OREANDA-NEWS.  June 18, 2012. The Supreme Arbitration Court of the Russian Federation clarified legal views regarding legitimacy of holding persons with dominant positions on retail electric power markets liable for violating the antimonopoly law by creating unreasonable obstacles for related market participants in course of approving the lists of modification means that are required to enter the wholesale market, reported the press-centre of FAS Russia.   

In December 2009, Vologda OFAS Russia found that “Vologda Power Supply Company” OJSC (“VSK” OJSC) violated the antimonopoly law (Part 1 Articles 10 of the Federal Law “On Protection of Competition”). The company abused its dominant market position by unreasonably avoiding approvals of the lists of modification means for the purposes of commercial accounting and an Information Exchange Agreement. Such actions of the power supply company prevented entry of “Kommunenergosbyt” Ltd. to the wholesale market of electric power and capacity. Based on the case outcome, Vologda OFAS Russia issued a determination to “VSK” OJSC to stop violating the antimonopoly law.

However, Vologda Regional Arbitration Court found the decision of the antimonopoly body and a determination issued to “VSK” OJSC on its basis unlawful. Further on, the Appeal Court and the Cassation Court upheld the judgment of the Arbitration Court. According to the Courts, the antimonopoly body failed to prove identity of the concepts of dominance for the wholesale market of electric power and the market of the same goods within the boundaries of the Vologda region. The Courts also thought that the antimonopoly body had failed to take into account alternative methods for approving the lists of modification means (by approaching the Conflict Commission “Market Council” Non-Commercial Partnership), and to determine correlation between adverse consequences for “Kommunenergosbyt” Ltd. and actions undertaken by “VSK” OJSC.

Transferring the case to the Presidium of the Supreme Arbitration Court to exercise supervisory power, the panel of judges brought to notice that the antimonopoly body had lawfully established that the violation had been committed on the market where “VSK” OJSC had dominant position with the market share over 80%. The panel of judges also emphasized importance of taking into account the position of “Market Council” Non-Commercial Partnership - the body for out-of-court settlements in the electric power industry, and also drew attention to the facts that the antimonopoly body had proved infringements of the rights and legitimate interests of “Kommunenergosbyt” Ltd. (in particular, delaying the process of approving the lists of modification means).

Considering the case, the Presidium of the Supreme Arbitration Court of the Russian Federation concluded that the Courts had not assessed the decision of the Conflict Commission of the “Market Council” Non-Commercial Partnership, establishing that “VSK” OJSC had violated the Wholesale Market Rules. As a result, the Supreme Arbitration Court pronounced legitimacy of the position taken by the antimonopoly body regarding “VSK” OJSC and abolishing judicial acts of lower Courts.

Deputy Head of FAS, Anatoly Golomolzin, commented the findings of the Presidium of the Supreme Arbitration Court of the Russian Federation: “Undoubtedly, the act of the Supervisory-Instance Court constitutes a precedent because it will enhance efficiency of antimonopoly control over conduct of providers of last resort. Such actions of the entities that have considerable degree of power on the retail market as well as the exclusive right to approve the lists of modification means for a related market participant (allow competitor’s entry to the market) have adverse consequences for the state of competitive environment on both retail and wholesale markets of electric power Both legal and economic standpoints of “Market Council” Non-Commercial Partnership” played an important role in the court proceedings.

Reference:

Within the scope of its reference, the Conflict Commission of the “Market Council” Non-Commercial Partnership considers petitions from participants of retail and wholesale electric power market - members of the Partnership on the issues of creating obstacles to market entry or observing the Wholesale Market Rules. Every year the Commission considers 70-75 such petitions. In its turn, the fact of establishing a violation committed by such participants constitutes the grounds for forwarding materials to FAS in order to inspect whether companies’ actions comply with the antimonopoly law.

The antimonopoly bodies receive considerable number of complaints and petitions regarding unlawful conduct of providers of last resort that have dominant position on the markets of buying-and-selling electric power. Unfortunately, in spite of potential competitiveness of this type of activity, the market share of energy suppliers (“first level” providers of last resort) on average increases 80%. It enables providers of last resort to influence general conditions of goods circulation on the market and frequently results in infringing the rights and legitimate interests of consumers.