Federal Antimonopoly Service

Report on Competition Policy in 2004

Introduction  

+Administrative reform+
Federal Antimonopoly Service (FAS) was established by the Decree of the President of the Russian Federation of 09.04.2004 No 314 ¡§About the system and structure of federal executive power bodies¡¨. The functions of FAS Russia were defined by the Decree of the Government of the Russian Federation of 07.04.2004 No 189, while the Provision on Federal Antimonopoly Service was approved by the Government regulation of 30.06.2004 No 331.

+Economic situation+
Development of the Russian economy during last years is characterized by the sustained growth of macroeconomic indicators. In 2002, 2003, 2004 GDP growth rate to the previous year amounted accordingly 104,7%, 107,3%, 107,1%. In 2004 increase in production and basic industries services output amounted 6,6%, the volume of industry production - 6,1%, investment into basic capital (estimate) ¡V 10,9%. Turnover or retail commerce increased at 12,1%, wholesale ¡V at 14,7%. Favorable external economic trend also contributed to the situation. Increase in export volume amounted ¡V 34,2%, import ¡V 25%. Real income of the population increased to 7,8%. Reserves of the Central Bank have substantially increased, as well as the volume of stabilization fund of the federal budget, that adds to the creation of predictability of economic processes and investment attractiveness . By the end of 2004 the volume of enterprises and organization financing increased to more that 30%. Growth of foreign investment to the Russian economy continued in 2004. By the end of September 2004 accumulated foreign capital in Russia amounted USD73,4 bln., that is 37% more as compared with the same period of the previous year.

+Competition policy+
In 2004 FAS Russia implement competition policy at commodity and financial markets; provides control and supervision over the observance of antimonopoly legislation, law on natural monopolies and law on advertising by commercial and non-commercial organizations, executive power bodies. Implementation of the functions and tasks of antimonopoly control and supervision is aimed to provide effective operation of Russian commodity and financial markets, balanced protection of manufacturers and consumers¡¦ interests, promote the sustained economic growth in general. At present 75 regional offices are subordinated to FAS Russia, and they operate in 89 subjects of the Russian Federation. Regional offices are subordinated only to FAS Russia, providing equality of legal regulation of competition relations at the territory of the Russian Federation.

+Competition policy+
Significant place in competition policy implemented by FAS are occupied by the functions typical for all antimonopoly bodies ¡V restriction of abuse of dominance at commodity and financial markets, restraint of anticompetitive agreements (concerted actions) between economic entities and financial organizations, control over economic concentration at commodity and financial markets. Besides, the top-priority tasks of the antimonopoly regulation include discovering and efficient restraint of anticompetitive rules and activities of federal executive bodies, executive bodies of the subjects of the Russian Federation and local government bodies, evaluation of the influence of measures of tariff and non-tariff regulation of external economic activity, control and supervision over natural monopolies, in particular restriction of activities leading to infringement consumer¡¦s interests or containment of economically justified transition from the state of natural monopoly to the state of competitive market, providing non-discriminative access to the goods and services produced by the subjects of natural monopolies, non-admission of unfair competition and control over observance of the law on advertising.

+Competition policy+
In 2004 the activity of FAS Russia and its territorial bodies was executed in accordance with the goals and tasks determined by the competition legislation of the Russian Federation, Message of the President of the Russian Federation to the Federal Assembly (About the public environment and the main directions of domestic and international policy of the state), main provisions of the medium-term Programme on social-economic development of the Russian Federation (2003-2005) and events envisaged by the Plan of actions of the Government of the Russian Federation on implementation of the provisions of this Programme in 2004, Plan of law-making activity of the Government of the Russian Federation for 2004, as well as decisions of the President and the Government of the Russian Federation. Measures taken in 2004 by FAS Russia and its regional offices on control over observation of antimonopoly law at commodity and financial markets were aimed at creation of environment for equal and fair competition contributing to the effective allocation of material and financial resources, as well as sustainable economic growth.

+Contents of the report+
The report contains the review of principal amendments of the present Russian competition law, data on the scale of practical implementation of antimonopoly legislature, investigated cases on typical and prevailing infringements of antimonopoly law, outlook of the activities of antimonopoly bodies.

Improvement of competition legislation and policy
1. Amendment of competition law

+Legislation development+
To conduct an effective competition policy it is important to improve legal standards and mechanisms of strengthening of administrative responsibility for their violation. Profound work on improvement of competition law and methodological provision of antimonopoly bodies¡¦ activity was executed in 2004. Main directions of this work included: developing of bills subject to the system of competition law, improving of present law (as well as adjusting it to the economic realities), and elimination of existing gaps and contradictions.

+Legislation development+
In 2004 Draft Federal Law ¡§On introducing amendments into Articles 17 and 18 of the Law on Competition¡¨ was developed, in accordance with which the level of total balance assets value is substantially increased (150 times for pre-notification, 20 times for post-notification). Exceeding of this level is the reason for adjusting the transaction with antimonopoly body (up to USD100 mln) and notification about the transaction (up to USD 6 mln). In March 2005 this Federal Law came into force (No13-FL of 07.03.2005).

+Legislation development+
In 2004 draft Law ¡§On competition protection¡¨ was elaborated. It envisages improvement of legal regulation of activities on competition protection, specification of legal basis of state policy in this field, improvement of political instruments of restriction and prevention of monopolistic activity, as well as unification of legal regulation of activities on competition protection at commodity and financial markets. The sphere of legal regulation of competition activities is supposed to include relations concerning the rights on land usage, earth entrails usage, water biological resources, as well as other objects. The list of ¡§per se¡¨ violation is specified for the cases concerning abuse of dominance, agreements and concerted actions, restricting competition, besides precise criteria are introduced, at the basis of which agreements and concerted actions having unconditional positive effect may be found admissible. Definition of ¡§collective dominance¡¨ is introduced. Definition of ¡§state aid¡¨ is introduced, as well as the basis and the order of granting some kinds of state aid are being determined. Threshold values for turnover indicators of economic entities ¡V parties of transactions subject to antimonopoly control ¡V are introduced as criteria for the control over economic concentration. The number of transactions subject to the approval or notification is decreasing minding the condition of their transparency. After coming this draft law into force, the Law of 22.03.91 No 948-1 ¡§On competition and limitation of monopolistic activity at commodity markets¡¨ (Law on competition) and Federal Law of 23.06.99 No 117-FL ¡§On competition protection at financial markets¡¨ (Law on competition protection) will become invalid. In July 2005 the Draft Law was approved during the first reading in State Duma.

+Legislation development+
Draft Federal Law ¡§On introducing amendments into the Code of the Russian Federation on administrative legal violation¡¨ is developed and is currently at the stage of approval. It envisages substantial strengthening of sanctions for violation of antimonopoly legislation, including introduction of penalties calculated in percentage of violator¡¦ turnover.

+Legislation development+
In 2004 FAS Russia executed activities on realization of the Programme of structure reform of railway transport for 2003-2005, enacted by the Decree of the Russian Government of 06.05.2003 No 283. In particular FAS Russia participated in drafting of some regulations of the Russian Government (No 810 of 20.10.2004, No 384 of 18.05.2001, No 811 of 20.12.2004, No 585 of 18.09.2003), specifying measures on structure reform of railway transport and activities of RZD and envisaging introduction of separate account of revenues, costs and financial activity results concerning all types of railway transport. FAS Russia participated in drafting of the concept of corporate building of JSC ¡§RZD¡¨, as well as in establishing of its branches with special functions on major repairs of rolling-stock, manufacture of spare parts, electro technical and other production for railway transport etc. The concept envisages development of competition in the sphere of railway transport.

+Legislation development+
FAS Russia developed the draft of Decree of the Russian Government ¡§On development of competition in the sphere of freight transport, basis of legal regulation of the activity of operators of railway rolling-stock and their interaction with ferrymen¡¨ which is currently at the stage of approval.

