The European Antitrust Review 2014 • Section 3: Country chapters
Russia: Federal Antimonopoly Service
According to experts, the modern legal and organisational basis for the protection and support of competition, based on the provisions of the Constitution and of the advanced competition legislation, is now in place in the Russian Federation.
The creation of conditions for the development of competition and effective enforcement is one of the main priorities of the government of the Russian Federation.
The peculiarity of the present state of the competition policy is necessary in order to transfer its protective power to the systematic activities of a macroeconomic profile, which should lead to the formation of a pro-competitive legal and institutional regime in key industries and sectors of the Russian economy.
In 2012, a number of strategic documents defining the activity of the Russian antimonopoly authority in the medium and long-term were developed and adopted.
The Road Map ‘Development of the Competition and Improvement of the Antimonopoly Policy’ (the Road Map) (approved by the Resolution of the Government of the Russian Federation of 28 December 2012 No. 2579-r):
- provides for general overall activities on competition development;
- includes a list of actions for competition development in specific sectors (eg, medical drugs, medical services, air transportation, communication services, preschool education and oil products, etc); and
- provides for actions that ensure the coordination of public authorities and interaction with representatives of the business community for the development of state policy in the field of competition.
Specific terms of implementation and execution were determined for each of the the Road Map’s actions. A monitoring system and controls indicating the efficiency of its implementation, including an indicator for the development of a competitive environment on commodity markets and services (on the basis of a method of calculation of the PMR index applied by the OECD), as well as the number of new enterprises per 1,000 people (an indicator used by the World Bank), were also developed.
Activities aimed at the promotion of competition are also included in a number of other developments adopted from 2012 to 2013.
In 2012, the Governmental Commission on Competition Issues and Development of Small and Medium Enterprises (Resolution of the Government of the Russian Federation of 23 July 2012 No 762 ‘Governmental Commission on Competition Issues and Development of Small and Medium Enterprises’) (the Governmental Commission) was established to ensure the coordination of activities by executive authorities and the interaction with representatives of the business community on the development of suggestions with regards to the realisation of state policy in the sphere of competition.
The objectives of the Governmental Commission include measures aimed at the development of competition and the reduction of excess intervention by governmental bodies in the activities of small and medium enterprises, the development of suggestions on the modification of legislation by the Russian Federation in order to implement the best competitive practices, and control over implementation of the actions provided by the the Road Map described above.
The chairman of the Commission is the first deputy prime minister of the Russian Federation, Igor Shuvalov. The vice chairman of the Commission is the head of the FAS, Igor Artemiev.
In order to specify the goals and objectives of state policy in the field of competition and to define priorities, the FAS elaborated and approved the ‘Strategy of Development of Antimonopoly Regulation in the Russian Federation for 2013–2024’ (the Strategy) in February 2013.
The Strategy substantially supplements and details the list of measures contained in the above-mentioned Road Map, as well as suggesting a policy vision on the development and protection of competition in the future.
The Strategy defines the direction of the FAS’s controlling and supervisory functions, and the development of competition, international cooperation and internal administration. It also defines internal communications, staff management and the development of internal informing.
One of the key events that influenced the formation of the key priorities of the FAS was the coming into force in January 2012 of the Third Antimonopoly Package, which amended the Federal Law on Protection of Competition, the Code of Administrative Violations of the Russian Federation and other legal acts of the Russian Federation.
After coming into force, the Third Antimonopoly Package secured the formation of a new enforcement practice related to the following amendments to the antimonopoly legislation:
- the adjustment of criteria of the monopolistically high price;
- the refinement of the definitions of ‘cartel’, ‘anti-competitive agreements’ and ‘concerted practices’;
- the liberalisation of the rules of control over mergers and acquisitions; and
- the detailing of the procedure for considering antimonopoly legislation violation cases.
