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Art De Lex Counsels Magnitogorsk Iron and Steel Works on Abuse of Dominant Position Claim Against United Company RUSAL — Trading House


Russia's Art De Lex firm has counseled OJSC Magnitogorsk Iron and Steel Works on the successful resolution of its claim of abuse of dominant market position against JSC United Company RUSAL — Trading House.

According to Art De Lex, RUSAL and OJSC Magnitogorsk Iron and Steel Works (MISW) failed to agree on a contract for the supply of pitch MISW, and the lack of suitable rolling stock owned by RUSAL made it impossible to sell pitch to another buyer, leading "to the emergency suspension of the production of pitch at Magnitogorsk Iron and Steel Works." According to the firm, "given the critical nature of the environmental situation in the enterprise and the risk of stopping the production of coke chemicals, Magnitogorsk Iron and Steel Works had to conclude the contract on the terms of RUSAL." MISW lodged a formal complaint with the FAS (Russia's Competition authority), accusing RUSAL of imposing onerous contract terms on it. The FAS's initiated a case against RUSAL.

Art De Lex reports that, "while reviewing the complaint, FAS Russia confirmed the presence of signs of abuse of the dominant position by RUSAL, while also perceived improper conduct in the actions of Magnitogorsk Iron and Steel Works. At the end of 2016, FAS Russia gave warnings to both companies to stop the violation of the antimonopoly legislation."

Following this warning both sides negotiated a new supply agreement, and on May 18, 2017 JSC United Company RUSAL — Trading House submitted documents announcing that the warning issued to it had been resolved.

According to Yaroslav Kulik, a partner of the Art De Lex law firm, which served as a consultant to protect interests of MISW, “the companies agreed on mutually beneficial non-discriminatory terms of the coal tar pitch, corresponding to economically justified pricing conditions for coal tar pitch.” Following RUSAL's announcement, the FAS commission decided to terminate its consideration of the case.

According to Art De Lex, "this case, which had been under consideration for more than a year and a half, is unique and extremely important for the emerging practice of resolving disputes between dominant buyers and dominant sellers. Prior to this case, FAS Russia did not apply the approaches used in the present case (on issuing warnings to both the buyer and the seller simultaneously). This demonstrates the flexibility of the antimonopoly authority in solving complex and out-of-the-ordinary problems in important commodity markets."

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