+Legislation development+
The major result of the activity of FAS Russia in 2004 as for the improvement of legal basis for regulation of the markets of natural monopolies in the sphere of electric energy became drafting of the Rules for non-discriminative access to the services on electric energy transmission, on operative-dispatching management in electric energy, on administration of trade system of wholesale market and the Rules for technological adjusting of energy-accepting facilities (energy installations) of legal and physical entities to electric networks (enacted by the Decree of the Government of the Russian Federation of 27.12.2004 No861). The main purpose of ratification of these Rules ¡V building the order of contractual relations under new conditions by means of creating of equal opportunities for the customers of services of natural monopolies, that will contribute to the competition promotion at commodity markets.

+Legislation development+
FAS Russia developed draft resolutions of the Government of the Russian Federation ¡§Definition of the order and criteria of determination of the spheres of purchase and sale of electric energy, in which competition is limited or is lacking¡¨, including the order and criteria of determination of spheres of electric energy, which operates in conditions of permanent lack of competition due to technological reasons; the order and criteria of availability or lack of aggregate deficit of electric energy in separate price zones of wholesale market and (or) at wholesale market in general; ¡§On approving the order of antimonopoly control at wholesale and retail markets¡¨, including the criteria of estimate the origin of dominance and exclusive status of some organizations or groups of persons and limitation of competition at specified markets; criteria and order of determining cases of abuse of dominant position by producers and suppliers of electric energy, as well extraordinary cases when regime of state regulation is introduced; the order of supplying of information concerning their activity to the federal antimonopoly body by the subjects of wholesale and retail markets.

+Legislation development+
FAS Russia participated in development of the Rules of granting services of local, internal, inter-city and international communication; Rules of accreditation of the bodies of certification and experimental laboratories (centers) conducting certification tests of communication facilities; Rules of organization and conducting works on obligatory confirmation of compliance of communication facilities; Rules on certification of communication facilities; Rules on connection and interaction of communication networks etc.

+Legislation development+
In 2004 FAS Russia participated in the development of the draft Federal Law ¡§On heat supply¡¨; draft Housing Code of the Russian Federation (enacted by State Duma on 22.12.2004 No 188-FL); new wording of the Law of the Russian Federation ¡§On entrails¡¨ and prepared proposals on antimonopoly regulation of the markets of rights for scarce natural resources.

+Legislation development+
FAS Russia actively participated in the work under Federal Law ¡§On placing orders for goods supply, executing works, rendering services for state and municipal needs¡¨ which was enacted by State Duma. New Law takes into account the proposals of FAS Russia, which provides the transparency of the system of public procurement from the party of state power bodies and local municipalities.

+Legislation development+
FAS Russia drafted concept of the bill with the aim to provide outlet of the Russian Federation, subjects of the Russian Federation, municipal bodies, public and municipal enterprises from authorized capital stocks of financial organizations.

+Legislation development+
In the framework of reforming of the system of mandatory medical insurance FAS Russia participated in developing of the draft Federal Law ¡§On mandatory medical insurance in the Russian Federation¡¨.

2. Other adequate measures

+further development of realization mechanisms+
With the aim of organizational provision of Federal Law ¡§On competition protection at the market of financial services¡¨ and at the basis of clause 5.2.9 of the Provision on FAS Russia an Order of FAS Russia of 15.10.2004 No 140 ¡§On approving the Rules of considering cases on violation of antimonopoly law and other legal acts on competition protection at financial markets by credit organizations¡¨ was approved. The Rules determine organizational and legal basis of considering cases on violation of antimonopoly law by credit organizations.

+further development of realization mechanisms+
With the aim to increase the efficiency of work on prevention and restriction of violations of law on competition at commodity markets, at financial market, law on natural monopolies and law on advertising a Provision on the order of interaction between the Ministry of Internal Affairs (MIA) and Federal Antimonopoly Service was approved by the joint Order of MIA Russia and FAS Russia of 30.12.2004 No 878/215.

+collaboration with plenipotentiaries of the President of the Russian Federation+
In 2004 FAS Russia developed the Order of information collaboration with plenipotentiaries of the President of the Russian Federation on issues of provision the common economic and legal space, supervision of antimonopoly legislation in subjected federal districts. Above all operative information collaboration between all districts is executed by regional antimonopoly offices located in the centers of all districts.

+collaboration with plenipotentiaries of the President of the Russian Federation+
Priority directions of collaboration are conducting state policy on removal of administrative barriers for the development of entrepreneurship; control for changes in economic concentration of the markets; providing the priority of federal legislation over legal acts of federal subjects power bodies; coordination of activity of territorial bodies of federal executive power bodies responsible for preserving of common economic space; assistance to the development of regional markets and competition; solving issues of inter-regional barter and formation of civilized inter-regional commodity markets; overcoming of dissociation of commodity markets and creation of common economic space; control over establishing of vertically integrated structures. Implementation of priority tasks of collaboration between antimonopoly bodies and plenipotentiaries of the President of the Russian Federation in federal districts is executed by means of participation of experts in the work of the boards subjected to plenipotentiaries; sections on issues devoted to provision of common economic space and free competition; commissions on removal of administrative barriers created under major federal inspections; meetings, conferences, workshops on issues included into the competence of antimonopoly bodies, as well as by means of dialogue as it is.

2. Implementation of competition law and conducting of competition policy

1. Activities aimed at restriction of anticompetitive practices, including abuse of dominant position and cartels

+general figures+
With the aim to prevent and restrict anticompetitive practice in 2004 FAS Russia executed 43590 of control and supervision activities at commodity and financial markets (considered applications, conducted examination of following antimonopoly legislation, cases initiated under initiative of antimonopoly bodies, cases on application the measures of administrative responsibility for violation of antimonopoly law, considered drafts of legal acts with the aim to exclude those inconsistent to antimonopoly law, considered petitions and notifications about transactions at commodity and financial markets). For 2004 antimonopoly body considered 10415 precedents on signs of violation of antimonopoly law, instituted 4506 legal proceedings. As result of preventing legal violations without institution of legal proceedings and carrying out check-ups 7693 legal violations were removed. At the same time the number of disclosed and removed legal violations at commodity markets substantially exceeds (6,7 times) similar indicators at the market of financial services. It is necessary to mention increase of activity of antimonopoly bodies in preventing violations of the Law on competition protection and activity of financial organizations in asking them for assistance. Antimonopoly bodies accepted 311 applications on signs of legal violation (surplus 90% to 2003). 72 violations were removed without instituting the legal proceedings and 104 proceedings were instituted. Antimonopoly bodies conducted 831 check-ups (surplus 2/3 to 2003), as the result 196 legal violations were prevented, that is 6 times more then in 2003. Under initiative of antimonopoly bodies 552 legal proceedings were instituted (2 times more to 2003).

+restriction of monopolistic practices+
restriction of monopolistic activity at commodity and financial markets include restriction of abuse of dominance and agreements (concerted actions) of economic entities and financial organizations. In 2004 1534 violations on signs of monopolistic activity are revealed (surplus 5,6% to the level of 2003), 1088 legal proceedings instituted (surplus 19,4%), 1345 violations are removed or 88% from the number of revealed violations. In 2004 FAS Russia conducted 4002 supervision actions aimed at preventing and restriction of monopolistic activity at commodity and financial markets (3,5% more then level of 2003).

