OREANDA-NEWS. April 03, 2012. The 9th Arbitration Appeal Court (Moscow) published the ruling regarding a case FAS vs. “RSITs” CJSC (“Ru-Centre”). On 16th March 2012, the Court reversed the judgment of the Court of First Instance and supported the decision and determination of the Federal Antimonopoly Service (FAS Russia) regarding companies that register domain names in the .RF extension, according to which “RSITs” CJSC (“Ru-Centre”) must return the unlawfully gained income to the budget - 239 million Rubles. The 9th Arbitration Appeal Court (Moscow) upheld Clauses 2 and 3 of the FAS decision regarding “Ru-Centre”, confirming that companies – registrars violated Clause 5 Part 1 Article 11 and Part 1 Article 14 of the Federal Law “On Protection of Competition”, reported the press-centre of FAS Russia.

When FAS made the decision and determination in question they were in compliance with the existing Law. Passing the ruling, the 9th Arbitration Appeal Court was governed by the “third antimonopoly package” that had already came into force, clarifying the coordination concept. Therefore, the Court reversed the FAS decision regarding “Ru-Centre” under Part 3 Article 11 of the Law.

On 1st July 2011, FAS made a decision on a precedent case against companies – registrars of domain names in the .RF extension. The Antimonopoly Service found that “RSITs” CJSC and “RSITs” Autonomous Non-Commercial Organization violated Articles 11 and 14 of the Federal Law “On Protection of Competition”.

The FAS Commission issued a determination to “RSITs” CJSC to transfer the unlawfully obtained income - over 239 million Rubles - to the budget of the Russian Federation.

Violating Part 1 Article 14 of the Federal Law “On Protection of Competition”, “RSITs” CJSC registered for itself over 70,000 domain names in .ÐÔ extension that must be distributed to the petitioners on the basis of equal accessibility. Also by concluding and participating in the agreement, “RSITs” CJSC and “RSITs” Autonomous Non-Commercial Organization were imposing disadvantageous contract conditions or irrelevant contract conditions to their clients – physical persons and legal entities who wished to register for themselves domain names in .ÐÔ extension.

Under the Rules of the Coordination Centre of the national domain one company – registrar (overall there are 21 registrars) could register no more than 4800 domains per hour. “RSITs” CJSC concluded client agreements with several other registrars that registered domain names for “RSITs” CJSC as an administrator.

FAS also established that “RSITs” CJSC and “RSITs” Autonomous Non-Commercial Organization concluded an agreement, under which domain names were set for closed auctions. The income unlawfully obtained through the auctions was distributed between “RSITs” CJSC and “RSITs” Autonomous Non-Commercial Organization.

“Ru-Centre” challenged the decision and determination of the Antimonopoly Service. Moscow Arbitration Court accepted the argument of the claimant and reversed the FAS decision. However, the 9th Arbitration Appeal Court (Moscow) revalidated the FAS decision and determination.

Reference:

After FAS made the decision regarding the registrars of domain names in .ÐÔ extension, “RSITs” Autonomous Non-Commercial Organization was liquidated.

Under the Federal Law “On Protection of Competition”:

Article 11. Prohibition of Competition- Restricting Agreements between Economic Entities (as revised in No.401-FZ Federal Law of 6th December 2011)

1. Agreements between economic entities – competitors are recognized as cartels shall be prohibited, that is, agreements between economic entities that sell goods on the same market, if such agreements or concerted practices lead or can lead to:

1) Fixing or maintaining of prices (tariffs), discounts, markups (extra charges), and (or) margins;

2) Raising, lowering, or maintaining prices in course of competitive bidding;

3) Dividing a market according to a geographical principle, the volume of sales or purchases of goods, the range of sold products or composition of sellers or buyers (customers);

4) Reducing or terminating goods production;

5) Refusing to conclude contracts with certain sellers or buyers (clients).

2. “Vertical” agreements between economic entities are prohibited (except “vertical” agreements that are allowed under Article 12 of this Federal Law), if:

1) Such agreements lead or can lead to fixing reselling prices, except if the seller sets the maximum reselling price for a buyer;

2) Such agreements obligate the buyer not to sell goods of an economic entity that competes with the seller. This prohibition is not applicable to agreements on sale of goods by a buyer under the trademark or other means of individualization of a seller or a producer.

