OREANDA-NEWS. December 29, 2010. Perm OFAS Russia suspects violations of the antimonopoly law in companies’ fixing monopolistically high price for motor fuel.

On 27th December 2010, the Office of the Federal Antimonopoly Service in the Perm region (Perm OFAS Russia) initiated a case against the group of persons of “LUKOIL” vertically-integrated oil company, comprising “LUKOIL-PNOS” Ltd. and “LUKOIL-PNP” Ltd., that have dominant position on the market of wholesale and retail sale of motor fuel in the Perm region. The antimonopoly body suspects that the companies violated Clause 1 Part 1 Article 10 of the Federal Law “On Protection of Competition” by fixing monopolistically high prices for motor fuel in October – December 2010.

According to the Head of Perm OFAS Russia, Mr. Dmitry Makhonin, from 18th October 2010 to 20th December 2010 retail prices for diesel fuel increased by 27%. In October the price for diesel fuel was 18.8 Rubles per liter, while on 20th December it already reached 23.9 Rubles per liter. Prices for motor petrol also increased by 2 – 3 %.

Clause 1 Part 1 Article 6 of the Federal Law “On Protection of Competition” defines monopolistically high price as the price fixed by an economic entity that has dominant market position if this price exceeds the sum of the costs for production and sale of the product and profit, particularly a price that results from an increase over previously established prices, provided the following conditions are met together:

а) the costs for production and sale of the product have not changed or changes do not correspond to the change in the price of the goods;

b) the composition of buyers and sellers of the product have not changed or have not changed significantly and;

c) the conditions for circulation of the product on the market, including those resulting from state regulation including taxation and tariff regulation, have remained unchanged or changes do not correspond to the change in price.

According to Dmitry Makhonin, all three conditions are valid for the retail market of motor fuel in the Perm region: conditions for circulation of goods on the market and expenses necessary to produce and distribute the goods have remained the same. The composition of the sellers and buyers of the goods also changed insignificantly.

Dmitry Makhonin also emphasized that in view of regional specifics of the two related markets (wholesale and retail sale of motor fuel) within the boundaries of the Perm region, “LUKOIL-PNOS” Ltd. indirectly has a possibility to influence general conditions of circulation of motor fuel on retail market of motor fuel.

The case is scheduled for 17th January 2011.