 of the Federal Law "On Protection of Competition".

Clause 2 Part 1 Article 10 of the Federal Law "On Protection of Competition"- withdrawal of rolling stock from circulation of the total fleet, if it resulted in increased goods prices;

Sub-clause 4 Part 1 Article 10 of the Federal Law "On Protection of Competition"- economically or technologically unjustified reduction or termination of goods production, if there is demand for the goods or orders are placed for the goods supplies provided there is possibility of cost-effective production of the goods, as well as if such reduction or termination of the goods production are not directly specified in the federal laws, normative legal acts of the Government of the Russian Federation, normative legal acts of the of the authorized federal executive bodies, or judicial acts (the consignor/ consignee is deprived of the right to use integrated transport services at the government-regulated rates);

Sub-clause 5 Part 1 Article 10 of the Federal Law "On Protection of Competition"- - economically or technologically unjustified refusal or evasion from signing contracts with individual buyers (clients) while there is possibility for production or supplies of the goods, as well as such a refusal or evasion are not directly specified in the federal laws, normative legal acts of the Government of the Russian Federation, normative legal acts of the of the authorized federal executive bodies, or judicial acts (evading from providing rolling stock under the requests from по поданным consignor/ consignee, form GU12);

Clause 8 Part 1 Article 10 of the Federal Law "On Protection of Competition"- creating discriminatory conditions for owners/ lessees and operators of insulated and refrigerator cars (containers), as well as transport forwarding agents, that are not members of the group of persons of "RZhD" OJSC, in comparison with its subsidiary "Refservice" OJSC.

The judicial board concluded that FAS Russia had not have any ground for finding that "RZhD" OJSC and "Refservice" OJSC had violated Clauses 2 and 4 Part 1 Article 10 of the Federal Law "On Protection of Competition". At the same time, the Court confirmed validity of the decision of the antimonopoly body on recognizing that the group of persons - "RZhD" OJSC and "Refservice" OJSC - violated Clauses 5 and 8 Part 1 Article 10 of the Federal Law "On Protection of Competition".

Reference:

The carrier - "RZhD" OJSC violated the law because it unreasonably evaded providing integrated transportation services to the consignor - transportation of the goods in refrigerated rolling stock by the railways in general use. "RZhD" OJSC was forcing the consignors to enter into contracts with "Refservice" OJSC. Furthermore, "Refservice" OJSC and "RZhD" OJSC created discriminatory conditions for forwarding agents /operators of refrigerated rolling stock, who were not members of the group of persons of "RZhD" OJSC.

In May 2006 "RZhD" OJSC, the only public carrier on the Russian railways, formed a daughter company - "Refservice" OJSC.

"Refservice" OJSC is not a carrier, it is not involved in goods transportation, and does not enter into contracts for goods transportation. The company only offers services for organizing transportation and provides the rolling stock. When the case was being processed, "RZhD" OJSC transferred into the ownership of its daughter company around 6700 refrigerated and insulated railcars of the carrier, which was approximately 45 % of the total number of the registered fleet of refrigerated and insulated railcars of the carrier.

The total refrigerated and insulated rolling stock of the group of persons of "RZhD" OJSC (the carrier and its daughter company) is around 15000 (approximately 80% of the total rolling stock). The overall refrigerated and insulated rolling stock of other owners - not members of the group of persons of "RZhD" OJSC, is only about 3800 units.

With "Refservice" OJSC began its operations, "RZhD" OJSC started refusing the applications of consignors for transportation of the goods in the refrigerated cars of the carrier - "RZhD" OJSC (total car fleet) with the carriage charges specified in No.10-01 Price List for such type of shipment. Effectively, the consignors were deprived a possibility to directly use the services of the carrier for transporting their goods, because after creating "Refservice" OJSC the carrier - "RZhD" OJSC refused to provide transportation services due to the absence of railcars but agreed to provide them only if "Refservice" OJSC acted as the forwarding agent.

Therefore, consignors are forced to deal with the owners of the refrigerated rolling stock, among whom "Refservice" OJSC has dominant position.

As a result, the condition for the access of the consignors to transportation of the goods by the railways in general use is the contract for the services on organizing transportation with the owners of the refrigerated railcars, of whom only "Refservice" OJSC can supply the cars from the general fleet of "RZhD" OJSC to the consignors for the fee (specified in a separate contract).

In accordance with the Appendix to the Contract, upon an application from the consignor "Refservice" OJSC orders refrigerated railcars from the general fleet of the carrier - "RZhD" OJSC. The cost of such services, imposed upon the consignors, reaches up to 50% of the carriage charges specified in No.10-01 Price List for transportation of the goods in the railcars of general fleet (which belongs to the carrier - "RZhD" OJSC). Effectively, "Refservice" OJSC acts as an intermediary between the consignors and the carrier, which artificially increase transportation expenses of the consignors and violates the pricing procedures established by the state for the services of railway freight transportation.

As emphasized in course of the case investigation, not only the actions of "RZhD" OJSC violated the antimonopoly legislation, they also contravened Articles 1, 2 and 12 of the Federal Law "On the Railway Transport in the Russian Federation".

The Courts confirmed validity of the FAS Russia's decision, which is aimed at leveling playing field for the operators of refrigerated rolling stock and the forwarding agents regardless of their affiliation with "RZhD" OJSC. The decision confirms and protects the right of the consignors to use integrated transportation services for railway goods transportation by general fleet as long as the group of persons of "RZhD" OJSC and "Refservice" OJSC has dominant position on the market for providing the rolling stock.

In the FAS Russia's opinion, executing the decision and the determination, issued in follow-up of the decision on the case, will reduce transportation expenses of producers and sellers for railway shipment of food products and, as a consequence, limit the growth of prices for food products.