Administrative Cases Related to Violations of Antimonopoly Legislation
Formation, establishment, approval of tariffs, and determination of tariff regulation methods.According to subparagraphs 2) and 3) of Article 6 of the Law, state regulation of activities in the spheres of natural monopolies is carried out through the formation, establishment, and approval of tariffs, as well as the determination of methods of tariff regulation in the spheres of natural monopolies.
Subparagraph 6) of Article 4 of the Law defines public hearings as a procedure for discussing a tariff draft, consumption standards for utility services in the spheres of natural monopolies for consumers who do not have metering devices, and conducting reports before consumers and other interested parties.
Subparagraph 9) of Article 8 of the Law stipulates that the authorized body conducts public hearings with the publication in the mass media of announcements regarding the date and place of such hearings.
Paragraph 403 of the Tariff Formation Rules approved by Order No. 90 of the Minister of National Economy of the Republic of Kazakhstan dated November 19, 2019 (the Rules), provides that public hearings shall be conducted by the department of the authorized body when determining a tariff.
Pursuant to paragraph 5 of Article 25 of the Law, the authorized body publishes in a periodical printed publication information on the date and place of public hearings regarding the discussion of the tariff draft, and on its internet resource — the results of the conducted public hearings, including transcripts of discussions and minutes of meetings containing decisions adopted on the issues under consideration.
Thus, 17 disputes in this category of cases were considered by the cassation instance.
Illustrative cases in this category of disputes include:upon the claim of JSC (No. 6001-23-00-6ап/1563), LLP (No. 6001-23-00-6ап/1079).
The local courts, dismissing the claims, concluded that the respondent’s actions in amending Order No. 135-OD dated November 29, 2021, were lawful, since as a result of internal control by the central authorized body regulating natural monopolies, violations of natural monopoly legislation were identified in the actions of the territorial body, which necessitated amendments to the said order in terms of the tariff and tariff estimate by establishing the retail price of commercial gas.
The Judicial Collegium for Administrative Cases of the Supreme Court (JCAC SC), overturning the decisions, concluded that consideration of the application, including calculations for tariff increases, approval and enactment of the amended tariff, must be carried out during public hearings. Consequently, the territorial body regulating natural monopolies failed to comply with procedural requirements during the tariff approval process, including preparation of the relevant documents, which led to a violation of the procedural order for amending the approved tariff estimate, since approval and enactment of the amended tariff may only be considered during public hearings. Therefore, the territorial body should have conducted a new administrative procedure in accordance with the first part of Article 100 of the APPC, rather than amending the existing order.
In the case upon the claim of LLP (No. 6001-22-00-6ап/1726), the local courts established the fact of unlawful refusal by the territorial body; however, they reached an unfounded conclusion that there were no legal grounds to satisfy the claims regarding compelling the respondent to approve the tariff requested by the claimant in the application dated May 19, 2021.
The JCAC SC, overturning the judicial acts in the part concerning tariff approval, concluded that at the time of filing the application for approval of a new tariff, the claimant was included in the Local Section of the State Register of Natural Monopoly Entities; therefore, the claim for tariff approval was subject to satisfaction.
In the case upon the claim of JSC (No. 6001-23-00-6ап/128), the local courts, refusing to satisfy the claim, concluded that the contested order had been issued in execution of an enforceable instruction and a court decision having prejudicial significance for the case. The court is not entitled to review circumstances established by a judicial act that has entered into legal force. The order was issued within the competence and authority granted to the Committee under Article 8 of the Law and in accordance with the existing administrative discretion (Article 11 of the APPC).
The JCAC SC, overturning the decisions of the local courts and remanding the case for a new trial, indicated that no legal assessment had been given to the lawfulness of the grounds for issuing the instruction, since the instruction of the Accounts Committee did not specify for which types of services the claimant was required to introduce a temporary compensatory tariff (TCT), while the territorial body regulating natural monopolies introduced the TCT for all three regulated services. This circumstance may lead to unjustified reimbursement of funds to energy-producing organizations, thereby affecting the rights and legitimate interests of an indefinite group of end consumers of electric energy.
Thus, violation of the principles of administrative procedures and administrative judicial proceedings, depending on its nature and materiality, entails recognition of administrative acts and administrative actions (inaction) as unlawful, as well as annulment of the judicial acts issued (part four of Article 6 of the APPC).
REGULATORY SOURCES AND ABBREVIATIONS
The principal regulatory legal acts that courts should be guided by when considering cases related to the application of antimonopoly legislation are:
- the Constitution of the Republic of Kazakhstan dated August 30, 1995;
- the Entrepreneurial Code of the Republic of Kazakhstan dated October 29, 2015 (EC);
- the Administrative Procedural and Process-Related Code of the Republic of Kazakhstan dated June 29, 2020 No. 350-VI (APPC);
- the Code of the Republic of Kazakhstan on Administrative Offenses dated July 5, 2014 No. 235-V ZRK (CAO);
- the Law of the Republic of Kazakhstan “On Natural Monopolies” dated December 27, 2018 No. 204-VI ZRK (the Law);
- the Judicial Collegium for Administrative Cases of the Supreme Court of the Republic of Kazakhstan (JCAC SC);
- the Agency for Protection and Development of Competition of the Republic of Kazakhstan and its territorial bodies (the antimonopoly authority);
- the Committee for Regulation of Natural Monopolies of the Ministry of National Economy of the Republic of Kazakhstan and its territorial bodies (the authorized body for regulation of natural monopolies).
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