OREANDA-NEWS. April 30, 2009. The Federal Antimonopoly Service (FAS Russia) heard the case on collusion between the Sergiev Posad Town Authority and the mortgage corporation of the Moscow Region (IKMO) and pronounced that the parties violated Article 16 of the Federal Law "On Protection of Competition" (prohibiting competition-restrictive agreements and concerted actions between the authorities and economic entities), reported the press-centre of FAS Russia.

Investigating the case, FAS Russia established that the subject of the collusion was obtaining the rights for land plots in Sergiev Posad by IKMO. Concerted actions between the Town Authority and the mortgage corporation of the Moscow Region enabled IKMO get advantages over any other potential investors, and the outcome of the auctions, won by IKMO, effectively was predetermined.

FAS Russia thoroughly scrutinized the situation with the auction for the right for intergrated development of the built-up areas, which took place on 18th April 2008. FAS Russia discovered that:

1. Long before the auctions (in January - March 2008) the Town Authority, jointly with the executive officers of the mortgage corporation of the Moscow Region, repeatedly organized public campaigns for issuing some kind of certificates to the residents of shabby houses, located in the area that later was auctioned, which guaranteed their accommodation in the new houses. Those campaigns received wide publicity through the media in Sergiev Posad.

2. Information about the auction was not available to potential bidders as it was published in the supplement to the "Sergievskie Vedomosti [Herald]" newspaper with the circulation of 20 copies.

3. The only "competitor" of the mortgage corporation at the auction was a firm whose documents, filed for participation in the auction, were fully identical with the documents of IKMO, and were executed similarly and put in the same envelopes. At the auction the firm was represented by a person who had no relation to it. As a result, the final contract price differed from the initial price by only 0.5 %.

"If the whole story were to end with one unfair auction in one town, it would not be so very serious, said Alexander Kinyov, the Head of the FAS Russia's Anti-Cartel Department - The trouble is that, first, the story has a continuation - a year has passed after the action took place and the contract was signed, but IKMO has not undertaken actions either to build new residential houses or to move the residents of the shabby houses located in the area. Second, it did not stop with one town. We found that from October 2007 to August 2008 год the mortgage corporation of the Moscow Region had won more than 30 similar auctions in Klin, Zvenigorod, Yegoryevsk and other towns in the Moscow region. We are currently investigating whether the auctions were lawful and how IKMO is fulfilling its obligations in those towns".

"The story also has an important social consequence" - continues Alexander Kinyov. "Investigating the case circumstances we visited the shabby houses and talked to the residents who had been promised new flats. They feel cheated and blame the authorities. As we were informed by the corporation, the department that dealt with those issues was dissolved, its employees were dismissed and most of the documents could not be found. In such circumstance it is unlikely that the corporation will honour its obligations under the contracts with the municipalities. We asked ourselves what can be done to rectify the situation and we arrived to the conclusion that the first step that must be undertaken is to terminate the contracts that IKMO is unable to perform. The Sergiev Posad Town Authority is of the same opinion. Their representative promised that they will be terminating the contracts with the mortgage corporation of the Moscow Region.

We hope that IKMO will do the same".

Based on the FAS Russia's decision, the mortgage corporation of the Moscow Region is facing a "turnover" fine (up to 15 % of the company's turnover in the previous year). Calculating the fines, FAS Russia takes into account mitigating circumstances, which in this case can be eliminating of the consequences of the antimonopoly violations by IKMO, namely, terminating the contracts which are not being executed.