+abuse of dominant position at commodity markets+
In 2004 antimonopoly bodies accepted 3257 applications concerning abuse of dominance position. The most common type of abuse like in previous years is imposing unfavorable conditions of agreements (more than of all applications). Ungrounded refusal to sign an agreement have the second place (16%). Nearly 14% of applications dealt with violation of the order of pricing. Antimonopoly bodies executed 278 check-ups and restricted 39 legal violations. Check-ups often dealt with the issues of imposing unfavorable conditionsof agreements. In general antimonopoly bodies instituted 1004 legal proceedings on signs of abuse of dominance in 2004 (surplus 20% to 2003), 414 of proceedings were closed due to removal of legal violation during the process of their consideration. 590 decisions were taken and 569 prescriptions were given as for the rest cases under proceedings. 164 (29%) decisions were appealed. The Court recognized 24 decisions invalid.

+abuse of dominant position at commodity markets+ electric supply+ imposing of unfavorable conditions of the agreement+
Following the application of joint stock company ¡§Katungesstroi¡¨ FAS regional office in Altai Republic instituted legal proceeding against joint stock company ¡§Altaienergo¡¨ on signs of violation of clause 1 Article 5 of the Law on Competition, dealing with imposing of unfavorable conditions of the agreement. ¡§Altaienergo¡¨ when signing an agreement on electricity supply for 2004 introduced to ¡§Katungesstroi¡¨ a condition of requirement to pay losses in transformer of fixed capacity, but not depending on the quantity of consumed energy, that increased the payment several times. Commission of the regional office recognized violation of Article 5 of the Law on Competition and gave the order to ¡§Altaienergo¡¨ to stop violating antimonopoly legislation. The order was fulfilled on time.

+abuse of dominant position at commodity markets+ railway transport+ violation of the fixed order of pricing+
FAS regional office in Arkhangelsk instituted a legal proceeding against JSC ¡§RZD¡¨ in the person of Arkhangelsk branch of the subsidiary ¡§Northern Railway¡¨ (Arkhangelsk branch of ¡§Northern Railway¡¨). During antimonopoly investigation it was revealed that from January to July 2004 Arkhangelsk branch of ¡§Northern Railway¡¨ violating the fixed order of pricing collected the payment for getting permission (visa) from the station to import and load cargoes. Commission of the regional office recognized violation of the Law on competition during the period from January 1st to July 1st 2004 and ordered to transfer illegal revenue (nearly USD14 000) to the federal budget. The order was fulfilled on time.

+abuse of dominant position at commodity markets+ water supply+ stopping of production of the good+
Municipal enterprise ¡§Raivodokanal¡¨ submit an application to FAS regional office in Dagestan Republic which dealt with illegal actions of state enterprise ¡§Dagvodokanal¡¨. ¡§Dagvodokanal¡¨ using its dominant position at the market of water supply cut off water supply to three settlements in Kizilyurt district due to non-regulated financial relations with ¡§Raivodokanal¡¨. Regional office instituted a legal proceeding against ¡§Dagvodokanal¡¨ on the signs of violation of clause 1 of Article 5 of the Law on Competition. ¡§Dagvodokanal¡¨ was given the order to stop violation and recommence water supply. The order was fulfilled on time.

+abuse of dominant position at commodity markets+ oil products+ price discrimination+
FAS regional office in Krasnoyarsk instituted legal proceeding against LLC ¡§Trade House YUKOS-M¡¨ on signs of violation of clause 1 of Article 5 of the Law on Competition, dealing with ungrounded pricing for oil products in Krasnoyarsk and Novosibirsk districts. Occupying a dominant position at the wholesale market of oil products in Krasnoyarsk district ¡§Trade House UKOS-M¡¨ during the period from 01.01.2004 to 31.10.2004 under equal starting conditions stipulated more high sale prices at this market then at wholesale market of Novosibirsk district, where ¡§Trade House YUKOS-M¡¨ have not occupied dominant position. Discriminative actions of ¡§Trade House YUKOS-M¡¨ led to increase of costs of manufacturers of Krasnoyarsk district who purchased oil products, as to compare with production costs in Novosibirsk district, that affected competitive positions of manufacturers of Krasnoyarsk district. After investigating the case ¡§Trade House YUKOS-M¡¨ was given an order to implement economic, technical, information and other requirements aimed at preventing of discriminative conditions of the activity of economic entities, as well as transferring the profit received in result of antimonopoly law violation from 01.01.2004 to 31.10.2004 to the federal budget. ¡§Trade House YUKOS-M¡¨ transferred illegal profit (nearly USD 2,8 mln.). Decision of the antimonopoly body was appealed and at present is considered by arbitrage court of Krasnoyarsk district.

+Abuse of dominant position at financial markets+
In 2004 antimonopoly bodies accepted 24 applications on abuse of dominance by financial organizations. Abuses of dominance were fixed in banking and insurance. Antimonopoly bodies conducted 86 audits at financial market. During auditing 4 infringements were eliminated. 80% of check-ups considered banking and insurance organizations. In general 4 cases were instituted at financial market dealing with dominance position (2 proceedings stopped due to eliminating of violation , 2 cases were appealed but left in force).

+Abuse of dominant position at financial markets+ market of crediting+
FAS Russia accepted application of JSC ¡§Uralvneshtorgbank¡¨ on violation of the system of Visa International Service Association of antimonopoly legislaion dealing with the barriers for several credit organizations for entering to the named credit system. FAS Russia analysed competitive environment at the spesified credit card system market of the Russian Federation of 2001-2003 found out that the volume of operations through Visa International Service Association in general volume of operations executed in volume systems operaing at the territory of the RussianFederation increased to 10,9% and anumerated 40,25% in 2003. The share of plastic cards Visa International Service Association of the general amount of plastic cards emmited by credit organisations for 2001-2003 increased to 15,06% and anumerated in 36,89% in 2003. Conducted polls among credit organisations confirmed the named difficulties and entering the paying system of Visa International Service Association, as well as getting through the system of sertification such as: lack of information about the procedure of entering and the rules of operating in the current paying system, difficulties with coordination of buisness plans of credit organizations and getting through the certification. However, having heard explanations of representatives of of Visa International Service Association and having examined the evidence of Visa International Service Association, the Commission of FAS Russia concluded that the facts of violating of antionopoly legislation by Visa International Service Association have not been confirmed and the Commission desided to stop the procedure due to non-confirmation of the facts of violation of antimonopoly legislation.

+anticompetitive agreements of economic entities at commodity markets+
For the period of 2003-2004 antimonopoly bodies accepted accordingly 41, 59 and 72 applications concerning the signs of violation of the Article 6 of the Law on Competiton. In 2004 the most quantity of applications (40%) dealt with establishing (supplying) prices (tariffes), discounts, surpluses, as well as as for the restriction of the accesss to the market (14%). Like in 2003 applications on the signs of violation of Article 6 in 2004 were considered by 32 (or nearly 43%) of antimonopoly bodies. As for following the rules of Article 6, 65 check-ups were conducted, which in general dealt with stipulating (..) prices (tariffes), discounts, .. In the process of check-ups 2 legal violations were eliminated. General quantity of the cases at commodity markets instituted under Article 6 constituted 64 and increased 28% as compared to 2003. Proceedings were stopped as for 29 cases, because legal antimonopoly violation was eliminated in the process of consideration. 35 decisions were taken as for the rest of cases, 54 orders were given. 22 decisions were appealed (63%), 1 decision was accepted invalid by the court, that informs about the sufficiency of decisions taken.
+agreements+ oil products+
In result of the monitoring of retail prices by Yamalo-Nenetsky FAS terrototial office it was stipulated that independent oil companies like ¡§NK Rosneft-Yamalnefteproduct¡¨ and ¡§Lukoil-Yugra¡¨ conducted coordinated price policy when retailing of car and diesel fuel in Salekhard and Labytnanghi, performed in simultaneous increase of retail prices and there stipulating at the equal level. Other participants of the market have also increased the prices but not simultaneously with the named subjects of the market, but since some time after, so it may be proposed that the price policy of ¡§NK Rosneft-Yamalnefteproduct¡¨ and ¡§Lukoil-Yugra¡¨ influenced them. As the result of coordination of the time of changing of retail prices, as well as their level, FAS terrototial office Yamalo-Nenetsky district took decision on instituting the legal proceeding on the signs of violating the Article 6 of the Law on Competition. At the territory of Salekhard the total share of companies performing concerted actions constitutes as for fuel ¡V 74%, diesel fuel ¡V 60%; at the territory of Labytnanghi accordingly 89% and 50%. As it was discovered in the result of investigation the actions of ¡§NK Rosneft-Yamalnefteproduct¡¨ and ¡§Lukoil-Yugra¡¨ were not economically justified. In the result of investigation it was decided to order to ¡§NK Rosneft-Yamalnefteproduct¡¨ and ¡§Lukoil-Yugra¡¨ to coordinate retail prices for car fuel into conformity with the competition level and to later non-admission of concerted actions with simultaneous increase (decrease) of prices, as well as stipulating of similar retail prices for car fuel and diesel fuel with different costs. The order was fulfilled on time.

