The formation, establishment, approval of the tariff and the definition of methods of tariff regulation related to violations of antimonopoly legislation

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17 June 2024

The formation, establishment, approval of the tariff and the definition of methods of tariff regulation related to violations of antimonopoly legislation

Regulation of natural monopolies is an important aspect of economic policy aimed at ensuring fair prices, preventing abuse and protecting consumer interests in sectors where there is a natural monopoly due to the economic or technical characteristics of the market.

The courts consider various categories of cases related to violations of legislation in the field of natural monopolies, including the following: formation, establishment, approval of tariffs and determination of methods of tariff regulation; appeals against acts of inspection results and orders to eliminate violations of the legislation of the Republic of Kazakhstan on natural monopolies.

According to sub-paragraphs 2), 3) of Article 6 of the Law, state regulation of activities in the fields of natural monopolies is carried out by forming, establishing and approving a tariff and determining methods of tariff regulation of the spheres of natural monopolies.

Subparagraph 6) of Article 4 of the Law defines that public hearings are a procedure for discussing the draft tariff, standards of consumption of utilities in the areas of natural monopolies for consumers who do not have metering devices, and conducting reports to consumers and other interested parties.

Subparagraph 9) of Article 8 of the Law stipulates that the authorized body conducts public hearings with the publication of an announcement in the media about the date and place of their holding.

Paragraph 403 of the Rules for the Formation of Tariffs, approved by Order of the Minister of National Economy of the Republic of Kazakhstan No. 90 dated November 19, 2019 (Rules), stipulates that public hearings are conducted by the department of the authorized body when determining the tariff.

By virtue of paragraph 5 of Article 25 of the Law, the authorized body publishes in a periodical information on the date and place of public hearings to discuss the draft tariff, and on its Internet resource - the results of public hearings to discuss the draft tariff, including transcripts of discussions, minutes of meetings with decisions on the issues under consideration.

Illustrative cases in this category of disputes are: in the claim of JSC (No. 6001-23-00-6ap/1563), LLP (No. 6001-23-00-6ap/1079).

The local courts, rejecting the claim, concluded that the defendant's actions to amend Order No. 135-OD dated November 29, 2021 were lawful due to the fact that, according to the results of internal control by the Central Authorized Body for the Regulation of Natural Monopolies, violations of the requirements of the legislation on natural monopolies were found in the actions of the territorial body, and therefore it is necessary It was proposed to amend the specified order in terms of the tariff and tariff estimates with the establishment of the retail price of commercial gas.

The SCAD of the Supreme Court, canceling the decisions, concluded that the consideration of the application, including calculations for tariff increases, approval and implementation of the amended tariff should be considered during public hearings.

Consequently, the failure of the territorial authority for the regulation of natural monopolies to comply with procedural actions during the approval of the tariff, including the preparation of relevant documents, led to a violation of the procedural procedure for making changes to the approved tariff estimate, since the approval and implementation of the amended tariff can be considered during public hearings.

Thus, in accordance with the first part of Article 100 of the CPC, the territorial authority had to carry out a new administrative procedure, rather than amend the current order.

According to the LLP's claim (No. 6001-22-00-6ap/1726), the local courts established the fact of an illegal refusal by the territorial authority, however, they came to the untenable conclusion that there were no legal grounds to satisfy the requirements regarding forcing the defendant to approve the plaintiff's tariff according to the application dated May 19, 2021. The SCAD of the Supreme Court, canceling the decisions regarding the approval of the tariff, concluded that at the time of filing the application for approval of the new tariff, the plaintiff was in the Local Section of the State Register of Natural Monopoly Entities, and therefore the requirement for approval of the tariff must be satisfied.

According to the JSC's claim (No. 6001-23-00-6ap/128), rejecting the claim, the local courts concluded that the contested order was issued in compliance with a legally binding order and a court order of prejudicial importance to the case.

The court has no right to review the circumstances established by a judicial act that has entered into legal force.

The order was issued within the competence and powers granted to the Committee by article 8 of the Law, and in accordance with the available administrative discretion (Article 11 of the CPC).

The SCAD of the Supreme Court, overturning the decisions of the local courts, sent the case for reconsideration due to the fact that there was no legal assessment of the legality of the grounds for issuing the order, since the order of the Accounting Committee did not specify which types of plaintiff's services should be provided with CGT, while the territorial authority for the regulation of natural monopolies introduced CGT for all three regulated services. this circumstance will lead to the fact that the funds will unreasonably be returned to energy-producing organizations ., As a result, the rights and legitimate interests of an indefinite range of end users of electric energy will be affected.

Thus, a violation of the principles of administrative procedures and administrative proceedings, depending on its nature and materiality, entails the recognition of administrative acts, administrative actions (inaction) as illegal, as well as the cancellation of judicial acts (part four of Article 6 of the CPC).

Return of administrative cases.

The refunds fall on subparagraph 6) of the second part of Article 138 of the CPC "the plaintiff withdrew the claim" - as well as subparagraph 11) of the second part of Article 138 of the CPC "the case is not subject to consideration in administrative proceedings"

The basis (according to the second part of Article 138 of the APPC):

1) the plaintiff has not complied with the pre-trial dispute settlement procedure established by law for this category of cases and the possibility of applying this procedure has not been lost

4) the application is signed by a person who does not have the authority to sign or present it.

15) the court refused to restore the missed deadline

17) the case is beyond the jurisdiction of this court

The analysis showed that a large number of refunds based on subparagraph 11) of the second part of Article 138 of the CPC are related to errors made by plaintiffs when filing administrative lawsuits.

In accordance with the second part of Article 5 of the CPC, the task of administrative proceedings is the fair, impartial and timely resolution of administrative cases in order to effectively protect and restore violated or disputed rights, freedoms and legitimate interests of individuals, rights and legitimate interests of legal entities in public relations.

It is important to note that public law relations arise between subjects of law in connection with the exercise by one of the participants of his powers in relation to the other.

It should be noted that, in accordance with part 5 of Article 138 of the CPC, failure to provide a written response or a reasoned position is the basis for the application of a monetary penalty and does not prevent the consideration of an administrative case on its merits.

Regulatory legal acts

The main regulatory legal acts that courts should follow when considering cases related to the application of antimonopoly legislation are:

1) The Constitution of the Republic of Kazakhstan dated August 30, 1995;

2) The Business Code of the Republic of Kazakhstan dated October 29, 2015 (PC);

3) Administrative Procedural Procedure Code of the Republic of Kazakhstan dated June 29, 2020 No. 350-VI (APPC);

4) The Code of the Republic of Kazakhstan "On Administrative Offenses" dated July 5, 2014 No. 235-V SAM (Administrative Code);

5) The Law of the Republic of Kazakhstan "On Natural Monopolies" dated December 27, 2018 No. 204-VI SAM (Law);

6) Judicial Board on Administrative Cases of the Supreme Court of the Republic of Kazakhstan (SCAD VS);

7) The Agency for Protection and Development of Competition of the Republic of Kazakhstan and its territorial bodies (antimonopoly authority);

8) The Committee for Regulation of Natural Monopolies of the Ministry of National Economy of the Republic of Kazakhstan and its territorial bodies (authorized body for regulation of natural monopolies).

President

Republic of Kazakhstan

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