The Federal Anti-Monopoly Service is accusing City Hall of illegally promoting its own dairy farm, whose development was a favorite pastime of former Mayor Yury Luzhkov.
An investigation into the farm, located in the Kaluga region south of the capital, was opened on Jan. 26, the anti-monopoly watchdog said Tuesday.
Executives of the MosMedynAgroProm dairy holding are accused of colluding with city officials to get their products onto Moscow store shelves.
Both sides discussed a sales assistance program after the farm wrote to City Hall in 2009 asking for help, the watchdog said in a statement on its web site.
Subsequently, the statement said, the city's consumer markets department wrote to retailers suggesting that they buy the farm's products, which include honey.
Founded in 2000, the farm grew to 12,000 hectares and secured 6,000 cattle over the last decade, selling dairy and meat products both regionally and to Moscow's schools.
It profited from active promotion by Luzhkov, who personally oversaw the buying of cattle during his frequent visits to the southern German state of Bavaria.
As late as August, City Hall announced plans to inject 256 million rubles ($8.6 million) of fresh capital into the farm.
But after Luzhkov's ouster last fall, City Hall seems to have changed its mind about its support. Mayor Sergei Sobyanin last month held talks with Kaluga Governor Anatoly Artamonov to hand the enterprise over to regional authorities, Kaluzhsky Perekryostok newspaper reported.