OREANDA-NEWS. December 28, 2010. The Federal Antimonopoly Service (FAS Russia) found that “Bezant” Ltd. violated Part 1 Article 10 of the Federal Law “On Protection of Competition”.

The FAS Russia’s Commission found that “Bezant” Ltd. has dominant position on the market of protected electronic control tape. “Bezant” Ltd. is also included in the Register of economic entities with over 35% share of the market of particular goods. The company’s share is over 50%.

On 22nd December 2010, FAS Russia completed an expert examination of the costs of production of electronic modules for protected electronic control tape by Russian companies. The expert examination showed that costs of production of electronic module are considerably lower what “Bezant” Ltd. pays to “Unitech” Ltd. and “Technotransservice Engineering” Ltd.

According to FAS Russia, cooperation of “Bezant” Ltd. with other suppliers of component parts for protected electronic control tape, and development of competition on the relevant market would considerably reduce product costs for protected electronic control tape and cut down the price for the end customers.

Although buying cheaper component parts, including electronic modules, would enable “Bezant” Ltd. to reduce its costs of producing protected electronic control tape, the company has not made any efforts to expand the number of its suppliers.

FAS Russia initiated the case in April 2010, upon investigating a petition of “Kores” Ltd.

“Kores” Ltd. attempted to enter into a contract with “Bezant” Ltd. for supplying component parts (electronic modules) for protected electronic control tape, but to no avail. At the same time, the cost of the items offered by “Kores” Ltd. was considerably lower than ex-works prices of similar items being purchased by “Bezant” Ltd.

Electronic modules constitute the main component part (over 90% of the final cost) in production of protected electronic control tape, and “Bezant” Ltd. buys them from two Russian companies – “Unitech” Ltd. (Moscow) and “Technotransservice Engineering” Ltd. (Moscow), that, in their turn, buy electronic modules abroad.

“Kores” Ltd. analyzed technical equipment of protected electronic control tape and found it possible to organize production of electronic modules, so it offered to supply them to “Bezant” Ltd. at lower prices.

Having analyzed the market of protected electronic control tape, FAS Russia concluded that this market is highly concentrated with underdeveloped competitive environment. For instance, in 2009 “Nauchnie Pribory” CJSC (St Petersburg) entered the market of protected electronic control tape with a similar product. However, so far the company’s share in the overall production and sale of protected electronic control tape has been insignificant. Therefore, “Nauchnie Pribory” CJSC cannot really compete with “Bezant” Ltd. in the relevant market. FAS Russia did not identify any other producers and suppliers of protected electronic control tape or its substitutes.

“In a competitive market companies have enough incentives to optimize their production processes and minimize the costs as the main preconditions for survival, which, in its turn, is associated with reduction of consumer prices and increase of the quality of products or services. In the market of protected electronic control tape “Bezant” Ltd. does not have such incentives as there is no competition. The whole burden of high production costs is transferred to the consumers – the users of cash registers, and today this burden is one of the heaviest in the world. It may safely be said that there is a considerable potential for cost reduction. The decision of the antimonopoly authority is aimed exactly at achieving such potential”, commented the Head of FAS Russia’s Department Maksim Ovchinnikov.