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. Last Updated: 07/27/2016

Ministry Says It Will Ease Up on GAZ

Fighting accusations of illegally underproducing to push up prices, No. 2 automaker GAZ has lost a court case but won a battle against the government.

On Friday, a Moscow arbitration court dismissed GAZ's case against the Anti-Monopoly Ministry for classifying it as a monopolist, but the ministry's Nizhny Novgorod office said it would likely withdraw its complaint against the company anyway, saving it from financial penalties and ministry supervision.

Last summer, the ministry put GAZ on its list of registered monopolies in the categories of large sedans and commercial vans. The company has been fighting to be removed from that list ever since. As a result, the ministry has been poking around in the manufacturer's activities and late last year ordered GAZ to increase production on its well-known Volga model. The ministry suspected the carmaker of cutting supplies of the car to artificially raise prices, while GAZ maintained its warehouses were overstocked because the market was oversaturated with used foreign cars.

Now the ministry, after achieving its goal of getting GAZ declared a monopoly, has changed its tune.

"GAZ's warehouses are, in fact, overstocked because car dealers are expecting import tariffs on used foreign cars to go up in July, and as a result are not ordering Volgas. They are stocking foreign cars instead," said Valery Ankudinov, deputy head of the ministry's representative office in Nizhny Novgorod, where GAZ is located. "It's likely that our commission will withdraw its order to make GAZ increase production."

"We're glad the ministry has changed its position," GAZ spokesman Vasily Sarchev said. He added, however, the company is still fighting to get removed from the ministry's list of monopolists.

Sarchev said GAZ plans to increase production of Volgas this year, of its own accord.