OREANDA-NEWS. February 13, 2012. Kostroma Regional Arbitration Court pronounced legitimacy and reasonableness of the decision made by the Office of the Federal Antimonopoly Service in the Kostroma region regarding Kostroma City Council, which had passed a normative act restricting competition on the market of maintaining urban highways and courtyards / common areas in Kostroma, reported the press-centre of FAS Russia.

The City Council adopted 2010 budget for Kostroma, providing subsidies to particular legal entities to compensate the costs of maintaining local highways and asphalt paving of courtyards / common areas in Kostroma. Therefore it was provided for in advance and without open selection procedures who will carry out such works.

The Commission of Kostroma OFAS Russia concluded that works for maintaining highways is a competitive activity that can be exercised by any economic entity without restriction, and found that Kostroma City Council violated Part 1 Article 15 of the Federal Law On Protection of Competition.

Kostroma City Council disagreed with the decision of the antimonopoly body and approached Kostroma Regional Arbitration Court that dismissed the claim.

Works for maintaining highways and asphalt paving of courtyards / common areas constitute municipal needs of Kostroma; therefore, selection of economic entities for the right to carry out these works must take place upon the outcome of competitive bidding according to the procedures specified by the federal law on procurement, commented Deputy Head of Kostroma OFAS Russia, Vladimir Nidens.

Open competitive bidding gives all market participants equal rights for access to state or municipal financial resources. Competitive bidding develops competition for the right to conclude contracts, which reduces budgetary expenses and establishes optimal trade-offs between the price contract and the quality of works.

Reference:

Part 1 Article 15 of the Federal Law On Protection of Competition prohibits federal executive bodies, the authorities of the constituent territories of the Russian Federation, local self-government bodies, other bodies and organizations exercising the functions of the above bodies, as well as state extra-budgetary funds, the Central Bank of the Russian Federation to pass acts and (or) exercise actions (omissions) that lead or can lead to preventing, restricting, eliminating competition.