OREANDA-NEWS. November 16, 2012. The Federal Antimonopoly Service held the largest carrier - “Russian Railways” OJSC – administratively liable under Article 14.31 of the Code of the Russian Federation on Administrative Violations for abusing market dominance, reported the press-centre of FAS Russia.

Under FAS determination, “Russian Railways” OJSC is held administratively liable: the company is fined 2,241,296,238 Rubles for abusing its dominance on the market of railway freight transportation in the Russian Federation. Earlier the FAS Commission found that the company violated Part 1 Article 10 of the Federal Law “On Protection of Competition”. FAS issued a determination to the company to grant applications for freight transportation under the conditions of inventory rolling stock and to this purpose develop cooperation with the companies included in the same group of persons of “Russian Railways” OJSC and other operators.

The case against “Russian Railways” OJSC was initiated upon the outcome of investigating materials received by FAS from several dozen economic entities, nine industry associations of consignees, and a number of executive and legislative bodies, and prosecutor’s offices. Petitioners complained about a considerable growth of aggregate transportation expenses related to freight transportation by railway transport in general use, an increased non-regulated “car element”, incomplete approvals or refusals to approve applications for freight transportation on the grounds not provided for by the existing law, failure to ship bulk freight and “carload” in freight cars owned by the carrier, etc.

The antimonopoly violation was the result of the failure by “Russian Railways” OJSC to execute FAS determination that had been issued when the company had formed “PGK” OJSC and “VGK” OJSC and came into force. The rolling stock (freight cars) was transferred into the authorized capital of “PGK” OJSC and “VGK” OJSC. At the same time FAS formulated requirements to the group of persons of “Russian Railways” OJSC aimed at supporting competition, including drafting the “Regulations for Providing Cars by a Group of Persons: “Russian Railways” OJSC, “PGK” OJSC and “VGK” OJSC, to Consignors (Particularly, for Car Freights)”. The draft Regulations were repeatedly discussed with consignors and their associations, with other railway operators at FAS Expert Council on Railway Transport; however, the necessary measures have not been taken.

The target model of the market of railway freight transportation until 2015 for “Russian Railways” OJSC, as a holder of natural monopoly and a company that has dominant position on the market of railway freight transportation, includes integrated services for freight transportation by railway transport, if necessary using cars of other persons (in particular, “PGK” OJSC and “VGK” OJSC). However, in 2010 – 2011 “Russian Railways” OJSC started using the so-called agent scheme of company’s cooperation with subsidiary operators. As a result, “Russian Railways” OJSC stopped being responsible for executing a carrier’s obligation to provide rolling stock. In spite of a surplus of cars, there was a lack of their supply on the market (the number of cars increased but fewer freights were carried); in many incidents the car elements of transportation increased by up to two times, and the costs of transportation increased by up to 30% and more. For large consignors availability of services (a degree of granting applications) decreased from 90% to 60%, and for small and medium businesses – from 75% to 35%.

In 2012, the situation has improved but not as a result of independent actions of “Russian Railways” OJSC or by executing the FAS determination (“Russian Railways” OJSC has filed a lawsuit challenging the decision and the determination). The improvement happened only after the requirements to “Russian Railways” OJSC for using rolling stock and rendering integrated transportation services to consignors at the state-regulated tariffs, had been formalized, in particular, in the Decree of the Government of the Russian Federation “On the Procedures for Using Rolling Stock of “Russian Railways” OJSC for Freight Transportation and on Establishing a Special Pricing Procedure for Freight Transportation in the Above Rolling Stock” of 20th December 2012.

“At the same time, some violations of the antimonopoly law are committed. For instance, FAS is investigating cases against “Russian Railways” OJSC, opened upon a complaint of “Urals Steel” OJSC that “Russian Railways” OJSC had established “logical control” for shipping freights from 15 railway stations, specifying the number of cars accepted for transportation at each station, the type of freights, the list of consignors, to whom the cargo can be forwarded. Such “logical control” by “Russian Railways” OJSC had signs of creating discriminatory conditions. We believe that the situation can be radically improved by forcing to the full the instructions of the President of the Russian Federation, issued at a meeting in Kemerovo, in the part of developing commercial infrastructure at railway transport”, pointed out Deputy Head of FAS Anatoly Golomolzin.