The ART DE LEX law firm defended the interests of OJSC Magnitogorsk Iron and Steel Works in a dispute with JSC United Company RUSAL — Trading House regarding the terms of delivery of coal tar pitch

In 2015, FAS Russia initiated a case No. 1-10-172/00-05-15 against JSC United Company RUSAL — Trading House on the violation of the antimonopoly legislation based on the signs of abuse of the dominant position in the coal tar pitch market identified by the antimonopoly authority following a complaint by OJSC Magnitogorsk Iron and Steel Works. OJSC Magnitogorsk Iron and Steel Works chose ART DE LEX as a consultant to protect its interests.

FAS Russia established that RUSAL is the dominant buyer in Russia of the melted coal-bearing electrode mark "Б1" and "В", which is the raw material for the production of anodes. Magnitogorsk Iron and Steel Works together with other producers occupy a dominant position in the pitch sale market. Based on the analysis of the competition in the commodity market, FAS Russia has revealed a strict interconnectedness in the production and consumption of pitch between both enterprises, which characterizes the market as bilateral dominance.

In 2015, the companies failed to agree on the key terms of the contract for the supply of pitch, in particular on the price of the goods. Impossibility in a short time to sell pitch to another buyer due to the lack of a suitable rolling stock owned by RUSAL led to the emergency suspension of the production of pitch at Magnitogorsk Iron and Steel Works. 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. Simultaneously, Magnitogorsk Iron and Steel Works filed a complaint, accusing RUSAL of imposing unprofitable contract terms on it.

FAS Russia had been considering the case since November 2015. The case is an interesting example of the FAS Russia's development of approaches to antimonopoly disputes in the markets with bilateral dominance. 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.

For several months, Magnitogorsk Iron and Steel Works and RUSAL were negotiating a new supply agreement on mutually beneficial terms. At a meeting of a commission on May 18, 2017, JSC United Company RUSAL — Trading House submitted documents confirming the execution of the warning issued to it. 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 the results of the RUSAL's execution of the warning, the FAS Russia's commission decided to stop the consideration of case № 1-10-172 / 00-05-15.

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. To defender their position the lawyers of ART DE LEX attracted Lomonosov Moscow State University to do a unique research, during which the economic model of interaction between the two companies developed by economic experts explained many aspects of company behavior and рelped the antimonopoly body develop approaches to restore the balance of rights and interests of economic entities.

Yaroslav Kulik, a lawyer, partner and the head of the antimonopoly practice at ART DE LEX, headed the project. Kirill Dozmarov, a lawyer and the head of group of the competition practice, lawyers Anna Mitroshkina and Elizaveta Savina participated in the project.

ART DE LEX specializes in legal support of business activities and provides consulting services to Russian and foreign clients in Russia and abroad.

Antimonopoly practice of ART DE LEX is among the best on the market according to the national rating of law firms Pravo.ru-300 (Group I) and recommended by the international rating Chambers Europe. Chambers Europe has repeatedly mentioned Yaroslav Kulik, a partner, lawyer and the head of antimonopoly practice at ART DE LEX, among the best specialists in the Competition/Antitrust category.