“Kavkazregiongaz” will have to a pay a multimillion fine

In summer 2009, Kabardino-Balkaria OFAS Russia initiated a case upon a petition of “Boum-Bank” Commercial Bank, of Nalchik, that “Kavkazregiongaz” Ltd. violated Clause 3 Part 1 Article 10 of the Federal Law “On Protection of Competition” (prohibiting market-dominating economic entities to impose disadvantageous conditions upon counteragents).
“Kavkazregiongaz” Ltd. was forcing the Bank to sign the gas supply contract under the conditions requested by the company, which was contrary to the antimonopoly law.
The Protocol of Disagreements, presented by the “Boum-Bank” Commercial Bank in response to the suggested contract, was not accepted by “Kavkazregiongaz” Ltd. The company advised that if the Bank refused to sign the gas supply contract under the requested conditions, it should use alternative types of fuel to feed the fuel-consuming equipment.
Such actions of “Kavkazregiongaz” Ltd. infringed the interests of this commercial organization forcing it to sign the contract under unfavourable conditions and could have caused damage to its financial and business reputation.
Kabardino-Balkaria OFAS Russia made “Kavkazregiongaz” Ltd. administratively liable under Article 14.31 of the Code of the Russian Federation on Administrative Violations and imposed a fine – 122,219,710 Rubles.
“Kavkazregiongaz” Ltd. disagreed with the decision of the antimonopoly body and filed a lawsuit. The Arbitration Court of the Kabardino-Balkaria Republic reversed the determination of OFAS Russia on holding “Kavkazregiongaz” Ltd., in the persons of its branch in the Kabardino-Balkaria Republic, administratively liable under Article 14.31 of the Code of the Russian Federation on Administrative Violations.
However, on 13th October 2010, the 16th Arbitration Appeal Court concluded that the Court of First Instance wrongly applied substantial provisions of the antimonopoly law. The appeal of the antimonopoly body was allowed in full and the decision of Kabardino-Balkaria OFAS Russia was found legitimate.
“Imposing disadvantageous conditions by monopolists is unacceptable, and the 16th Arbitration Appeal Court supported our position”, commented the Head of Kabardino-Balkaria OFAS Russia, Mr. Kazbek Pshintsev.
Now “Kavkazregiongaz” Ltd. must pay the fine in full within the statutory period.