OREANDA-NEWS. November 15, 2013. The 9th Arbitration Appeal Court allowed an appeal of the Federal Antimonopoly Service (FAS Russia) and reversed the judgment of Moscow Arbitration Court, pronouncing legitimacy of FAS decision and determination with regard to “Russian Railways” OJSC.

The case against the railway company was initiated upon the outcome of investigating materials obtained by the antimonopoly authority from economic entities, industry association of consignors, and a number of executive and legislative bodies and prosecutor’s offices. The petitions indicated a considerable growth of aggregate freight transportation costs.

The violation of the antimonopoly law was a consequence of a failure by “Russian Railways” OJSC to execute the coming into force determinations issued by the antimonopoly authority when “PGK” OJSC and “VGK” OJSC were formed. The rolling stock (freight wagons), earlier owned by “Russian Railways” OJSC was included in the authorized capital.

As pointed out by Deputy Head of FAS Anatoly Golomolzin, “Russian Railways” OJSC stopped duly executing its obligation to carry out goods by wagons, owned by the carrier. As a result, in spite of an actual surplus of wagons on the market there is a shortage of their supply (less freight in spite of more wagons); the wagon element of the costs in many cases increased by up to two times, while the costs of freight went up by 30% and more. For large consignors availability of services (the extent of fulfilling requests) reduced from 90% to 60%, and for small and medium business – from 75% to 35%.

The monopolist disagreed with FAS decision and determination and filed a lawsuit. “This is already the second circle of judicial procedures”, explained Anatoly Golomolzin. “Earlier on 18th March 2013, the Federal Arbitration Court of the Moscow District forwarded the case on invalidating the FAS decision and determination for a new consideration to the Court of First Instance to more carefully investigate the impact of the actions, undertaken by “Russian Railways” OJSC, upon the economic situation. The 9th Arbitration Appeal Court, in its turn, supported the position of the Antimonopoly Service. Thus, the FAS decision and determination came into force”.

Based on the ruling, in November 2013 FAS imposed a fine over 2.2 billion Rubles for abusing market dominance for freight services by railway transport in general use, which was abolished in the course of the judicial procedures. FAS will petition to reopen a case upon newly discovered evidence.