+agreements+ bread+
FAS regional office in Bashkortostan in the result of the conducted chek-up had instituted the case against JSC ¡§Ufimsky khleb¡¨, JSC ¡§Ufimsky khlebokombinat No 1¡¨, ¡§Ufimsky khlebobulochny kombinat No 4¡¨ on the signs of violation of Article 6 of the Law on Competiton, executed as the performance of concerted actions on fixing and supplying of high prices at the market of bread in Ufa. The Commission of FAS regional office in Bashkortostan accepted violation of the Law on Competitin and ordered the enumerated companies to eliminate violation by overviewing and decreasing wholesale prices for bread to the level of prices stipulated before the increase of prices; as well as transferring the revenue received from antimonopoly law violation in the result of concerted actions under simultaneous ungrounded wholesale bread prices increase to the federal budget.

+anticompetitive agreements of financial organizations+
30 applications were submitted in connection with the signs of violation of Article 6 of the Law on Competition, 83% of the infringements dealt with the market of insurance services. 66 check-ups of following the Article 6 were conducted and 38 violations were eliminated. 16 legal proceedings were instituted, 12 of them on the initiative of antimonopoly body. The nimber of proceedings instituted decreased 75% as compared to 2003. The proceedings were stopped against 8 cases in the result of eliminating of the violation of antimonopoly legislation in the process of the case investigation. For the rest of cases 8 decisions were accepted, 7 orders were taken. 3 decision wee appealed, which were accepted valid by the Court.

+anticompetitive agreements of financial organizations+ the market of banking services+
FAS Russia considered the application of AKB ¡§Russlavbank¡¨ (clearing bank of ¡§CONTACT¡¨ system) and instituted proceeding against ¡§NKO ¡§Western Union DP Vostok¡¨ on the signs of violating of antimonopoly legislation and other legal acts on competition protection at the market of financial services. Russian system ¡§CONTACT¡¨ performs transfers of finance of physical persons without opening of banking account through the system of corresponding banking accounts. However Russian banks were forced to refuse to execute and conclude agreements with Russian paying systems , as well as with AKB ¡§Russlavbank¡¨ because of the previously concluded agreements with LLC ¡§Western Union¡¨. The subject of the concluded agreements were the services granted by LLC ¡§Western Union¡¨ to economic persons on sending and paying monetary transferes without opening banking accounts. These agreements include standard clause 4.2.8 in accordance with which the banks are banned to ccordinate with other companies granting the services on operative transfer of money in forms similar to those applied by the systemof ¡§Western Union¡¨ during the period the ageement is valid. In accordance with the decision accepted on this case the Commission of the fedral antimonopoly body, the terms of the clause 4.2.8 were accepted not conformng to the Article 6 of the Law on Competition, which prohibits to conclude agreements having or could have the result of restriction of competition at the market of financial services, as well as aimed to restriction of access to the market of financial services of othe financial organizations. Besides, the actions of LLC ¡§Western Union¡¨ on including the clause 4.2.8 into the termsof typical agreement, and the proposed requirements on continueing relations of the banks with other organisators of the system of transfer of money of physical persons without openeing of banking accounts together with simultaneous threat to cancel the agreement of the banks and LLC ¡§Western Union¡¨, were accepted to be unfair competition, prohibited by the Article 15 of the Law on competiton protection at financial markets. At the basis of the decision taken LLC ¡§Western Union¡¨ was given the order to eliminate the violation of antimonopoly legislation by directing to the addresses of agreed banks proposals on introducing changes on excluding of the clause 4.2.8 to the agreements; excluding the clause 4.2.8 out of the terms of typical agreement offered by the banks to be concluded. Decision and the order of the Commission of Federal antimonopoly body were appealed by LLC ¡§Western Union¡¨ to the arbitrage court of Moscow. However the court did not satisfied the application of LLC ¡§Western Union¡¨. In the result LLC ¡§Western Union¡¨ decreased their tariffs at average 30%.

+anticompetitive agreements of financial organizations+ the market of insurance services+
After the federal antimonopoly body considered a petition, it was discovered some documents giving a reason to propose that in April 2003 a secret merger of several insurance companies among which JSC ¡§Rosgosstrakh¡¨, LLC ¡§Rosgosstrakh-Accord¡¨, JSC ¡§Accord¡¨ compiling a group of persons and CJSC ¡§ASK Sozinvest¡¨, JSC ¡§Accord-Garant¡¨ (Ufa), JSC ¡§Vostok¡¨ (Ufa) took place. Consideration of the protocols of the meetings of Board of directors of the three last companies gave the reason to stipulate that their founders (LLC ¡§K.F. Stalt¡¨, LLC ¡§Nordtradegroup¡¨, LLC ¡§Mega-Intellect¡¨) gave certificates to vote on all issues to the one physical person belonging to the group of persons JSC ¡§Rosgosstrakh¡¨.In result 50% of the same physical persons comprising the group of persons together with ¡§Rosgosstrakh¡¨ were elected to the Board of directors of the enumerated insurance companies. Thus in the result of concerted actions of JSC ¡§Rosgosstrakh¡¨, LLC ¡§Rosgosstrakh-Accord¡¨, LLC ¡§K.F. Stalt¡¨, LLC ¡§Nordtradegroup¡¨ and LLC ¡§Mega-Intellect¡¨ insurance companies JSC ¡§Rosgosstrakh¡¨ and LLC ¡§Rosgosstrakh-Accord¡¨ obtained an opportunity to determine (through their Boards of management) conditions and terms of conducting of buisness activityof the following insurance companies - CJSC ¡§ASK Sozinvest¡¨, JSC ¡§Accord-Garant¡¨ (Ufa), JSC ¡§Vostok¡¨ (Ufa), that ended in liquidation of subsidiaries and restriction of insurance premies of insurance companies 2,5, 2, 15 times accordingly, as well as to separation of insurance market of Bashkortostan Republic on territorial type, on types of insurance services rendered and to the removal of other insurance companies out of the market of insurance services. Commission of FAS Russia ordered to the parties of concerted actions to cancel decisions of the Board of directors of CJSC ¡§ASK Sozinvest¡¨, JSC ¡§Accord-Garant¡¨, JSC ¡§Vostok¡¨ where the decisios on subsidiaries liquidation was taken, to cancel the orders taken by ¡§Rosgosstrakh-Accord¡¨ on reorganization of subsidiary network and on the order of the work on agreements of the following insurance companies - CJSC ¡§ASK Sozinvest¡¨, JSC ¡§Accord-Garant¡¨, JSC ¡§Vostok¡¨, on reestablishing of the branch network of insurance organizations CJSC ¡§ASK Sozinvest¡¨, JSC ¡§Accord-Garant¡¨, JSC ¡§Vostok¡¨ with the condition of existing of consumer demand on insurance services of the named insurance companies and the opportunity to render the services of CJSC ¡§ASK Sozinvest¡¨, JSC ¡§Accord-Garant¡¨, JSC ¡§Vostok¡¨ without losses, besides it was ordered to reestablish the initial position through removal out of the Board of directors of CJSC ¡§ASK Sozinvest¡¨, JSC ¡§Accord-Garant¡¨, JSC ¡§Vostok¡¨ physical persons belonging to the group of persons of ¡§Rosgosstrakh¡¨. ¡§Rosgosstrakh¡¨ appealed the decision and order given by FAS Russia in Moscow arbitrage court. Arbitrage court refused the appeal of ¡§Rosgosstrakh¡¨ and recognized decision and order of FAS Russia to be legal.