3. The Law prohibits agreement between economic entities that are participants of wholesale and (or) retail markets of electric power (capacity), organizations of commercial infrastructure, organizations of technological infrastructure, network organizations, if such concerted actions results in price manipulations on wholesale and (or) retail markets of electric power (capacity).

4. Other agreements between economic entities (except “vertical” agreements that are allowed under Article 12 of this Federal Law) are prohibited if it is established that such agreements lead or can lead to restricting competition. Such agreements can include, in particular, agreements on:

1) Imposing disadvantageous contract conditions upon a counteragent or conditions irrelevant to the contract subject (unreasonable requirements to transfer funds, other property, including property rights, as well as a consent to conclude a contract subject to including provisions regarding the goods, in which the counteragent is not interested in, and other requirements);

2) Economically, technologically or otherwise unjustified fixing different prices (tariffs) for the same goods by an economic entity;

3) Preventing market entry or exit of other economic entities;

4) Fixing membership (participation) conditions for professional and other associations.

5. Physical persons, commercial organizations and non-commercial organizations are prohibited to coordinate economic activities of economic entities if such coordination leads to any of the consequences specified in Parts 1 - 3 of this Article, that cannot be allowed under Articles 12 and 13 of this Federal Law and that are not provided for by the federal laws.

6. An economic entity can present evidence that concluded agreements, specified in Parts 2 - 4 of this Article, can be allowed under Article 12 or Part 1 Article 13 of this Federal Law.

7. The provisions of this Article do not cover agreements between economic entities that are members of the same group of persons if one of such economic entities has established control over another economic entity or if such economic entities are controlled by the same persons, except agreements between economic entities that exercise activities, simultaneous execution of which by the same economic entity is prohibited by the law of the Russian Federation.

8. In this Article, Articles 11.1 and 32 of this Federal Law, “control” means ability of a physical person or a legal entity to directly or indirectly (through a legal entity or several legal entities) determine decisions made by another legal entity, through one or several following actions:

1) Disposition of over 50% of the total voting shares (stock) that form the authorized (share) capital of a legal entity;

2) Exercising the functions of an executive body of a legal entity.

9. The provisions of this Article do not cover agreements on granting and (or) alienating the right of using the results of intellectual activities or the means of individualization of a legal person, the means of individualization of products, works, services.

Article 11.1. Prohibition of Competition- Restricting Concerted Actions of Economic Entities (introduced by No.401-FZ Federal Law of 6th December 2011)

1. Concerted actions of economic entities – competitors are prohibited if such concerted actions lead to:

1) Fixing or maintaining of prices (tariffs), discounts, markups (extra charges), and (or) margins;

2) Raising, lowering, or maintaining prices in course of competitive bidding;

3) Dividing a market according to a geographical principle, the volume of sales or purchases of goods, the range of sold products or composition of sellers or buyers (customers);

4) Reducing or terminating goods production;

5) Refusing to conclude contracts with certain sellers or buyers (clients) if such a refusal is not directly provided for by the federal laws.

2. The Law prohibits concerted actions of economic entities that are participants of wholesale and (or) retail markets of electric power (capacity), organizations of commercial infrastructure, organizations of technological infrastructure, network organizations, if such concerted actions results in price manipulations on wholesale and (or) retail markets of electric power (capacity).

3. Other types of concerted actions of economic entities – competitors that are not specified in Parts 1 and 2 of this Article are prohibited if it is established that such concerted actions lead to restricting competition. Such concerted actions can include:

1) Imposing disadvantageous contract conditions upon a counteragent or conditions irrelevant to the contract subject (unreasonable requirements to transfer funds, other property, including property rights, as well as a consent to conclude a contract subject to including provisions regarding the goods, in which the counteragent is not interested in, and other requirements);

2) Economically, technologically or otherwise unjustified fixing different prices (tariffs) for the same goods by an economic entity;

3) Preventing market entry or exit of other economic entities.

4. An economic entity can present evidence that exercised concerted actions, specified in Parts 1 - 3 of this Article, can be allowed under Part 1 Article 13 of this Federal Law.

5. The prohibitions specified in this Article do not cover concerted actions of economic entities, whose aggregate market share does not exceed 20% and the market share of each economic entity does not exceed 8%.

6. The provisions of this Article do not cover concerted actions of economic entities that are members of the same group of persons if one of such economic entities has established control over another economic entity or if such economic entities are controlled by the same persons.