Daghestani anti-monopoly regulator orders minibus companies to lower prices

The Federal Antimonopoly Service of the Russian Republic of Daghestan has ordered six local transport companies to reverse a rise in bus fare.

On 26 June, the commission of the Antimonopoly Service ordered the companies to reduce their fares from ₽23 ($0.35) to ₽17 ($0.25).

They ruled that the six companies had colluded to simultaneously increase their prices in violation of federal competition laws. 

An investigation into seven companies was initiated in February after a group of minibus drivers held a protest in the Daghestani capital, Makhachkala. 

chairman of the Independent Trade Union of Entrepreneurs and Drivers of Daghestan, told OC Media that drivers were angry that along with the rise in fares, the companies had increased the minimum sum they were obliged to deliver to the companies per day.

According to Nabiyev, some drivers had continued to charge passengers ₽17 in defiance of the companies, while others ‘did not withstand the pressure of the management’.

The Antimonopoly Service gave the companies five working days to comply with the order, however, so far only one of the six companies has done so.

Failure to comply with the order would mean the transport companies could be subject to penalties.

While one company complied on 4 July and reversed the fare hike, it has now joined the remaining four in defying the order and vowing to challenge it in court.

Alibek Aliyev, the deputy head of the Government of Daghestan’s Anti-corruption Department told OC Media that the price rise would hit some of the most vulnerable people worst of all.

‘Raising the price for travel immediately by 40% hits the pockets of ordinary people, retirees, and those who trade in the bazaars. Moreover, at the same time, wages are not increasing’, he said.

An attempt to capture the market 

Aliyev accused the local authorities of being behind the price hike. He said that the collusion between companies was being orchestrated in an attempt to disrupt the market and hand over the local transport market to people close to the administration.

‘The administration of Makhachkala and the transport department are interested in creating confusion within the public transport system, as there is a lot of money in it’, he said.

According to him, tenders for routes organised by the Mayor’s Office and the local transport department were won only by companies associated with the leadership of Makhachkala and the Daghestani Government.

Public tenders were introduced to regulate minibus routes in the city at the end of 2017. Prior to this, transport companies or individual drivers could operate whichever routes they wished to.

Drivers who previously worked individually were forced to sign contracts with whichever company won their route.

Alidibir Iskantiyev, whose Antsukhsiti transport company has failed to win any tenders since they were introduced, told OC Media that his company had failed to do so because the authorities only allowed ‘their’ enterprises to win.

According to Iskantiyev, the increase in fares along with the corresponding increase in the minimum sum drivers must pay the companies per day had created a dangerous situation on the roads.

He said that drivers were now not leaving on schedule in pursuit of their daily required sum. 

Aliyev said that directions by Head of Daghestan Vladimir Vasilyev in July 2018 to create ‘a national transport company’ led to attempts to take over the market.

‘The future is for big buses’

Andrey Guseynov, the head of the Transport Department of the Makhachkala Administration, told OC Media denied that either the city administration or the government of Daghestan was pressuring local transport companies.

He also said it was impossible for a single company to capture the market as this was against the law.

According to Guseynov, companies were free to raise tariffs on the routes they operate and the authorities could not dictate terms to them.

Guseynov said that the administration did have plans to update the city’s transport network by phasing out minibuses in favour of larger buses.

‘The city administration will review the route network of the city, carry out optimisation, switch to regulated tariffs, and announce new competitive procedures’, he said. 

The Ministry of Transport of Daghestan told OC Media that ‘the future of Daghestan’s transport is in strong transport organisations that will provide passengers with safe and comfortable travel conditions’.