2. State control over economic concentration

+control over economic concentration at commodity markets+

On establishing, reorganization, liquidation of commercial and non-commercial organizations at commodity markets the number of considered in 2004 petitions decreased to 38% as to compare with 2003 and constituted 452 applications, of which 98% were satisfied, including 20 together with the order on performing actions aimed at providing competiton. The number of notifications decreased to 33% and constituted 2609, of which 99% were taken into consideration, including 9 ¡V with stipulating of antimonopoly requirements. 8108 petitions concerning acquiring shares in the chartered capital and other cases were considered in 2004, that decreased to 30%. Positive decisions were taken on 99% of petitions, including 260 ¡V with the order to perform actions aimed at competition provision. The number of notifications decreased to 6% and constituted 6574, including 55 with antimonopoly requirements. Decrease in the number of petitions and notifications was provided by 2 times increase of threashold value of transactions subject to antimonopoly control in accordance with amendments to the Law on competiton, introduced by Federal Law of 09.10.2002 No 122-FL.

+control over economic concentration at commodity markets+tendencies+
In general the increase of investment activity may be niticed at commodity markets, however these processes are disseminated unequally along the industries. Processes of establishment, reorganization, liquidation of commercial and non-commercial organizationshave larger scale in the sphere of commerce and food industry, construction complex, public catering, agriculture, especially at inter-regional markets, including with the aim of vertical integration of economic entities. The majority of transactions dealing with the redistribution of property rights and other rights are executed by physical persons. The activity of legal entities is disseminated for 10 sectors chosen by the reason of the majority number of transactions executed and may be ranged as following: 1st place ¡V commerce and public catering, then ¡V activities with transportable property (including land), food industry, construction, agriculture, machinery, transportation and transport services, timber, wood processing and cellulose and textile sector, oil and oil products. The minority number of transactions were concluded by legal persons in gas sector, public utility, telecommunication, ferrous and non-ferrous metallurgy, defense industry. In general the number of intra sector contracts prevails, excepting transactions with immovable property, commerce and public catering. More than 70% of the total number of transactions are inner sectoral contracts in gas, electric and heat energy, agricultire and public utility. Considerable amount of contracts on acquiring shares in fixed capital are concluded between economic entities operating at different non-competing markets, thus antimonopoly bodies have nothing against such transactions. Most attractive are assets of enterprises dealing with commerce and public catering, construction, agriculture, food industry, transportation and transport services, textiles, immovabale property. Active acquirers are legal persons in the sector of commerce and public catering. For example in 2004 they have acquired assets of practically all sectors excluding defence sector. Significant number of transactions on acquiring of assets is performed by enterprises of commerce and public catering in the sector of legal estate, food industry, construction, agriculture, machinery, textile industry, transportation and transport services. Construction complex acquired assets of raw sectors, gas, oil and oil products, chemistry and oil-chemistry, electric and heat energy, machinery, timber, wood processing and cellulose and textile sector, food sector, agriculture, transportation and transport services, telecommunication, commerce and public catering, public unility, legal estate. In 2004 processes of creation of building the diversified structure and vertical integration aiming to control the undertakings which provide all technological chain of production and distribution were typical as for federal commodity markets and for the regional ones.

+control over economic concentration at commodity markets+
In 2004 FAS Russia satisfied the petition of Alcoa Luxembourg SARL, Alcoa Inversiones S.p.a. SL and Alcoa Inversiones Internacionales SL (Alcoa) to buy 100% of equities of ¡§Prime-alum¡¨ (RUSAL), owing more than 99% of shares of ¡§Samara metallurgical plant¡¨ (SMP) and more than 81% of shares of ¡§Belokalitvinsky metallurgical production society¡¨ (BMPS) and 100% of shares in the chartered capital of ¡§Trade House ¡§Russian Aluminium Prokat¡¨ (TH RAP) (Prime-alum, SMP, BMPS and TH RAP ¡V Russian companies) specifying behavioral remedies, including Alcoa was obliged to provide the Russian companies to continue to execute to perform all existing agreements, including agreements related to performing the public defense order and state target programmes in the sphere of aviation and space activity; inform FAS Russia in cases of ceasing or loosing production-technological opportunities of production manufacture necessary for executing the mentioned agreements, performing transactions, which may be followed by lossing control over Russian companies from the part of Alcoa; notify FAS Russia in preliminary order about transactions, which may be followed by alienation of 5%of the assets and/ or 10% of the shares of Russian conmanies (excluding transactions conclluded inside Alcoa group); notify FAS Russia on reorganization inside Alcoa group when 5%of the assets and/ or 10% of the shares of the Russian companies would be re-distributed inside Alcoa group; and/or acquisitions of Alcoa group during coming 5 years of 5% and more assets (equities, shares, other rights of participation, basic production facilities) in an enterprises supplying the Russin market with boxites, primary aluminium and production of aliminium for the sum of not less then USD 5 million a year; to persent to FAS information on prices for the basic production and on volumes of their distribution and geographical area of consumers in the Russian Federation and abroad every half a year.

+control over economic concentration at financial markets+
In 2004 793 petitions were considered concerning transactions at the market of financial services, it is 38% less then in 2003. Of them 789 (99%) petitions were agreed, including 23 together with stipulating of requirements aimed at competition provision. Decrease in the nuber of petitions is mainly connected with excluding from the list of control functions the requirement of preliminary approval of antimonopoly bodies when changing the volume of chartered capital. Most of petitions (70%) were submitted dealing with acquisition of more than 20% of shares in the charter capital of financial organization. 75% of petotopns deal with the market of banking and insurance services. The number of notifications dealing with transactions at the markets of financial services in 2004 increased to 39% as to compare with 2003 mainly due to the growth of the number of notifications concerning agreements concluded in 2004 by financial organizations, and constituted 949 submissions. Of them 871 were taken into account, including 71 with antimonopoly requirements. In general development of competition at the market of financial services is insufficient, especially at the regional level. Infrastructure is developed not quite well, concentration of the markets is high. With the exception of financila markets of Moscow and Saint-Petersburg, Nizhny Novgorod and Sverdlovsk regions.

+control over economic concentration+ tendencies+
with the aim to increase efficiency of antimonopoly control of economic concentration and decrease of administrative barriers for businesses, the Draft Federal Law ¡§On Competition Protection¡¨ envisages substantial threshold value of transactions subject to antimonopoly control. The control is left only in cases when the change in structure of share capital influencing the balance of powers at this or that market takes place. That will let antimonopoly bodies to concentrate basically at control over establishing of big companies and associations, which influence the state of competition at this or that market, as well as at control of acquisitions of packages of shares of big companies, performing their activity at strategic markets of the Russian Federation.

