OREANDA-NEWS. September 23, 2010. The Commission of the Office of the Federal Antimonopoly Service in the Tatarstan Republic (OFAS Russia) postponed the case against “Kazanzernoproduct” OJSC, “Naberezhnie Chelny Bakery Works” OJSC and “Buroundyki Grain Elevator” for violating Part 1 Article 11 of the Federal Law “On Protection of Competition” (concerted actions), reported the press-centre of FAS Russia.

The case was initiated upon obtaining information from the Ministry of the Tatarstan Republic for Agriculture and Food Products that the above companies, which are the main flour producers in the Republic, unreasonably increased ex-works prices for flour.

According to the Ministry of the Tatarstan Republic for Agriculture and Food Products, the price for top-grade wheat flour, used for bread-making, increased from 6500-7500 Rubles per ton in June to 9500-12000 Rubles per ton in July 2010.

Producers believe that the main reason for growing flour prices is the growth of purchasing prices for grain, which accounts for around 80% costs of flour production (remaining 20% are operational costs, which for most companies reach 1800-1900 Rubles per ton). Flour yield is around 75%.

According to the processers, at the beginning of 2010 the price of wheat was 3500 - 3700 Rubles per ton but in July it jumped to 6000 - 6600 Rubles per ton. They believe it happened because of adverse climatic conditions and crop failure in several Russian regions.

Expenses for raw materials (grain) are about 80% of total cost. Therefore, increase of grain prices by 70% should not have caused such significant growth of flour prices.

According to representatives of the Ministry of the Tatarstan Republic for Agriculture and Food Products, wholesale ex-works flour prices over 10000 Rubles per ton are excessive, especially for the flour used for bread-making, as increase of flour prices can lead to increasing prices for other socially important food products (including bread and bakery products).

“Actions of processers who increase wholesale factory prices for flour without any compelling reasons restrict competition on the market of flour production and distribution and infringe the interests of economic entities that use flour as raw material for production of their products. Such actions also infringe the interests of citizens who buy and use flour for their personal needs”, commented Deputy Head of Tatarstan OFAS Russia Ivan Scherbakov. “Currently”, in view of Mr. Schebakov, “flour prices have leveled but in spite of this our Office will have to investigate why such price explosion took place and what kind of measures should be taken to avoid such a situation in the future. Today the OFAS Commission has requested additional information from flour producers, which will help make an objective decision and hold liable those responsible for unreasonable increase of flour prices.”

Should companies be found responsible for fixing excessive flour prices, the violators will be imposed turnover fines in the size from 1 % to 15% of the income of the violator in the preceding year.

The case will be continued on 14th October 2010.