OREANDA-NEWS. April 08, 2009. The Vologda OFAS Russia issued resolutions on imposing fined upon oil companies - "Lukoil-Volganefteproduct" Ltd. and "Enticom-Invest" Ltd. for violating the antimonopoly legislation. The companies were fined 148 million Rubles and 31.5 million Rubles accordingly, reported the press-centre of FAS Russia.   

Earlier the Commission of the Vologda OFAS Russia established that the companies violated Part 1 Article 11 of the Federal Law "On Protection of Competition", which prohibits competition-restrictive agreements or concerted actions between economic entities on the goods market.

In course of the case investigation, OFAS Russia established that the companies together had over 90% market share of the local retail markets of oil products, and over 60% in Cherepovets; the companies controlled enough fuel stations and market shares to influence general conditions of goods circulation on the local retail markets of oil products in the Vologda region.

The OFAS Commission concluded the following: "Lukoil-Volganefteproduct" Ltd. and "Enticom-Invest" Ltd. had fixed prices at petrol stations on the basis of local acts; analysis of those acts showed that throughout several time intervals (from a few days to several weeks) from 21st January to 30th October 2008 the companies had consistently changed and fixed petrol and diesel prices mostly for the same value.

In this case consistency means regular and periodical repetitions of the same actions by "Lukoil-Volganefteproduct" Ltd. and "Enticom-Invest" Ltd.

It is obvious that the economic entities had a possibility to regularly monitor and assess competitors' market behaviour because under the current legislation information about the prices for oil products is public and generally accessible. Repeated behavior can occur without any written agreement and some sort of "information exchange" because it is a direct consequence of information disclosure by the companies.

With their market power (for certain types of oil products the market share of "Lukoil-Volganefteproduct" Ltd. reaches 87% and the market share of "Enticom-Invest" Ltd. 50%), each company can influence general conditions of goods circulation on the relevant markets. Other market participants are presented with a fait accompli when these important players have changed the prices and are forced to act similarly.

At the end, concerted actions between "Lukoil-Volganefteproduct" Ltd. and "Enticom-Invest" Ltd. led to refusal from competition by fixing the same prices in the absence of any objective reasons, which sent anticompetitive signals to other economic entities. The consequence of maintaining the same level of fuel prices by "Lukoil-Volganefteproduct" Ltd. and "Enticom-Invest" Ltd. was elimination of competition between these two companies: the companies eliminated price competition in retail sales of oil products in the above time intervals.

In addition, the general factors, influencing changes of retail prices at fuel stations, such as conditions on the wholesale market, changing prices by suppliers, the level of inflation level its developments, growth of prices and rates for the services of natural monopolies, affected each company to a different extent, depending on its cost structure. At the same time, the findings of the research carried out by the Vologda OFAS Russia showed that "Lukoil-Volganefteproduct" Ltd. and "Enticom-Invest" Ltd. fixed the same retail prices despite their different cost structure: objectively the purchasing prices and the total distribution costs were different, so the companies could have sold the goods at different retail prices.

Under the Code on Administrative Violations, breaching Article 11 of the Federal Law "On Protection of Competition" constitutes the grounds for imposing a fine upon legal entities in the amount from 1 to 15% of the company's proceeds gained in the year preceding the year when the violation was committed.