OREANDA-NEWS  On 24 February was announced, that the Federal Antimonopoly Service (FAS Russia) initiated antimonopoly proceedings against the following oil companies: "Lukoil" OLSC, "Rosneft" Oil Company" OJSC, "Gazprom Neft" OJSC and "ТNК-BP Holding" OJSC. The decision was announced by Igor Artemyev, the Head of FAS Russia, at the session of the Presidium of the FAS Russia's Collegium.

"At the end of 2008 retail fuel prices decreased on average by 20%. Nevertheless, the downward trend was not in line with dropping global oil prices largely because oil companies maintained monopolistically high prices for oil products", - said Igor Artemyev. "At the beginning of 2009 the companies allowed unreasonable increase of wholesale prices, which has already resulted in growing retail prices in some regions. Last year FAS Russia initiated more than 150 cases against antimonopoly violations on the markets of oil products. Since the beginning of 2009, the antimonopoly authority has initiated 22 cases involving participants of the fuel market".

FAS Russia obtained sufficient information to initiate antimonopoly proceedings from the data of the FAS Russia's monitoring of wholesale and retail markets of oil products, findings of independent research organizations, and numerous complaints by physical persons and legal entities, received by the Antimonopoly Service through various channels.

Majority of petitions from organizations, governmental agencies and physical persons, addressed to FAS Russia, state that the situation on the fuel market can cause serious adverse consequences in various sectors of the economy.

A petition of the Moscow Distirct Authority, the Tver region (quoting): "[… from 12th January 2009 to 7th February 2009 prices for fuel oil increased twofold: from 3500 Rubles per ton to 7000 Rubles per ton".

Agricultural problems are some of the most important subjects raised in the petitions to FAS Russia. Sharp, unjustified increase of prices for fuel and lubricant materials can disrupt the 2009 sowing campaign. According to the Russian Ministry of Agriculture, that refers to the survey completed by the Federal State Statistics Service, changes of the selling prices for grain were disproportionate to the cost of fuel.

More quotations from the petitions submitted to FAS Russia:

The Russian Union of Sugar Producers: "[…according to the "real-time" monitoring carried out by the Union of Sugar Producers, in the central part of the Black Earth area in January 2009 the cost of diesel fuel was 10500 Rubles per ton, and in February it already reached 16000 Rubles per ton…] […In the time of a financial crises and increasingly expensive credit resources, such factors can disrupt the 2009 sowing campaign…]"

The Tambov Regional Authority: "[…a sharp run-up of prices for diesel fuel happened when most of agricultural enterprises and farms were preparing to the sowing campaign, which threatens stability of their performance in the period of crisis…]"

Anatoly Golomolzin, Deputy Head of FAS Russia, stated: "The oil companies that in autumn 2008 were found guilty in committing antimonopoly violations and were fined accordingly, have failed to fulfill the determinations, issued by FAS Russia, and execute the measures towards creating healthy competitive environment on the fuel market". According to Mr Golomolzin, "such measures are extremely important in the current economic situation and are aimed at preventing economically and technologically unjustified reduction of supplies of oil products to domestic market in order to secure lasting supply of oil products on domestic market in line with the level of demand".

Quoting the petition of the coal companies from the Kemerovo region: "Soaring prices for energy resources put coal producers in the Kemerovo region, involved in open-cut mining, on the brink of survival, because the share of fuel and lubricant materials accounts for 12 - 18% of the cost of the extracted products. Despite considerable price increase, fuel and lubricant materials stored in warehouses in the Kemerovo region are insufficient. Also, refineries do not confirm shipping of the required goods (traditional suppliers: Omsk refinery, Achinks refinery, Ufa refinery, and Angarsk refinery)".

The Deputy Head of FAS Russia reminded: "The companies were also issued determinations to avoid compensating the reduced profitability of supplying oil and oil products to external markets by increasing the price for oil products on domestic market". Since the beginning of 2009, the oil companies have found export less profitable because of decreasing fuel prices on the foreign markets, which are formed at the commodities exchanges.

Publicly, the oil companies stand that their actions are fully compatible with competitive environment and satisfy the interests of the society. Their real position, however, is revealed in the lawsuits filed by the companies to challenge the FAS Russia's determinations, which were issued with the ultimate aim to protect competition. In particular, the oil companies are opposing organization of continuous sales of oil products on domestic market through a commodities exchange or an electronic trading site. Such measures would increase the number of market participants and implement the procedures of equal access to the bidding, which are necessary to establish a market-based pricing system. Also the oil companies are challenging the FAS Russia's request that business units and organizations - parts of these vertically integrated oil companies must register costs and revenues separately. FAS Russia insists on this approach to achieve pricing transparency. The companies also are litigating the FAS Russia's determination on possibility to conclude direct contracts for wholesale sales of oil products on non-discriminatory conditions in 2009 and subsequent years, first of all, for the companies that are not members of the same group of persons with these oil companies. This position is reflected in the companies' actions.

Another quotation from the petition of the coal companies of the Kemerovo region: "Refineries refuse to supply directly to the coal producers and force them to work through intermediaries, at the same time increasing prices for the coal producers".

FAS Russia finds behavior of the oil companies anticompetitive. Ignoring the federal laws leads to direct infringement of the interests of the population of the Russian Federation and can constitute the grounds for applying the whole spectrum of the sanctions specified by the laws on protection of competition.