Address: 26/55, Bldg. 7, Kosmodamianskaya Emb., Moscow, 115035
(495) 953-91-08, 617-18-88.



Certain Issues of Law Enforcement Practice Arising in Settlement of Cases on Abuse of Dominance by Grid Operators during Technological Connection to Power Grids

Новосельцев Даниил Эдуардович, Fourth-Year Student of Kutafin Moscow State Law University (MSAL)

The article is devoted to the analysis of certain issues of law enforcement practice arising in settlement of cases on abuse of dominance by grid operators during technological connection.

At present, there are two types of natural monopoly entities in the electric power industry: organizations engaged either in supervisory control or transmission of electric power[1].

Pursuant to P. 5, Art. 5 of Federal Law dd. July 26, 2006 No. 135-ФЗ “On Protection of Competition”, natural monopoly entities automatically dominate in the market that is in the state of a natural monopoly. This circumstance implies special control over such entities on the part of the Federal Antimonopoly Service, because abuse of dominance is a monopolistic activity prohibited by the law: “… actions (inaction) of a dominant business entity, which result or may result in prevention, restriction, elimination of competition and (or) infringement of interests of others, are prohibited”[2].

Abuse of dominance has a number of criteria for its definition: a business entity shall dominate in the market of the relevant commodity or financial service, while the fact of dominance in the market is not an offense; prevention, restriction or elimination of competition – this criterion serves as a legal definition of abuse of dominance; infringement of interests of other business entities is an alternative condition of qualification. The list of prohibited actions stipulated in Art. 10 of the Law on Protection of Competition shows that most of them are meant to protect an economically dependent party, and likewise, a large number of cases examined by the antimonopoly body is associated with protection of a weaker party in supplier-customer relations. The list of actions constituting abuse of dominance includes all those actions of dominating business entities that are not accompanied by restriction of competition, but infringe on contractors’ rights. In this respect, the list of forbidden actions provided in Art. 10 of the Law on Protection of Competition is not exhaustive.

At the moment, the most common cases of abuse of dominance by natural monopoly entities in the electric power industry in law-enforcement practice are violations committed by grid operators. Pursuant to cl. 2 of the Rules of Non-Discriminatory Access to Electric Power Transmission Services and Rendering Thereof approved by Resolution of the Government of the Russian Federation dd. December 27, 2004 No. 861[3], grid operators are organizations owning power grid facilities, with which they render electric power transmission services and perform technological connection in the prescribed manner.

It should be noted that grid operators engaged in transmission of electric power basically act as a key infrastructure binder between producers of electric power and its consumers. A prerequisite for rendering electric power transmission services is technological connection by grid operators of power receivers, electric power generating facilities and power grid facilities.

Technological connection is a complex procedure, which includes[4]: a) a request initiated by a legal entity or individual; b) conclusion of a contract; c) performance of contract-stipulated activities by the contracting parties; d) obtaining a permit of the Federal Environmental, Industrial and Nuclear Supervision Service for release to service of the requestor’s facilities; e) actual connection of the requestor’s facilities to power grids performed by the grid operator; f) actual intake (supply) of voltage and capacity; g) drawing up a certificate of technological connection, certificate of delineation of balance sheet attribution of the parties, certificate of delineation of operational responsibilities of the parties and certificate of coordination of technological and (or) emergency reserved quota.

Subsequently, purchase and sale of electric power between producers and purchasers is actually impossible without technological connection. Therefore, at the time of technological connection they are particularly vulnerable to possible abuse of dominance on the part of the grid operator. In this respect, there is no independent market of services in technological connection to power grids: transmission of electric power is inextricably linked to technological connection, services in implementation of measures for technological connection to a power grid are rendered to ensure subsequent transmission of electric power, the possibility to conclude an electric power transmission contract is attributable to the need to conclude a technological connection contract compulsory for the grid operator[5].

One of the problems of law-enforcement practice in this field identified during analysis is determining what organization shall be referred to natural monopoly entities in transmission of electric power, inter alia, regarding technological connection: to implement technological connection, Interregional Distribution Grid Company of Siberia sent to Territorial Generation Company 11 requests for technological connection to the company’s power grid facilities. Having received from Territorial Generation Company 11 no prepared draft contracts for technological connection of substations and no notices on the absence (insufficiency) of data and documents for preparation of such drafts, Interregional Distribution Grid Company of Siberia lodged a complaint with the antimonopoly body in relation to unlawful inaction of Territorial Generation Company 11 in avoiding technological connection contracts in violation of the Rules of Technological Connection. When examining the antimonopoly case, the office considered Territorial Generation Company 11 to be a natural monopoly entity in the market of electric power transmission services, and found a violation of the Rules of Technological Connection in its actions and made an award, which cl. 2 declared that Territorial Generation Company 11 violated P. 1, Art. 10 of the Law on Protection of Competition by avoiding the contracts without any economic and technological justification. Courts of first instance, courts of appeal and cassation agreed with the antimonopoly body’s conclusions.

The Presidium of the Supreme Arbitration Court of the Russian Federation, by its Resolution dd. December 11, 2012 No. 6332/12 with regard to case No. A46-7025/2011, cancelled awards of lower courts and invalidated the resolution of the Office of the Federal Antimonopoly Service[6] on a basis of the following facts.

