OREANDA-NEWS. October 27, 2010. The Federal Antimonopoly Service (FAS Russia) finalized the case against “MTS” OJSC, “VympelCom” OJSC, “MegaPhon” OJSC (the Russian Federation), “GSM Kazakhstan” LLP, “Kar-Tel” LLP and “Mobile Telecom-Service” LLP (the Republic of Kazakhstan) on violating Part 1 Article 10 and Parts 1 and 2 Article 11 of the Federal Law “On Protection of Competition”, reported the press-centre of FAS Russia.

At the same time, the Agency of the Republic of Kazakhstan for protection of competition also investigated actions undertaken by the largest mobile communications providers in Kazakhstan: “GSM Kazakhstan” LLP, “Kar-Tel” LLP and “Mobile Telecom-Service” LLP.

Having investigated the case, FAS Russia found that “MTS” OJSC, “VympelCom” OJSC and “MegaPhon” OJSC violated Clauses 1 and 3 Part 1 Article 10 of the Federal Law “On Protection of Competition”.

These providers fixed and maintained monopolistically high prices for their roaming services – national (within the Russian Federation) and international – (within the CIS-member-states) and also imposed disadvantageous contract conditions for their subscribers, who were not properly informed about changes in roaming calculation procedures.

The FAS Russia’s Commission established that the “Big Three” providers had been maintaining monopolistically high rates for mutual payments with their roaming partners (in particular, a member of the same group of persons with the Russian provider) which resulted in excessive profits generated by providing communications services to the “guest” subscribers arriving to the Russian Federation.

As the rate for mutual payments with counteragents is one of the main tariff-forming factors for roaming services for Russian subscribers, the “Big Three” providers formed excessive rates for Russian subscribers by maintaining unreasonably high rates for mutual payments.

Currently roaming services can be paid by two methods: “on-line” roaming —the money are taken from the subscriber’s account at the moment when they actually are spent, and “off-line” roaming – when a ”domestic” provider learns from its partner that the money were spent hours or more after the act of spending. In the latter case, the money is taken from the subscriber’s account with a considerable delay. If the communications services are provided in “off-line” roaming, the subscriber who signed a contract under the condition of advance payments is convinced that the services will be interrupted when his balance reaches “zero”, but coming back home learns that he has a debt. If the subscriber used high-speed Internet access services, his bills can be several hundred thousand Rubles.

The FAS Russia’s Commission has established that regardless of the payment procedures specified in the contract for communication services, “MTS” OJSC, “VympelCom” OJSC and “MegaPhon” OJSC do not properly inform their subscribers that in roaming the payments procedures are different. Therefore, the providers unilaterally change an essential contract conditions for the payment procedures, which infringe the interest of their subscribers.

FAS Russia has taken into account the following actions undertaken by the “Big Three” providers:

- From 30th September 2010 “VympelCom” OJSC reduced the rates for mobile telecommunications services in roaming in the CIS;

- “MTS” OJSC and “MegaPhon” OJSC stated their intention to reduce the rates for the rates for mobile services in roaming in the CIS within the periods specified by the companies;

- “MTS” OJSC and “MegaPhon” OJSC reduced the rates for mobile telecommunications services in domestic roaming;

- “MTS” OJSC, “VympelCom” OJSC and “MegaPhon” OJSC will undertake all necessary measures to regulate inter-provider actions with “MTS” OJSC, “VympelCom” OJSC and “MegaPhon” OJSC under the conditions of non-discrimination, which will allow providers to fix subscribers’ rates at the level unilaterally stated by the providers;

- “MTS” OJSC, “VympelCom” OJSC, “MegaPhon” OJSC stated they will use the sms-system to inform subscribers travelling outside the Russian Federation that if they use roaming services, their accounts can be debited with significant delays in Q1 2011.

Taking the above into account, the FAS Russia’s Commission issued determinations to “MegaPhon” OJSC and “MTS” OJSC to eliminate the violation of Clause 1 Part 1 Article 10 of the Federal Law “On Protection of Competition”, by fixing the rates for roaming services at the level unilaterally stated by the companies;

“MTS” OJSC, “VympelCom” OJSC and “MegaPhon” OJSC were issued determination to provide sms-information to subscribers travelling outside the Russian Federation that if they use roaming services, their accounts can be debited with significant delays within the periods unilaterally stated by the companies.

The FAS Russia’s Commission did not find the facts of violating Parts 1 and 2 Article 11 of the Federal Law “On Protection of Competition” by “MTS” OJSC, “VympelCom” OJSC, “MegaPhon” OJSC (the Russian Federation), “GSM Kazakhstan” LLP, “Kar-Tel” LLP and “Mobile Telecom-Service” LLP (the Republic of Kazakhstan) and in this part the case was closed due to absence of violations.

Anatoly Golomolzin, Deputy Head of FAS Russia and the Chair of the CIS Headquarters for Joint Investigations, commented:

“On average rates for international roaming in CIS have been reduced: voice services: by 1.5-2 times, sms –twofold, GPRS Internet access– by four times; for national roaming: voice services – by 3-3.5 times, sms – up to three times.

Such results are achieved only due to coordinated efforts of the antimonopoly authorities of the CIS member-states.

In November 2009 the Headquarters for Joint Investigations of Antimonopoly Violations, at the International Council for Antimonopoly Policy (ICAP) of the CIS member-states, completed analysis of telecommunications market in the CIS.

In follow-up of this analysis, FAS Russia and the Agency of the Republic of Kazakhstan for protection of competition carried out detailed investigations. In course of antimonopoly investigations, the largest providers of communications services in both countries undertook measures to decrease their rates for inter-provider payments. It enabled reducing the rates for subscribers of both countries travelling abroad.

Providers in Russia and Kazakhstan also sent their proposals about reducing inter-provider-rates in other CIS countries. More than 70% responses were positive. Information about providers of those countries that refused to accept non-discriminatory conditions were forwarded to the competition authorities of other CIS countries in order to complete antimonopoly enforcement.

ICAP has decided to submit materials on the telecommunications market in the CIS for consideration of the Council of the Head of Governments of the CIS member-states”.