The RF Supreme Arbitration Court on Banned Restrictions on Competition during Tenders (Auctions).

05.12.2011

Legal Update No. 293

Goltsblat BLP advises that Resolution No. 7905/09 dated 20 September 2011 of the Presidium of the RF Supreme Arbitration Court has been published following an application filed by the Federal Antimonopoly Service ("Russian FAS") for supervisory review of lower court acts regarding the legitimacy of tenders (auctions) conducted by the Forestry Office for the Moscow Region and the City of Moscow ("Mosleskhoz") for sale of the right to enter into forested area leases.
The Presidium of the RF Supreme Arbitration Court overturned the lower court acts and adjudicated on the merits of the case confirming the legitimacy of the Russian FAS position and unlawfulness of tender (auction) access restrictions set by Mosleskhoz.
The Russian FAS decision was based primarily on Federal Law No. 135-FZ dated 26 July 2006 "On Protection of Competition" (the "Competition Law"), Clause 17, Part 2, prohibiting (executive authorities of the RF constituent entities among others) to restrict access to tenders and deemed the following measures taken by the tender organiser as violation of this prohibition:

  • unreasonably short filing period (without due regard for the large number of entities wishing to take part in the tenders);
  • notices containing no information on access control to the Mosleskhoz building and a prior appointment required to enter the building for filing;
  • ban on filing by post;
  • violation of the public form of tender;
  • refusal to accept applications through the secretariat;
  • refusal to issue passes to the Mosleskhoz building on the basis of requests sent by telegram.

The said Resolution also contains additional conclusions of the Presidium of the RF Supreme Arbitration Court:

  •  If tender organisers set non-statutory access restrictions to the tender for at least one potential bidder, this will constitute an unconditional basis for considering their actions to be in violation of the Competition Law.
  • If, in one case, the court concludes that the actions taken by tender organisers did not violate any rights of a specific person or that violation was not proved, this cannot constitute a barrier to finding these actions illegal in another case, especially when other entities are involved, otherwise the rights of the latter to adversary procedure and judicial protection would be infringed.
  • Public tenders are conducted in order to attract as many bidders as possible and obtain the highest price for the executed right (in this case by tender organisers). Unlawful restriction of access to a tender thus infringes on the rights of potential bidders, those of the tender organisers and, as in this case of a public property tender, public interests.

Interpretation of the corresponding legal provisions of this Resolution of the Presidium of the RF Supreme Arbitration Court constitutes grounds for revision, under the new circumstances, of judicial acts of arbitration courts currently in effect and offer another interpretation of these provisions in cases involving similar facts.

For additional information, please contact:

to Nikolay Voznesenskiy,
Head of Competition Practice,
Goltsblat BLP,
T: +7 (495) 287 44 44,
E: info@gblplaw.com

to Vatslav Makarskiy,
Associate,Goltsblat BLP,
T: +7 (495) 287 44 44,
E: info@gblplaw.com

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