21 Aug 2009 16:22

Russian regulator probes Silvinit, Uralkali over potash prices

MOSCOW. Aug 21 (Interfax) - The Russian Federal Antimonopoly Service has opened a case against potash producers Silvinit and Uralkali over potassium chloride prices.

The FAS said it opened the case following complaints by TNK-BP , agrichemicals producers and a number of government agencies.

In addition to being charged with setting monopolistically high prices on potash chloride, Uralkali has also been charged with groundlessly setting various prices on the same commodity.

"The situation on the market does not provide us with basis for a thorough inspection of the company's price policy," FAS deputy chief Andrei Tsyganov said.

Both companies have a dominant position on the Russian potash chloride market. The FAS determined during an analysis of the market in 2007 as part of similar investigation that the two companies have a combined share of the market exceeding 50%.

According to the law on the protection of competition, the price a company sets for goods is considered monopolistically high when the company has a dominant position on the market and the price exceeds the sum needed for producing and selling such goods as well as expenditures and profit.

Uralkali said earlier that it had signed an agreement with complex fertilizer producers PhosAgro and EuroChem Mineral Chemical Company on a 20% hike in potash chloride prices in the third quarter of 2009 to 4,750 rubles per tonne from 3,955 rubles per tonne in the first half of the year.

Silvinit has yet to reach an agreement with its consumers - Acron , Dorogobuzh , Kirovo-Chepetsk Chemical Works, Voskresensk Mineral Fertilizers and Rossosh-based Mineral Fertilizers (Minudobreniya).

Silvinit on Thursday re-sent these companies contracts on the supply of 247,500 tonnes of potash chloride before the end of 2009 at a price of 3,955 rubles per tonne as recommended by the Industry and Trade Ministry. Earlier in August, these companies sent Silvinit a joint letter accusing one of its affiliates, Mineral Trading LLC, of offering potash chloride contracts that envision prices for domestic producers being directly dependent on export prices.