Territorial Generation Company 11 is engaged in production and supply of electric power and heat energy and does not render electric power transmission services as was specified by the courts and antimonopoly body, because concurrent competitive natural-monopoly types of activities are expressly prohibited by law[7]. Pursuant to cl. 5 of the Rules of Technological Connection, when connecting power receivers to distributing devices of a power plant, the latter functions as a grid operator in determining technical connectivity, agreeing technical conditions with supervisory control entities and adjacent grid operators, and performing necessary contractual terms. However, assignment of some functions of a grid operator on the power plant upon receipt of a request for technological connection does not imply any change of the power producer’s activities. Thus, Territorial Generation Company 11 is not engaged in electric power transmission activities in the market, so there were no grounds to recognize it as a natural monopoly entity by this type of activities.

The analysis of court practice also revealed that one of the most frequent violations committed by grid operators in this field is abuse of dominance by avoiding a technological connection contract being a public contract. As a rule, antimonopoly bodies properly establish violations of law by grid operators and hold them administratively liable pursuant to Art. 14.31 of the Code of Administrative Offenses of the Russian Federation. However, grid operators may try to prove the low significance of their offense in court of first instance or court of appeal, which are entitled to exempt an offender from administrative liability and make only a verbal warning in accordance with Art. 2.9 of the Code of Administrative Offenses of the Russian Federation. Despite the above-mentioned importance of the technological connection contract for business entities, cl. 18.1 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dd. June 2, 2004 No. 10 specifies that “when qualifying an administrative offense as insignificant, courts shall take into account that Article 2.9 of the Code of Administrative Offenses of the Russian Federation contains no reservations of its non-application to any set of elements of offenses stipulated by the Code of Administrative Offenses of the Russian Federation”[8]. The possibility to qualify an act as insignificant cannot be established abstractly based only on the structure of elements of an offense formulated in the Code of Administrative Offenses of the Russian Federation. In this regard, the existence or absence of a significant threat to protected legal relations shall serve as a major criterion.

For example, arbitration courts exempted grid operators in the following circumstances: there were proofs that the offender’s actions were not meant to continue a violation, it took measures to eliminate the violation and prevent it in the future, while administrative proceedings were initiated against it[9]; the offender’s actions were not deliberate and were not meant to continue the violation, which had no negative consequences for municipal enterprises and consumers[10].

In general, it can be concluded that at the current stage the law enforcer has already made considerable efforts to maintain unity of court practice, in relation to prevention of offenses and protection of grid operators’ contractors.



[1] See: Art. 4 of Federal Law dd. August 17, 1995 No. 147-ФЗ “On Natural Monopolies” // Collection of Legislative Acts of the Russian Federation, 1995, No. 34, Art. 3426 (in Russian).

[2] Federal Law dd. July 26, 2006 No. 135-ФЗ “On Protection of Competition” // Rossiyskaya Gazeta, July 27, 2006 (in Russian).

[3] Resolution of the Government of the Russian Federation dd. December 27, 2004 No. 861 “On Approving the Rules of Non-Discriminatory Access to Electric Power Transmission Services and Rendering Thereof, Rules of Non-Discriminatory Access to Supervisory Control Services in the Electric Power Industry and Rendering Thereof, Rules of Non-Discriminatory Access to Services of the Wholesale Market Trade System Administrator and Rendering Thereof and Rules of Technological Connection of Power Receivers of Electric Power Consumers, Electric Power Generating Facilities and Power Grid Facilities Belonging to Grid Operators and Other Bodies to Power Grids” // Rossiyskaya Gazeta, January 19, 2005 (in Russian).

[4] See: cl. 7 of the Rules of Technological Connection of Power Receivers of Electric Power Consumers, Electric Power Generating Facilities and Power Grid Facilities Belonging to Grid Operators and Other Bodies to Power Grids approved by Resolution of the Government of the Russian Federation dd. December 27, 2004 No. 861 (in Russian).

[5] See: Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dd. September 8, 2009 No. 6057/09 on case No. A49-3724/2008-120a/21-AK. URL: http://ras.arbitr.ru/

[6] See: Resolution of the Presidium of Supreme Arbitration Court of the Russian Federation dd. December 11, 2012 No. 6332/12 on case No. A46-7025/2011. URL: http://ras.arbitr.ru/

[7] Federal Law dd. March 26, 2003 No. 36-ФЗ “On Features of Operation of the Electric Power Industry and on Amending Certain Legislative Acts of the Russian Federation and Invalidation of Certain Legislative Acts of the Russian Federation following the Adoption of the Federal Law “On the Electric Power Industry” // Rossiyskaya Gazeta, March 29, 2003 (in Russian).

[8] Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dd. June 2, 2004 No. 10 (revised as of November 10, 2011) “On Some Issues Arising in Court Practice When Examining Administrative Offence Cases” // Bulletin of the Supreme Arbitration Court of the Russian Federation, 2004, No. 8 (in Russian).

[9] See: Judicial acts on case No. A51-7444/2008. URL: http://ras.arbitr.ru/

[10] See: Judicial acts on case No. A74-5327/2012. URL:http://ras.arbitr.ru/