OREANDA-NEWS. June 02, 2011. Deputy Head of FAS Russia Anatoly Golomolzin took part in the 6th Annual International Summit “CIS Coal 2011”, organized under the auspices of the Adam Smith Institute, where he made a presentation “Facilitating Fair Competition on the Coal Market”, focused on the FAS Russia’s efforts to exercise antimonopoly control on the market of power-generating coal, reported the press-centre of FAS Russia.

In particular, the speaker characterized the latest changes in the antimonopoly law including changes introduced to the Law “On Protection of Competition” by the “second antimonopoly package”, as well as changes planned in the “third antimonopoly package”.

The speaker also pointed out that the work towards harmonization of national antimonopoly laws in EurAsEC (EuroAsian Economic Community) had reached the final stage, as well as developing common competition law on the cross-border markets of this integration formation. Anatoly Golomolzin stated that these should be the last major changes to the antimonopoly law.

Anatoly Golomolzin told the Summit participants about the basic trends in the field of large mergers and acquisitions on the markets of power-generating coal. In 2008-2011 FAS Russia, including its regional offices, considered 48 petitions and 19 notifications about transactions on the market of power-generating coal.

In the period of economic crisis in 2009 the number of transactions completed by participants of the coal market went down. In that period petitions and notifications filed to FAS mainly were regarding intra-group transactions that were aimed at group restructuring and enhancing efficiency of asset management.

In 2010 the situation changed and, as in 2008, transactions between independent market participants became widely spread. At the same time more transactions are accomplished that are aimed at optimizing corporate governance within the groups of persons. At the moment FAS Russia is preparing the decisions about transactions of “SUEK” OJSC and members of the same group of persons, in view of the determination issued to “SUEK” OJSC in 2004. The requirements put forward in the determination were aimed at stimulating direct coal supply contracts between the company and its counteragents, and expanding possibilities for coal buyers to chose the methods of transport logistics.

Participants of the energy sector inclined to acquire coal-production facilities and the main players on the coal market – to acquire energy assets. For instance, the group of persons of “Irkutskenergo” acquired “Tulunugol”, “Cherenkhovugol”, “Vereiinsky”, “Irbeisky” coal pits; “Novosibirskenergo” OJSC acquired “Sereulsky” Coal Pit” OJSC. “SUEK” OJSC is the owner or a shareholder of such energy companies as “Kuzbassenergo” OJSC, “TGK-13” OJSC. When the antimonopoly authority makes decisions, it takes into account both positive and negative consequences of vertical integration for competition on the markets of electric power and power-generating coal.

Anatoly Golomolzin outlined the situation with violations of the antimonopoly law by participants of the market of power-generating coal. In 2008-2011, FAS Russia and its regional offices in total investigated 23 cases. In 11 cases legitimacy of decisions was confirmed by courts of law or the participants to the cases did not file lawsuits. The total fines imposed upon legal entities and officials in 2008-2011 reached 13,102,934 Rubles.

The speaker paid special attention to the FAS Russia’s decision on the “coal cartel”. In 2010 FAS Russia investigated a case about “SUEK” OJSC and other participants of the market of power-generating coal that violated the antimonopoly law by participating in competition-restricting agreements.

As a result of investigating the case, FAS Russia found that “SUEK”, “Russky Ugol” OJSC and “Stroiservice” CJSC violated Article 11 of the Federal Law “On Protection of Competition”, by concluding competition-restricting “vertical” agreements. The decision is being challenged through a court of law.

This is the first decision in the practice of the antimonopoly bodies that has made a precedent. Unlike antimonopoly bodies in other countries, FAS Russia does not have the authority to carry out operational and investigative activities; therefore, there must be close interaction with other power bodies that have such authority. With participation of the Russian Ministry of Interior, FAS Russia investigated the case and confirmed the fact of cartel collusion using materials and information obtained in course of operational and investigative activities.

Anatoly Golomolzin also gave brief information about the progress of the structural reform of the railway transport. Coal enterprises are the main consignors of bulk goods, and efficient operation and development of railway transport affect performance of coal companies.

Deputy Head of FAS Russia provided information about the work of FAS Russia towards developing the Information Disclosure Standards for the railway transport, the draft Rules of non-discriminatory access to railway transport infrastructure and railway transportation services. The Rules of non-discriminatory access to seaports services are also at the stage of development.

In course of the structural reform of “Russian Railways” OJSC, “Freight One” (“PGK”) and “Freight Two” (VGK”), FAS set conduct requirements aimed at developing competition. The FAS Russia’s determination specified that until this group of persons has dominant position on the market of services for providing rolling stock, the services must be provided under the conditions of inventory stock.

To meet the conduct requirements, the companies have drafted the Regulations of interaction between “Russian Railways” OJSC and its subsidiaries “Freight One” (“PGK”) and “Freight Two” (VGK”), which is of significant importance. To ensure the balance of interests, conditions of the Regulations are being discussed with the business community, particularly, consignors of bulk goods, at the meetings of the FAS Russia’s Expert Council on Railway Transport.