3. State control over statements and activity of executive power bodies and municipal power bodies, limiting competition

+administrative barriers+
2912 applications on anticompetitive activity of power bodies on commodity and financial markets were considered in 2004, that is 41% of all submitted to antimonopoly bodies applications. 8439 control and supervision arrangements were realized, which were aimed at preventing anticompetitive activity of power bodies on commodity and financial markets and exceeded 2003 level for 13,5%. 3008 infringements were revealed (for 13,7% more than in 2003), 2513 violations were eliminated (84% of revealed violations). Amount of revealed violations of the antimonopoly law by power bodies is for 1.5 times exceeds the amount of revealed facts of monopolistic activity and unfair competition of economic entities and financial organizations, that in conditions of Russian present-day reality confirms actuality and necessity of antimonopoly control over statements and activity, agreements and concerted actions with participation of power bodies, concerned with market and competition development.

+administrative barriers+ control over observance of legislation on commodity markets+
In 2004 2301 applications on statements and activity of power bodies aimed at limitation of competition (the article 7 of the Law ¡§On Competition¡¨) were considered, that is 33.8% of total amount of applications on violation of the Law ¡§On Competition¡¨ received by antimonopoly bodies. More than 36% concerned ungrounded impeding to economic entities¡¦ activity, about 24% of applications concerned with providing of benefits and privileges and other violations, which create discriminative conditions for activity. More often markets of trade services and catering, passenger traffic, advertising, housing and medical services are influenced by executive power bodies and municipal power bodies. In order to prevent and reveal violations of the article 7 antimonopoly bodies have realized 641 check-ups, 262 violations were eliminated during these check-ups. The most amounts of check-ups were concerned with ungrounded providing of benefits and privileges, creating discriminative conditions for activity, as well as ungrounded impeding to economic entities activity. In 2004 900 proceedings on signs of violation of the article 7 were instituted on applications and on the own initiative. 266 proceedings were stopped in view of eliminating of the violation during consideration. On other proceedings 634 decisions were taken and 622 Orders were issued. 115 decisions (or 18%) were appealed. 26 decisions were declared invalid, i.e. 4% to amount of taken decisions or 23% to amount of appealed. In 2004 in order to prevent and reveal violations 2978 draft legal acts elaborated by executive power bodies and municipal power bodies were considered for correspondence with antimonopoly legislation. More than 100 drafts were considered by Moscow (752), Arkhangelsk (190), Novgorod (189), Kaliningrad (184), Khanty-Mansiysk (104) Regional Offices of FAS Russia.611 (20%) drafts were revealed, which contained regulations, contradicted to competition law.

+administrative barriers+ +limitation of self-dependence+
Rostov Regional Office of FAS Russia on the own initiative instituted proceeding against administration of Sholokhov district of Rostov region and issued Order to eliminate violation of the paragraph 1 of the article 7 of the Law ¡§On Competition¡¨ until September 8 2004. The Head of Administration issued Decree of 23.03.2004 No 91 ¡§On approval of the order of calculation of objects of retail trade and catering at the territory of the Sholokhov district¡¨ Paragraph 2 of this decree made enterprises of all patterns of ownership and entrepreneurs accommodating retail trade, catering in the objects of local network, as well as of local small retail trading network, to rewrite at the administration. At the same time in accordance with the paragraph 1 of the Decree of the Government of the Russian Federation of 17.05.2002 No 319 ¡§ On plenipotentiary federal body, realizing state registration of legal entities, country farming, natural persons as individual entrepreneurs¡¨ Ministry of the Russian Federation for tariffs and tallage is the body realizing registration. Thus, issued by Sholokhov administration decree, which sets obligation to rewrite for trading and catering enterprises, limited self-dependency of the economic entities and infringe theirs interests. Order was carry out.

+administrative barriers+ +providing benefits+
Tula RO of FAS Russia on the results of check-up instituted proceeding on signs of infringement of the paragraph 1 of the article 7 of the Law ¡§On Competition¡¨ against Municipal Council of the municipal formation ¡§Zaoksky District¡¨ of the Tula region. ¡§Zaoksky District¡¨ issued the Act, which provides ungrounded benefit to one economic entity, creating advantage position for this economic entity. On June 4 2003 Municipal Council issued decision ¡§On approval of the list of functions, passed by Administration of municipal formation ¡§Zaoksky District¡¨ to United Committee of local public self-government of the part of the Zaoksky district of the Tula region¡¨. In accordance with this document only this Committee can realize come kinds of services. Thus interests of other economic entities that realize the same kinds of services were limited. Commission of the Tula RO FAS Russia issued decision to cease the violation and to cancel the decision until 01.12.2004. Order was carry out in time.

+administrative barriers+ +Inequality of conditions+
Novosibirsk RO FAS Russia considered the case, instituted on the results of the initiative check-up against Administration of the town Ob of the Novosibirsk region. Methods of calculation of the rent, agreed by the Order of the Head of Ob Administration of 28.01.2003 No 24-p ¡§ On rent of the municipal property¡¨ for state and municipal enterprises reducing coefficient of the kind of activity was set to rent at the rate 0.3. Thus for state and municipal enterprises (institutions) was created advantage position relative to other economic entities of Ob town acting at the same markets. Antimonopoly body issued a Order to set equal coefficient of the kind of activity independently of patterns of ownership of leasers. Order was carry out.

+administrative barriers at commodity markets++agreements+
In 2004 174 applications were received on the issues of anticompetitive agreements (conserted actions) with participation of power bodies (the article 8) 28% of the applications were on limitation of the market access. 74 check-ups were realized on the issue of observance of the article 8. check-ups concerned all kinds of violation of this article, but most of all - limitation of the market access. During the check-ups 10 violations were eliminated. On the applications and on the own initiative of the antimonopoly body 71 proceedings on the infringement of the article 8 were instituted. In spite of difficulties in evidence Krasnoyarsk RO FAS Russia instituted 10 cases, Moscow ¡V 8, Perm ¡V 6. . 33 proceedings were stopped in view of eliminating of the violation during consideration. On other proceedings 38 decisions were taken and 35 Orders were issued. 2 decisions were appealed and declared invalid by the court.

+administrative barriers+ +agreements+
Bashkortostan RO FAS Russia on the application by individual entrepreneur Mrs. Kulagina instituted proceeding against Krasnousolsk town Administration and munisipal enterprise ¡§Krasnousolsk Market¡¨ on the signs of violation of the article 8 of the Law ¡§On Competition¡¨.The Order for the market munisipal enterprise ¡§Krasnousolsk Market¡¨ was agreed by the Head of the Krasnousolsk town Administration. The Order contained regulations limiting access to the market Commission of the Bashkortostan RO FAS Russia issued decision on recognizing of the fact of violation of the Law ¡§On Competition¡¨ and issued Order to stop the violation and to issue regulation in accordance with the legislation in force until 19.07.2004. Order was carried out.

+administrative barriers ++agreements+
Udmurtia RO FAS Russia found violation of the article 8 of the Law ¡§On Competition¡¨ by the Administration of the Izhevsk city and LLC ¡§Saigas¡¨. Administration of the Izhevsk city issued decree of 07.05.2004 No196/2 ¡§on transmission of the municipal uninhabited fund for managing by LLC ¡§Saigas¡¨. Administration of the Izhevsk city created property treasury of the city and defined LLC ¡§Saigas ¡§ as a manager of the municipal property on the base of agreement with ¡§Saigas¡¨. The decree infringes paragraphs 1 and 2 of the article 7, as well as the article 8 of the Law ¡§On Competition¡¨, because one LLC (financial-commerce group ¡§Saigas¡¨) was provided with privilege, putting LLC in to advantage position relative to other economic entities, acting at the market of services for managing the municipal property. Anticompetitive agreement between major of Izhevsk city and LLC ¡§Saigas¡¨ limited access to the market of managing the municipal property (non-residential premises) for other economic entities. Decision of the Commission of the Udmurtia RO FAS Russia and issued Order were appealed at the arbitrage court. Decision and Order were declared valid. Decree of the Federal Court of Cassation of the Ural region of 30.12.2004 declared the first decision valid.

