OREANDA-NEWS  On 26 February was announced, that on 27h April 2009, the Federal Antimonopoly Service (FAS Russia) will continue proceedings against the "Residential Mortgage Agency" (“AIZhK” OJSC) and 45 insurance companies for violating Part 1 Article 11 of the Federal Law "On Protection of Competition" (competition-restrictive agreements). The hearing was postpones at the FAS Russia's Commission meeting on 19th February 2009.

On 28th August 2008, FAS Russia initiated the proceedings because the Agency and the insurance companies signed cooperation agreements for insuring the property and other interests of the borrowers under the mortgage lending programmes offered by "AIZhK" OJSC.

The agreements fixed the maximum combined insurance rate for the types of insurance specified in the credit agreement - no more than 1.5% of the insured sum under the insurance contracts. It contravened Clause 1 Part 1 Article 11 of the Federal Law "On Protection of Competition", which forbids fixing the rates in the contracts between economic entities.

Before the case was initiated, "AIZhK" OJSC and several insurers took advantage of the administrative leniency programme under Article 14.32 of the Code on Administrative Violations of the Russian Federation and submitted a statement to FAS Russia on concluding the agreements, which violated the antimonopoly legislation, and excluding the clause on insurance rates from the agreements.

On 19th February 2009, at the case hearing a representative of "AIZhK" OJSC informed the FAS Russia's Commission that "AIZhK" OJSC had analyzed its agreements with the insurance companies with the purpose of eliminating the antimonopoly violations and intended to make the following changes to the Agency's Standards for granting, refinancing and administering mortgage credits (loans):

1. Introducing special indicators of insurers' financial stability and solvency as an alternative to the Russian and international ratings for the purposes of selecting insurance companies for business cooperation;

2. Excluding the procedure for fixing the insurers' limit of the insurance premium;

3. Developing alternative credit products that do not have a mandatory requirement of a personal insurance contract;

4. Creating conditions for developing bona fide competition between the insurance companies selected by "AIZhK" OJSC:

- Establishing a possibility to extend the list of insured risks under the credit agreements signed when mortgage loan is granted, without an approval of "AIZhK" OJSC;

- Formalizing a possibility to change insurers throughout the duration of the credit agreement.

"AIZhK" OJSC submitted the proposed amendments to the Antimonopoly Service.

At the same time, "AIZhK" OJSC petitioned to postpone the case hearing to be able to approve the above amendments to the Agency's documentation.

FAS Russia granted the petition of "AIZhK" OJSC and postponed the Commission meeting until 27h April 2009.