«TNK-BP Holding» violated the antimonopoly law and must pay 1.1 billion Ruble fine

In May - July 2008, FAS Russia received numerous petitions from individuals, legal entities, legislatures and governors of the constituent territories of the Russian Federation, drawing attention to considerable increase of prices for motor petrol and aviation kerosene. For instance, in its letter addressed to the Chairman of the Government of the Russian Federation, the Russian Union of Flight Personnel pointed out that in Q1 2008 the growth of prices for aviation kerosene had made operation of Russian-made aircrafts unprofitable, considerably decreased airlines capacity and put many enterprises on the brink of bankruptcy.
FAS Russia analyzed competitive environment on the oil products markets and found that «Rosneft» Oil Company» OJSC, «Lukoil» OJSC, «Gazprom Neft» OJSC and «TNK-BP Holding» OJSC has a considerable cumulative share on the markets of motor petrol and aviation kerosene within the boundaries of the Russian Federation (in 2007 their cumulative share on the wholesale market of motor petrol in the Russian Federation was 73.44%, the cumulative share on the wholesale market of aviation kerosene in the Russian Federation is 79.26%).
FAS Russia established that «TNK-BP Holding» OJSC together with «Rosneft» Oil Company» OJSC, «Lukoil» OJSC and «Gazprom Neft» OJSC has dominant position on the wholesale market of motor petrol and aviation kerosene.
Upon the fact of increasing prices on wholesale markets of oil products, FAS Russia initiated an antimonopoly case against «TNK-BP Holding» OJSC; as a result of the investigation , FAS Russia established that «TNK-BP Holding» OJSC abused market dominance by:
- fixing monopolistically high prices for aviation kerosene and motor petrol in Q4 2007 and the first six months of 2008;
- fixing different wholesale prices for aviation kerosene without any economic justification and creating discriminatory conditions on the wholesale markets of motor petrol and aviation kerosene in the Russian Federation.
Based on its decision, FAS Russia issued a determination to the company to stop violating the antimonopoly law and exercise actions aimed at protecting competition on the relevant markets.
FAS also held the company administratively liable and imposed a 1.1 billion Rubles «turnover» fine.
«TNK-BP Holding» OJSC filed a lawsuit challenging the FAS Russia's decision, determination and authorization. On 6th April 2009 the Tyumen Regional Arbitration Court passed the judgment, upheld by the rulings of the 8th Arbitration Appeal Court of 30th June 2009 and the Federal Arbitration Court of the Western Siberia District of 2nd October 2009, to allow the claim of «TNK-BP Holding» OJSC in full. The Courts presumed that the antimonopoly authority wrongly determined the product and geographic boundaries of the relevant markets and, as a consequence, was not able to prove dominant position of the company and the facts of abusing market dominance.
FAS Russia filed an appeal to the Supreme Arbitration Court of the Russian Federation to review the case in exercise of judicial supervisory powers over the judicial acts issued by the Arbitration Courts.
On 25th May 2010, the Presidium of the Supreme Arbitration Court of the Russian Federation overturned the judgment of the Tyumen Regional Arbitration Court of 6th April 2009, and the rulings of the 8th Arbitration Appeal Court of 30th June 2009 and the Federal Arbitration Court of the Western Siberia District of 2nd October 2009, and, without remanding the case for reconsideration, issued a new judicial act by which the claim of «TNK-BP Holding» OJSC is dismissed in full and the FAS Russia's decision, determination and authorization regarding the company are pronounced legitimate and reasonable.

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