OREANDA-NEWS. August 09, 2010. The Federal Antimonopoly Service (FAS Russia) found that "Consumer Finance Company" CJSC (CFC) , "CFC" Commercial Bank OJSC and "CFC-Insurance" Ltd., "MSK" Insurance Group" OJSC, "Russkaya Insurance Company" OJSC, "AlfaStrakhovanie" OJSC, "Rosgosstrakh" Ltd., "Renaissance Insurance Group" Ltd. and "Admiral" Insurance Group" Ltd. violated the antimonopoly law, reported the press-centre of FAS Russia.

The companies violated the law by concluding agreements (contracts) for insuring property interests of the clients of "CFC" CJSC and the borrowers of "CFC" Commercial Bank OJSC who buy vehicles on credit or pay by installments.

The antimonopoly case was initiated upon petitions to FAS Russia from citizens complaining about actions of "CFC" CJSC, "CFC" Commercial Bank OJSC and the above insurance companies. According to the petitions, when citizens were concluding or prolonging contracts for insurance of vehicles subject of a pledge at "CFC" CJSC or "CFC" Commercial Bank OJSC, they were not given a possibility to choose an insurance company and the price of insurance policy was set above the market price and was fixed for the whole insurance period. If citizens lacked funds to pay the next insurance contribution, they were forced to take a consumer loan at "CFC" Commercial Bank OJSC.

Having investigated the case, the FAS Russia's Commission established the fact of the violation - fixing the insurance rate for insuring vehicles that were the subject of a pledge at "CFC" CJSC or "CFC" Commercial Bank OJSC, at 9.99% of the initial cost of the vehicle. The rate was applied until full execution of the obligations under a buying-and selling contract with payment in installments with "CFC" CJSC or a credit agreement with "CFC" Commercial Bank OJSC. Therefore, renegotiating the contract for a new period (prolonging the contract) a client of "CFC" CJSC or a borrower of "CFC" Commercial Bank OJSC was obligated to pay the insurance premium for the second and subsequent years of insurance as for a brand new vehicle, without taking into account amortization norms for the vehicle, coefficients for accident-free driving, etc.

The FAS Russia's Commission found that the agreements between "CFC" CJSC, "CFC" Commercial Bank OJSC and insurance companies violated Clauses 1 and 5 Part 1 Article 11 of the Federal Law "On Protection of Competition" as they led (could have led) to fixing the rates and imposing disadvantageous contract conditions for voluntary insurance of vehicles, that are subject of a pledge at "CFC" CJSC or "CFC" Commercial Bank OJSC.

To stop competition-restricting agreements and eliminate the consequences of the violations of the antimonopoly law, the FAS Russia's Commission issued determinations to "CFC" CJSC, "CFC" Commercial Bank OJSC, "CFC-Insurance" Ltd., "MSK" Insurance Group" OJSC, "Russkaya Insurance Company" OJSC, "AlfaStrakhovanie" OJSC, "Rosgosstrakh" Ltd., "Renaissance Insurance Group" Ltd. and "Admiral" Insurance Group" Ltd. to stop the violations.

The FAS Russia's Commission terminated the proceedings against "Ugoria" State Insurance Company" OJSC due to absence of antimonopoly violations in the company's actions.

Reference:
Clauses 1 and 5 Part 1 Article 11 of the Federal Law "On Protection of Competition" prohibit agreements between economic entities or concerted actions of economic entities on the goods market if such agreements or concerted actions have resulted or can result in:

(Clause 1) fixing or maintaining prices (tariffs, rates), discounts, mark-ups, surcharges;
(Clause 5) imposing contract conditions upon counteragents that are disadvantageous for a counteragent or irrelevant to the subject of the contract (unreasonable requirements to transfer financial means or other property, including property rights, as well as consent to conclude the contract provided it includes provisions regarding the goods, in which the counteragent is not interested, and other requirements).