OREANDA-NEWS. March 18, 2010. The Supreme Arbitration Court of the Russian Federation upheld the opinion of the three Arbitration Courts of lower instances and dismissed the claim of "VSK" OJSC to transfer the case to the Presidium of the Supreme Arbitration Court for review in the exercise of supervisory powers, reported the press-centre of FAS Russia.

In February 2009, the Chelyabinsk OFAS Russia established that a cooperation agreement and an agency agreement between "Voenno-Strakhovaya Kompania [Military-Insurance Company]" OJSC ("VSK" OJSC) and "OrgresBank" OJSC contravened the Federal Law "n Protection of Competition".

The Bank set mandatory insurance of the risks of borrower's death and loss of capability as one of the conditions for granting a mortgage loan.

Reference:
Under Part 2 Article 935 of the Civil Code of the Russian Federation, by law citizens cannot be required to insure their life or health. The more so such responsibilities cannot be imposed according to a loan agreement.

However, when a borrower intended buy a flat with a loan from "OrgresBank" OJSC, it was given a closed list of insurance. Insurance companies that had not entered into cooperation agreements with "OrgresBank" OJSC could not provide such services to the clients of "OrgresBank" OJSC and, therefore, were deprived of a possibility to compete for the borrowers.

Reference:
Clause 5 Article 11 of the Federal Law "On Protection of Competition" prohibits agreements between economic entities or concerted actions between economic entities that lead or can lead to imposing unfavorable contract conditions upon counteragents or irrelevant to the subject matter of the contract.

Joint insurance strategy brought "OrgresBank" OJSC a fixed percentage of the insurance premium for every insurance agreement concluded between the insurer and the borrower with the bank assistance, and helped "VSK" OJSC to expand its client base.

The Chelyabinsk OFAS Russia, which discovered those violations, fined the insurance company "VSK" OJSC 2% of the income gained for selling the services for insuring life, health and loss of capacity, titles, risks of loss and/ or damages to fixed property of physical persons (1,741,805 Rubles).

"VSK" OJSC filed a lawsuit to the Chelyabinsk Regional Arbitration Court challenging the determination of the Chelyabinsk OFAS Russia, which had imposed a fine upon the company. However, the Chelyabinsk Regional Arbitration Court upheld the OFAS Russia's determination, reducing the fine to 1%, or 870,000 Rubles. The 18th Arbitration Appeal Court and the Federal Arbitration Court of the Urals District also upheld this judgment.