The Third Antimonopoly Package introduced the new instruments of ‘warning’ and ‘admonition’, which prevent violations of the anti-monopoly legislation without extensive procedures for handling cases and, thus, reduce the burden on the authority’s staff. The adoption of ‘warning’ and ‘admonition’ in 2012 led to a 30 per cent decrease in the number of cases initiated in comparison with the same period in 2011.
The amendments to the Law on Protection of Competition unified threshold values, which, once reached, require the preliminary approval of the antimonopoly authority. It should be mentioned that, since the introduction of the specified amendments, there has been a double decrease in the number of considered pre-merger and post-merger notifications. One of the priorities of the FAS Russia is to further decrease the number of notified transactions.
The Third Antimonopoly Package introduced the concept of ‘cartel’ into the Law on Protection of Competition, including an exhaustive list of unconditionally forbidden agreements (per se) that are recognised as cartels.
Between 2009 and 2011, significant steps were taken to strengthen cartel enforcement. The work in this direction was connected with the improvement of Russian competition legislation and with establishing an institutional system of anti- cartel enforcement.
The necessary amendments have been introduced into the Law on the Protection of Competition, the Criminal Code of the Russian Federation and the Code of the Russian Federation on Administrative Violations. These amendments introduced the direct administrative liability in the form of turnover fines for cartel agreements, as well as a leniency programme.
To improve the implementation of an institutional system of cartel enforcement, the FAS established a special Anti-Cartel Division and engaged cooperation with law enforcement agencies of the Russian Federation. It should be noted that cartel enforcement cooperation with law enforcement agencies is crucial for the FAS.
In 2012, in order to provide effective cooperation with law enforcement agencies, the FAS carried out a number of method-ological and practical activities.
Methodological materials were prepared for internal affairs officers on detecting, documenting, qualifying and cartel offences.
The FAS held unannounced inspections with the close cooperation of representatives of the Office of Public Prosecutor, the Ministry of Internal Affairs and the Federal Security Office of the Russian Federation.
FAS officers participated in dozens of investigatory actions (eg, searches, examinations, etc) conducted by law enforcement agencies. As a result, at the end of 2012, the number of arbitration proceedings on cartel cases was completed and in the beginning of 2013 the materials were sent to law enforcement agencies to initiate criminal cases. They concerned cases in the pharmaceuticals market, chemical industry market and so on.
One of the significant decisions taken in 2012 by the FAS and confirmed by the Higher Courts was the decision on cartel agreement between two large pharmaceutical companies.
In February 2013, the Chamber of the High Arbitration Court confirmed the legitimacy of the FAS’s decision on a cartel agreement between two large players of pharmaceutical market – ZAO ‘R-Farm’ and OOO ‘Irvin-2’ – which was fulfilled on medicine procurement biddings organised by the Ministry of Health Care. The amount of the contract was 99.9 million roubles.
One more cartel case was discovered by the FAS in 2013. At the beginning of 2013, the FAS discovered signs of a violation of the Law on the Protection of Competition in the wholesale supply market of Norwegian salmon and trout to Russia. In the framework of the conducted investigation, the FAS discovered a cartel of nine companies in market sharing. As a result of an investigation in the beginning of July 2013, the FAS found these companies guilty. The companies will be brought to administrative liability in the form of turnover fines. The FAS has also asked the Ministry of Internal Affairs of the Russian Federation to pursue criminal charges against officials of the companies that had broken the law.
Success in the investigation was determined by cooperation between the Norwegian Competition Authority and the FAS.
It should be noted that the FAS has experience in international enforcement cooperation with competition authorities of CIS countries and members of the Common Economic Space of the Republic of Belarus, the Republic of Kazakhstan and the Russian Federation, which facilitated the effective investigation of violations of antimonopoly legislation.
International enforcement cooperation proved its effectiveness. The further development of this direction corresponds to the best international practices and recommendations of international organisations including the OECD, which the FAS is oriented to.
Next Chapter: Russia: Overview