+administrative barriers ++agreements+
Primorsk RO FAS Russia on considered the application of the LLC ¡§Primopttorg¡¨ on violation of the article 8 of the Law ¡§On Competition¡¨ in the form of agreement between Administration of the municipal formation ¡§Khorol district¡¨ and economic entity Khorol regional consumers society. Administration of the district have agreed written offer of the Khorol regional consumers society on protecting of local produsers, i.e. have concluded an agreement, at that protecting of the local producers was aimed at enterprises-members of Khorol regional consumers society and accordingly was aimed to limit access or to eliminate produsers from other cities from the market. Primorsk RO FAS Russia admitted this agreement as violation of the article 8 of the Constitution of the Russian Federation and the article 8 of the Law ¡§On Competition¡¨ and issued Order to cease the violation og the legislation in force. . Order was carried out in time.

+non observance of antimonopoly requirements to tenders for placing of orders for delivery of goods, execution phase , rendering of services for state needs and needs of local self-governing+
251 application on non observance of the antimonopoly requirements to tenders (the article 9) were received. 41% of the applications were hand in connection with ungrounded limiting of the access to participate in tenders, 23% - on illegal creation of advantaged conditions of participating in tenders. Cases on competition limitation between participants of the tender or infringement of its interests of participants, as well as on participation of the organizers, staff and affiliated persons in tenders were found.
In order to control observance of the article 9 388 check-ups were held, during check-ups 79 violations were suppressed, 50 proceedings were instituted. 20 proceedings were stopped in view of eliminating of the violation during consideration. On other proceedings 30 decisions were taken and 25 Orders were issued. 4 decisions were appealed and were declared invalid by the court.

+non observance of antimonopoly requirements to tenders+
Perm RO FAS Russia took institute proceeding on signs of violation of the article 9 of the Law ¡§On Competition¡¨ against Administration of the town Kizel and enterprise ¡§Stroitel¡¨ on limitation of the access to participate in tender for delivering of equipment and school furniture to town Yaiva. 2 days before opening the envelope organizer of the tender have inserted considerable changes into tender documentation and haven¡¦t prolonged the deadline of submitting applications for the tender thereby reduced opportunity to specify tender offer for other pretenders to tender. Order to take decision to prolong deadline of submitting applications until 03.11.2004 was issued to Administration of the Kizel town in order to provide participants¡¦ right to fill up the application taking into consideration inserted considerable changes into tender documentation. The Order was carried out.

+Statements and activities of executive power bodies, Central Bank of the Russian Federation, Municipal power bodies, aimed to limit competition at the financial markets+
In 2004 regarding illegal statements and activities of power bodies and Central Bank of the Russian Federation (the article 12) 67 applications were considered. 81% applications were concerning signs of violation of the antimonopoly legislation at the markets of insurance services. In order to found and prevent violations antimonopoly bodies realized 268 check-ups of observing the law. Check-ups concerned all sectors of financial market, but especially - the markets of insurance services (82% of check-ups). Diring check-ups 99 infringements were eliminated. 149 proceedings on the signs of violation of the article 12 were instituted under applications and on the own initiative in 2004. 26 proceedings were stopped in view of eliminating of the violation during consideration. On other proceedings 123decisions were taken and 112 Orders were issued. 3 decisions were appealed and 1 was declared invalid by the court.

+tenders of financial organizations, attracted for realizing operations with recourses of appropriate budget+
In 2004 on the facts of nonobservance by power bodies regulations of the articles 13,14 of the Law on competition protection, which define the order of tenders for financial organizations for realizing operations with budget recourses, 119 applications were considered, at that 87% of applications concerned infringement of the principles of tender for financial organizations at the markets of insurance services. 326 check-ups of observance of the law were realized, 80% of them ¡V concerning insurance organizations. During 326 check-ups 51 violation were ceased . 379 proceedings were instituted. 44 proceedings were stopped in view of eliminating of the violation during consideration. On other proceedings 335decisions were taken and 323 Orders were issued. 12 decisions were appealed and 1 was declared invalid by the court.

+tenders of financial organizations, attracted for realizing operations with recourses of appropriate budget+
Administration of Volgograd region in December 2003 ¡VJanuary 2004 hold tender between insurance organizations for the right to conclude the agreements on compulsory medical insurance for non employed inhabitants of municipal formations of the Volgograd region. FAS Russia Regional Office in Volgograd revealed infringement of the order of holding the tender, which creates advantage terms for two participants of the tender, in accordance with the article 14 of the Law on competition protection and the article 477 of the Civil Code of the Russian Federation, and applied to arbitrage Court for declaring this tender invalid. As a basis to declare the tender invalid were pointed infringement of the deadline of publishing the announcement on tender holding, namely - announcement were published before final agreement with antimonopoly body, infringement of the requirements of the regulations for tender commission and Regulations for medical insurance organizations, infringement of the estimation methods of tender offers, creation of advantage terms for one of medical insurance organizations ¡V participants of the tender, presence of tender organizers - affiliated persons, relative to one of medical insurance organizations ¡V winners the tender took place. Arbitrage court of the first instance answered to the claim by antimonopoly body. Appellation Court abolished the decision, reasoning from the fact that formal infringement of the rules stipulated by the article 14 of the Law on competition protection didn¡¦t entail violation of the rights of the interested persons during tender holding. But the Court of the cassation instance didn¡¦t agree with the court of appellation instance, pointed that revealed violations of the order of tender holding could not have formal nature, because the article 14 of the Law on competition protection has imperative nature and do not needs negative consequences to declare the tender invalid, including infringement of somebody¡¦s rights. By the decision of the court of the cassation instance the tender was declared invalid.

4. Actions aimed at restriction of unfair competition

+unfair competition+
In 2004 we may underline the increase in efficiency of activity of antimonopoly bodies as for restricting unfair competition at commodity and financial markets. Total amount of control and supervision activities with the aim to restrict unfair competition at commodity and financial markets constituted 943 applications (surplus to 2003 ¡V 78%). As the result of control and supervision activities 447 violations were discovered (surplus 82%) ans 400 are removed (surplus 86%). 285 legal proceedings have been instituted.

+unfair practices at commodity markets+
In 2004 the previous tendency have been conserve to the increase of the number of submissions of economic entities on the facts of unfair competition (Article 10). So in 2004 567 applications were considered (surplus 29% to 2003). The most number of applications were received dealing with sell, change or other introduction to the turnover of goods with illegal usage of the results of intellectual activity and measures of individualization of a legal person, production, performing of work,services equal to them. The number of applications concerning dissemination of false information stayed at the lavel of the previous year (85). The number of applications concerning deceiving of the consumer increased to 72% (79). With the aim to disclose violation antimonopoly bodies conducted 243 check-ups to find out the conformity to the Article 10, that increased th figures of 2003 8 times. Check-ups concerned in particular the facts of sell, exchange and other introduction to the turnover of goods with illegal usage of the results of intellectual activity (89%). In the result of check-ups 132 violations were removed. Considerable increase of the figures as for check-ups was achieved due to the activity of Chechen regional office of FAS, which conducted 160 check-ups and restricted 100 violations. According to applications and self initiative in 2004 262 legal proceedings were instituted under Article 10 (surplus 34% to 2003). Proceedings on 102 cases were stopped due to removal of violation during the consideration of the case. On the rest of cases 160 decisions were taken and 145 orders were given. 36 decisions (22%) were appealed. The Court admitted 4 decisions to be not valid.

