On June 10, 2008 the Federal Arbitration Court of the North-West Federal District disallowed the cassation appeal filed by the Office of the Federal Antimonopoly Service for St. Petersburg and Leningrad Region in respect of the case instituted by the Office of the Federal Antimonopoly Service in connection with the charge introduced by OJSC NWT in July 2006 for the local call initiation by dial-up Internet access providers. The Court of Cassation resolved to leave in force the Resolution made earlier by the Court of Appeal in favor of OJSC NWT.

Thus, as the result of almost 2 years’ proceedings, OJSC NWT fully confirmed that its prices charged for traffic transmission services from July 1, 2006 were lawful and justified and that its actions on the competitive market were legitimate.

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On October 24, 2006 the Office of the Federal Antimonopoly Service for St. Petersburg and Leningrad Region instituted a case based on signs of breach of the antimonopoly legislation. In the opinion of the Office, the introduction of the charge by OJSC NWT for local calls initiated by dial-up Internet access providers infringed on the interests of such Internet providers and had an adverse effect on competition on the Internet access market.

According to the Decision of the Office of the Federal Antimonopoly Service dated May 22, 2007, based on the review of the case of breach of antimonopoly legislation, OJSC NWT was found to be in breach of part 1, Article 10 of Federal Law “On Competition” No. 135-FZ of July 26, 2006. In the opinion of the Office of the Federal Antimonopoly Service, OJSC NWT imposed on Internet providers disadvantageous conditions of connection contracts regarding the prices for local call initiation services. Allegedly, the price charged by the company was higher than the price for a similar dial-up Internet access service for NWT’s clients. The Prescription of the Office of the Federal Antimonopoly Service dated May 22, 2007 obliged OJSC NWT to rectify breaches of antimonopoly legislation before July 1, 2007; in fact, the company had to change the prices for local call initiation services effective from July 1, 2006.

As the new method of settlements with communications operators fully conformed to the requirements of Russian legislation*, the Company made the decision to appeal in the court against the Prescription of the Office of the Federal Antimonopoly Service.

In October 2007, the Arbitration Court of original jurisdiction disallowed the claim of OJSC NWT. The Company disagreed with the court’s position and referred the case to the Court of Appeal. Decision No. 13 of the Arbitration Appeal Court of February 26, 2008 satisfied the appeal of OJSC NWT against the decision of the court of original jurisdiction; the Decision and the Prescript of the Office of the Federal Antimonopoly Service were declared invalid (see the Press Release of February 19, 2008 ).

Using its lawful right, the Office of the Federal Antimonopoly Service filed the cassation appeal against the resolution of the court of appeal. The cassation appeal was supported by a number of operators from the Kaliningrad and Pskov regions. However, on June 10, 2008 the Federal Arbitration Court of the North-West Federal District disallowed the cassation appeal filed by the Office of the Federal Antimonopoly Service for St. Petersburg and Leningrad Region.

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* The prices for the traffic transmission services are liable to the government regulation; the limit prices for the local call initiation services were approved for OJSC NWT by the competent government agency (at July 1, 2006, Rossvyaznadzor (Russian Communications Supervision Authority)).