Russia’s Federal Antimonopoly Service declared that Russian Railways violated Article 17 of the Federal Competition Protection Act (the one which prohibits favoritism towards a bidder in an auction), FAS’s press service reports.

The company’s offense consisted in the following:

Russian Railways conducted its Tender 907 on thirteen different offers; eight lots consisted in the opportunity to sign car insurance agreements with Russian Railways subsidiaries in 2010-2013, that is, for the duration of three years.

Under the terms of the auction, applicants had to submit proofs of their automobile insurer’s licenses.

Now offering a car owner an obligatory third-party damage insurance and a voluntary car damage insurance policy are two different services that cannot be seen as substituting one another. According to Rostecnadzor (the state technological safety watchdog), by the time of the auction, there were 130 insurers dealing in obligatory car insurance and 301 companies dealing in voluntary insurance against damage to the car.

This means that offering an opportunity to sign insurance agreements for both type of insurance under one lot prevents 171 insurance companies from making their bids to Russian Railways; it also creates preferential terms for the companies that run licenses for both insurance types.

Given that the contracts signed at the end of Tender 907 will only expire in October 2013, the FAS decided to take the case to court to have the results of the tender annulled.