+unfair competition+
FAS regional office in Stavropolsky district instituted proceeding under application of ¡§Stavropolenergo¡¨ against JSC ¡§StavropolAtomEnergoSbyt¡¨ on the signs of violation of clause 1 of Article 10 of the Law on competition. ¡§StavropolAtomEnergoSbyt¡¨ signed agreements of energy supply using the title of ¡§State Concern RosenergoAtom¡¨ and ¡§The Ministry of the Russian Federation on atomic energy¡¨ at their written forms. In the result of investigation conducted it was found out that ¡§StavropolAtomEnergoSbyt¡¨ being the subject of Federal wholesale market of electric energy is not the participant of the regulated sector of trade, does not participate in transactions of electric energy purchase and is not the owner of electric energy which it supplies to the customer. By its actions ¡§StavropolAtomEnergoSbyt¡¨ misleads economic entities - the customers on their purchasing of electric energy at the wholesale market. in the result of dissemination of distorted information ¡§StavropolAtomEnergoSbyt¡¨ obtains advantages such as ¡V the opportunity to attract new economic entities. Besides ¡§StavropolAtomEnergoSbyt¡¨ have used the trade mark title ¡§State Concern RosenergoAtom¡¨ and title of ¡§The Ministry of the Russian Federation on atomic energy¡¨ at their forms and stamps without consent of these organizations, which are not founders of ¡§StavropolAtomEnergoSbyt¡¨. The trade mark title along with the trade mark and the mark of service serves as the means of individualization of legal person and in accordance with Article 138 of the Civil Code of the Russian Federation is the object of intellectual property. ¡§StavropolAtomEnergoSbyt¡¨ was given the order to stop violate antimonopoly law misleading the customers and to stop: conclude agreements on energy supply with the subscribers with the absence of agrements; to join the trade system of the wholesale market; to the subscription payment with RAO UES Russia; for rendereing services on dispatch management with JSC SO-ZDU UES; usage of the title of ¡§State Concern RosenergoAtom¡¨ and ¡§The Ministry of the Russian Federation on atomic energy¡¨ at their written forms and other papers. The order was performed by ¡§StavropolAtomEnergoSbyt¡¨ and the appealed to the Court. Arbitrage Court of Stavropol region refused the appeal of ¡§StavropolAtomEnergoSbyt¡¨ on 2 December 2004.

+unfair practices at financial markets+
The practce of suppression of unfair competition at the markets of financial services considerably yields the one at commodity markets. However in 2004 the tendency to the increase of the number of financial organizations applications on signs of unfair competition at financial markets ( Article 15 of Federal Law ¡§On competition protection at the market of financial services¡¨). So in 2004 35 applications on the signs of unfair competition were considered (2,5 times more then in 2003). Most of applications (24) concerned unfair practices at the market of insurance services. With the aim to disclose violations 64 check-ups on were conducted to reveal following to Article 15. check-ups mainly dealt with the markets of banking (53%) and insurance (23%). In result of check-ups 1 violation in banking sector was removed. In 2004 23 legal proceedings were instituted under Article 15. the proceedings were stopped on 11 cases dealing with removal of violation. As for the rest cases ¡V 12 decisions were taken and 12 orders were given. 3 cases were appealed. The Court recognized 1 decision to be not valid.

+unfair competition+
FAS Russia received several applications concerning the terms of granting of consumer crediting in ¡§Bank Russian Standard¡¨. FAS conducted investigation and found out that the Bank disseminated not precise and distorted information on significaant terms of granting the credit, as well as on periods of tking the commission for the accounting services (payment for keeping the loan account) and on the terms of paying period on credit misleading the customers of their services on full cost of the service. Besides the Bank announcing a year interest of the credit does not inform the borrowers about additional commissions and payments. Having the announced 29% year interest the full cost of the payment for credit may amount to 66%. doing this the Bank prevents other credit organizations services from entering the market of financial services, when these organizations are ready to grant credits under conditions of giving the open and full information about the full amount of payments.during investigation of the cases representative of the Bank announced about free will removal of violation and gave th eevidence. The Commission of FAS Russia took decision on stopping the proceeding on this case in connection with the free will removal of violation of Article 15 of the Law on Competition.

5. Statistics

+statistics+
In general, in 2004 the activity connected with detection and suppression of violations of the Law ¡§On Competition¡¨ is characterized by the following data:

The state of activity in 2004 on revealing and supression of violations of Federal Law ¡§On competition at the maret of financial services¡¨ is characterized by the following data:

3. The role of antimonopoly bodies in developing and applying competition principles in external economic activity.

+participation in developing measures of state regulation of external trade activity+
In accordance with the powers specified by the Government of the Russian Federation FAS Russia has a poer to give conclusions on the results of influence of measures of tariff and non-tariff regulation at competition on domestic market of Russia. Besides FAS representative is a member of Inter-authority Commission on protective measures in external trade and customs-tariff policy (Commission), which was established instaed of abolished Commission on protective measures in external trade. This Commission is a coordination body providing participation of interested federal executibve power bodies in solving issues of customs and tariff and non-tariff regulation of external trade activity.

+participation in developing measures of state regulation of external trade activity+
The number of applications considered by the antimonopoly body concerning correction of export and import customs and introducing measures of protecting domestic market (special protective, antidamping and compensation measures) in the framework of the activities of Commission have a tendency to increase (2002 ¡V 86 applications, 2003 ¡V 102, 2004 ¡V 122). This says for strengthening of competition at domestic Russian markets in result of liberalization of external trade and enhancing of legal culture of domestic producers. These processes determine the necessity of precise analysis of the consequences for the development of competition at commodity markets of the Russian Fedeartion and for the consumers.

+participation in developing measures of state regulation of external trade activity+
FAS Russia suspended the work under the draft regulation of the Government of the Russian Federation limiting the spots of passing ferrous and non-ferrous scrap and waste supplied for export. When preparing the conclusion FAS minded that enacting of such regulation will create discriminative conditions for some economic entities and may result in non-admission, limitation and restriction of competition, that is violation of clause 1 of Article 7 of the Law on Competition.

+participation in developing measures of state regulation of external trade activity+
FAS gave negative conclusion on the issue of introducing antidamping measures concerning the import of shwellers from Ukraine, considering that application of such measures taking into account the competition situation at corresponding markets may lead to further growth of prices at domestic market fo rthis production along with strengthening of market power of some Russian enterprises.

+participation in developing measures of state regulation of external trade activity+
FAS supported introducing of special protective measures as for the import of dry baker yeast, considering this measure may equal competition conditions at domestc market for the Russian and foreign suppliersof this production and will promote domestic production.

+participation in improvement of the legal base of state regulation of external trade activity+
In 2004 FAS Russia actively participated in drafting legal acts in the frames of implementation of Federal law of 08.12.2003 No 164-FL ¡§On the basis of state regulation of external trade activity¡¨, in particular in preparation of the draft regulations of the Government ¡§On approving the provision on the order of licencing in the sphere of external trade of goods and on the order of supervision over export and import of separate goods¡¨, ¡§ On Federal bank of issued licencies in the sphere of external trade¡¨, ¡§ On approving the list of goods subject to pre-shipment inspection and the rules of organization and holding tenders for granting services on pre-shipment inspection¡¨, ¡§On approving the provision of pre-shipment inspection¡¨. In the process of drafting these documents FAS minded the necessity to follow the rules of competition legislation.

4. Resources of compeition body
5.  

1. Annual budget

In 2004 the annual budget of FAS Russia constituted 357453,3 thous. Roubles.
Including central office ¡V 109650,6 thous.roubles, regional offices ¡V 231941,8 thous.roubles, costs for salary for the staff and othe rexpenditures.

2. Human resources

For 01.01.2005 FAS has a staff of 1781 persons.
Including 326 ¡V central office, 1455- regional offices.
In central office 85,6% of employees have higher education, from them 90,3% - economy and law degrees. Two higher educations and more ¡V 20 persons, 15 persons have doctor degree.

In regional offices 88,4% of employees have higher education, from them 62,3% - economy and law degrees. Two higher educations and more ¡V 243 persons, 64 persons have doctor degree.
The staff of FAS is made up in central office ¡V for 93,1%, in regional offices ¡V for 98,5%.