OREANDA-NEWS. March 31, 2009. At a hearing at the Moscow Arbitration Court, "Refservice" OJSC, a daughter company of "RZhD" OJSC ("RZhD" OJSC was brought into the proceedings as a third party) withdrew its lawsuit on invalidating the determination issued by the Federal Antimonopoly Service (FAS Russia) to the group of persons, including "Refservice" OJSC and "RZhD" OJSC, reported the press-centre of FAS Russia.

On 26th December 2008, the Cassation Court upheld the ruling of the 9th Arbitration Appeal Court under Clauses 5 and 8 Part 1 Article 10 of the Federal Law "On Protection of Competition" on the decision of the Federal Antimonopoly Service (FAS Russia) regarding the group of persons of "RZhD" OJSC and "Refservice" OJSC.

Earlier FAS Russia found that the group of persons, including "Refservice" OJSC and "RZhD" OJSC, violated Clauses 2, 4, 5 and 8 Part 1 Article 10 of the Federal Law "On Protection of Competition".

The judicial board concluded that FAS Russia had not had the grounds for finding that "RZhD" OJSC and "Refservice" OJSC guilty in violating Clauses 2 and 4 Part 1 Article 10 of the Federal Law "On Protection of Competition". At the same time the Court confirmed legitimacy of the decision made by the antimonopoly authority in the part of recognizing that the group of persons, including "Refservice" OJSC and "RZhD" OJSC, violated Clauses 5 and 8 Part 1 Article 10 of the Federal Law "On Protection of Competition".

Reference:
The carrier - "RZhD" OJSC violated the law because it unreasonably avoided providing integrated transportation services to the consignor - transportation of the goods by the railways in general use, in refrigerated rolling stock. "RZhD" OJSC was forcing the consignors to enter into contracts with "Refservice" OJSC. Furthermore, "Refservice" OJSC and "RZhD" OJSC created discriminatory conditions for forwarding agents /operators of refrigerated rolling stock, who were not members of the group of persons of "RZhD" OJSC.

In May 2006 "RZhD" OJSC, the only public carrier on the Russian railways, split off a daughter company - "Refservice" OJSC.

"Refservice" OJSC is not a carrier, it is not involved in goods transportation, and does not enter into contracts for goods transportation. The company only provides services for organizing transportation and provides the rolling stock. When the case was being processed, "RZhD" OJSC transferred into the ownership of its daughter company around 6700 refrigerated and insulated railcars of the carrier, which was approximately 45 % of the total number of the designated fleet of refrigerated and insulated railcars of the carrier.

The total refrigerated and insulated rolling stock of the group of persons of "RZhD" OJSC (the carrier and its daughter company) is around 15000 (approximately 80% of the total above-mentioned rolling stock). The total refrigerated and insulated rolling stock of other owners - not members of the group of persons of "RZhD" OJSC, is only about 3800.

With the beginning of the operations by "Refservice" OJSC, "RZhD" OJSC started refusing the applications of consignors for transportation of the goods in the refrigerated cars of the carrier - "RZhD" OJSC (cars from the general fleet) with the carriage charges specified in No.10-01 Price List for such type of shipment. Effectively, the consignors were deprived possibility to directly use the services of the carrier for transporting their goods as after creating "Refservice" OJSC the carrier - "RZhD" OJSC refused to provide transportation services due to the absence of railcars but agreed to provide them only if "Refservice" OJSC acted as the forwarding agent.

Therefore, consignors are forced to deal with the owners of refrigerated rolling stock, among whom "Refservice" OJSC has dominant position.

As a result, the condition for the access of the consignors to transportation of the goods by the railways in general use is the contract for the services on organizing transportation with the owners of the refrigerated railcars, of whom only "Refservice" OJSC can supply the cars from the general fleet of "RZhD" OJSC to the consignors for the fee (specified in a separate contract).

In accordance with the Appendix to the Contract, upon an application from the consignor "Refservice" OJSC orders refrigerated railcars from the general fleet of the carrier - "RZhD" OJSC. The cost of such services, imposed upon the consignors, reaches up to 50% of the carriage charges specified in No.10-01 Price List for transportation of the goods in the railcars of general fleet (which belongs to the carrier - "RZhD" OJSC). Effectively, "Refservice" OJSC acts as an intermediary between the consignors and the carrier, which artificially increase transportation expenses of the consignors and in fact violates the pricing procedures established by the state for the services of railway cargo transportation.

As stated in course of the case investigation, not only the actions of "RZhD" OJSC violated the antimonopoly legislation, they also contravened Articles 1, 2 and 12 of the Federal Law "On the Railway Transport in the Russian Federation".

The FAS Russia's determination is aimed at leveling playing field for economic activity of the operators of refrigerated rolling stock, and the forwarding agents regardless of their affiliation with "RZhD" OJSC, ensuring an unconditional right of the consignors for use of integrated transportation services provided by the carrier at the government-regulated rates, reducing of transportation expenses for transporting food products, and as a consequence, uncontrolled growth of food products prices.

In the FAS Russia's opinion, executing the decision and the determination, issued in follow-up of the decision on the case, will reduce transportation expenses of producers and sellers for railway shipment of food products and, as a consequence, limit the growth of prices for food products.

Accordingly, the decision confirms the right of the consignors to transport the goods under the conditions of general fleet as long as the group of persons of "RZhD" OJSC has dominant position on the market for providing the rolling stock for transporting the goods by the railway transport in general use.