The Supreme Court will explain the rules for holding regional and municipal auctions
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The Supreme Court of the Russian Federation (SC) will decide whether access to a tender for the sale of municipal property limits the need to conclude a written deposit agreement with the organizer of the auction before filing an application. In practice, it is usually sufficient to transfer a deposit without signing an agreement, in connection with which the FAS decided that such a condition creates unreasonable obstacles to participation in the auction and limits competition. The legality of the decision of the service and will check the sun. Lawyers believe that the requirement to sign a deposit agreement in advance gives the organizer of the auction additional opportunities to influence the selection of participants.
The Supreme Court will clarify the rules for holding regional and municipal auctions. In September 2021, the Housing Committee of the Government of St. Petersburg put up for an open competition an apartment in a house on Millionnaya Street with an area of about 170 sq. m. The notice of the auction stated that the applicant before filing an application for participation in the competition must make a deposit, securing this in a written agreement with the committee. Without a document, the transferred funds will not be considered a deposit.
According to Petr Ulyanov’s complaint, the FAS department for St. Petersburg checked the actions of the housing committee in organizing and conducting the competition. As a result, the department recognized the condition under the deposit agreement as violating Art. 17 of the Law “On Protection of Competition” (antimonopoly requirements for bidding). The committee challenged the FAS decision in court, but lost.
Arbitration courts of three instances considered that the condition put forward by the committee creates an “administrative barrier” and “unreasonable obstacles to potential buyers to participate in the auction.” Meanwhile, the judicial acts say, “acting reasonably and in good faith”, the organizer of the auction “should provide the largest number of participants” in order to “increase the level of competition and protect the interests of all potential buyers.”
The Committee complained to the Supreme Court, insisting that the Civil Code allows to conclude an agreement on a deposit and such a condition for making an application for participation is provided for by the regulations for bidding for the sale of premises of the St. Petersburg housing stock. In addition, according to the committee, the FAS had no reason to consider the complaint of Mr. Ulyanov, since he did not participate in the auction and did not even submit an application. The case was referred to the Economic Board of the Armed Forces, consideration is scheduled for September 20.
The reference to the fact that the Federal Antimonopoly Service initiated a case on the complaint of a person who did not participate in the auction is considered by lawyers to be unfounded. File a complaint against the procedure for filing applications under Art. 17 of the law on protection of competition can be any person, explains the lawyer of the antimonopoly practice of Delcredere, Maria Lisichenkova.
As for the deposit, lawyers admit that it is a common practice to participate in the auction, but the signing of the contract is not always required. There are two key points here: is this method of ensuring participation in the auction mandatory by law, and if not, does it limit competition, Ms. Lisichenkova explains.
Oksana Pavluhina, Antimonopoly Practice Adviser of the MEF LEGAL, believes that the condition of the obligatory signing of a deposit agreement does not in itself violate antimonopoly legislation and may be provided for by regional or municipal legal acts. Since the conditions for filing an application are the same for everyone, she does not see any violations in the actions of the committee. If the authority avoids signing a deposit agreement with any of the persons, this “definitely creates obstacles in the admission of a potential participant’s application to the auction and gives grounds for an antimonopoly investigation,” adds Ms. Pavlukhina.
However, antimonopoly lawyer Natalya Pantyukhina emphasizes that regional and municipal acts should not contradict the federal law on the protection of competition, and in this case, the FAS has the authority to identify violations that limit opportunities for participation in bidding.
Moreover, Ms. Pantyukhina considers the very requirement to conclude a deposit agreement before filing an application for a tender as anti-competitive, since the authority will receive in advance “public data on bidders”, from which “it is possible to predict their behavior and roughly estimate the final price”, and if this information turns out to be from a competitor, then he “may adjust his bid”.
The condition on the need to sign the contract in person restricts bidders geographically, adds Maria Lisichenkova: “Those who want to buy an apartment may be in another region and not have time to physically exchange the originals of the contract with the committee.” However, according to Ms. Pavlukhina, the contract can be sent to the committee by mail, there is no prohibition on this.
In 2019, the Supreme Court spoke on a similar issue, however, in that case, the auction for the sale of property was conducted not by the government, but by a private company, OOO Megapolis. Then the Supreme Court decided that the requirement for the mandatory conclusion of a deposit agreement and the failure to take into account the transfer of the amount of the deposit without a previously signed agreement “create unreasonable obstacles to potential buyers to participate in the controversial auction.”
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