The European Antitrust Review 2014 Section 3: Country chapters

Russia: Overview

General overview

The fight against cartels continues to be the main strategic activity of the Federal Antimonopoly Service of Russia (the FAS). For the last five years, significant developments in legislative, law enforcement and judicial practice in the scope of prevention, discovery and suppression of cartels were made.

From 2008, when the Department for Combating Cartels was established within the FAS, until approximately 2009, it was still possible for the FAS to expect written evidences of cartels while conducting unscheduled inspections, or in documents provided by undertakings on the antimonopoly authorities’ requests.

However, despite the fact that professionals often criticises and argue against the antimonopoly authority’s initiatives and approaches, the FAS officially aims to resist and suppress cartels and not to seek punitive action. This is precisely why major efforts have been taken on the advocacy of the competition.

On 28 December 2012, a new plan for the development of competition and antimonopoly policy was enacted by Russian Parliament prepared in close cooperation with independent specialists in competition law, and provides, in the near future, for the introduction of a system of guidelines on cartel regulation matters, antitrust group damages actions and multiple damages recovery.

At the beginning of January 2012, significant amendments to the Russian competition legislation (Federal law No. 401-FZ of 6 December 2011) took effect. It was dubbed the ‘Third Antimonopoly Package’ among lawyers practising competition law and affected the essential sources of the Russian legislation concerning cartel prohibition, including:

  • the core federal law ‘On Protection of Competition’ No. 135-FZ, dated 26 July 2006 (the Competition Law);
  • the Code on Administrative Offences of the Russian Federation, dated 30 December 2001, No. 195-FZ (the Administrative Code); and
  • the Criminal Code of the Russian Federation, dated 13 June 1996, No. 63-FZ (the Criminal Code).

One important achievement of this reform was introducing the definition of a cartel that is now, in accordance with article 11 of the Competition Law, a horizontal agreement between competitors that leads, or may lead to:

  • the fixing or maintaining of prices, discounts, bonus payments or surcharges;
  • a division of the market by territory, volume of sales and purchases, assortment of goods and services, or range of sellers or purchasers;
  • the reduction or termination of the production of goods;
  • the refusal to enter into a contract with a particular customer or seller; or
  • the increasing, reducing or maintaining of prices on tenders.

The list of per se restrictions was limited. Any other agreements are prohibited only if it is discovered that they lead or may lead to the restriction of competition.

Cartel prohibition is based on articles 8 and 34 of the Constitution of the Russian Federation, guaranteeing:

  • shared economic space;
  • the free transfer of goods, services and financial recourses;
  • competition support and freedom of economic activity; and
  • the prohibiting of economic activities aimed at monopolisation and unfair competition.

The Competition Law is commonly applicable to all sectors of the economy, and there are no sector-specific offences or exemptions with respect to cartels.

It must be specifically noted that the Competition Law is extraterritorial in nature. The relevant rules were slightly amended, and now the Competition Law applies to agreements made outside Russian territory between Russian and foreign entities or organisations, and actions made by them to the extent that such agreements have an impact on competition in Russian territory. The character and extent of such an impact shall be assessed by the FAS in each case. Thus, foreign companies may be fined under the Administrative Code and foreign officials are also subject to criminal prosecution under the Criminal Code. Since 2012, the FAS has investigated a number of cartels against foreign undertakings. These are the antitrust cases against Pacific Andes (the pollack cartel case) and against Siemens (conspiracy on a public tender for supply medical equipment). The respective decisions of the antimonopoly authorities are being challenged in commercial courts now.

The cartel prohibition has both an administrative and criminal nature. Article 14.32 of the Administrative Code establishes administrative liability for undertakings and its officials, and article 178 of the Criminal Code provides criminal sanctions for individuals. It is worth mentioning that as of the latest amendments, any other prohibitive horizontal or vertical agreements are now decriminalised.

It should be noted that under Russian legislation, criminal liability for cartels is subject to the material consequences of the offence and arises when a cartel causes to individuals, legal entities or the state a loss of at least 1 million roubles, or derives illegal revenue exceeding 5 million roubles. Moreover, it is now disputable as to whether law enforcement authorities need to prove a negative effect to competition as it is clearly stated in the description of the law rule.

The provisions of article 178 of Criminal Code of Russian Federation are blanket provisions, and in case of determination of the basis for criminal case commencement and conduction of the preliminary investigation, it will be necessary to conform with the rules of the Competition Law.

The fact of the concluded or exercised cartel is established by decision of antimonopoly authority, which determines geographic, product, time boundaries of the product market, basic market members-competitors. The same decision names the consequences to which creation of the cartel led (or might have led).

The FAS is very attentive to competition as regards revealing cartels in the markets for chemical products, pharmaceuticals, food products, air carriages, financial services, energy products, funeral services and some others.

One of the much-publicised cartel cases of 2012 was the typical price cartel case with respect to sodium hydrate. The fine for the initiator of this cartel exceeded 912 million roubles, which is the highest pecuniary penalty ever imposed on a cartelist in Russia. The FAS’ decision is still being challenged in commercial courts.

The ‘fish cartels’ are expected to be the most discussed cases of 2013.

Inspections

In April 2012, the new FAS regulations on competition law compliance inspections came into force.

The basis of the rules for conducting inspections is provided for by articles 24 to 26 of the Competition Law and elaborated on in the new FAS Decree No. 340 of 25 May 2012 (the Rules).

In extraordinary cases, investigations carried out by the FAS may be accompanied by prosecution agencies. The FAS is also entitled to conduct joint inspections among its territorial administrations.

There are two types of inspections: scheduled and unscheduled. Both may be conducted with a camera (documentary) or an on-site form.

The ground for the initiation of a scheduled inspection expires three years from the date of either the incorporation of a legal entity or the completion of the latter inspection. Information about the schedules of inspections can be found on the official FAS website.

The grounds for the initiation of an unscheduled inspection include:

  • the receipt of materials from the state and municipal authorities or public associations indicating characteristics of antimonopoly law infringements;
  • the receipt of reports and claims from persons and the mass media indicating characteristics of antimonopoly law infringements;
  • the passing of the deadline by which to perform the binding prescription issued by the FAS (in this case, only the performance of such prescription is being inspected);
  • mandates issued by the president of the Russian Federation or the government of the Russian Federation; or
  • discovery by the FAS of characteristics of antimonopoly law infringements.

This last rule was introduced by the Third Antimonopoly Package liberalising the competition legislation as a whole. However, it now grants the FAS carte blanche to conduct unscheduled inspections on its own initiative and actually expands the grounds for inspections.

An inspection is conducted in accordance with the relevant decree issued by the head of antimonopoly authority. Article 25.1(7) of the Competition Law sets up the requirements to such decree: it should specify each full name; the position of the each FAS official authorised to conduct the inspection; terms and deadline for the inspection; the list of examining measures; legal grounds of the inspection, and so on. Any valuable mistake in the decree may become the ground for appeal.

The inspectee should be notified not less than three days prior to a scheduled inspection. No prior notification is provided for inspections of compliance with article 11 of the Competition Law providing prohibition of cartels and prohibitive agreements.

The maximum term of any inspection is one month from the commencing date, indicated in the decree, until the date of sending the certificate of inspection. This term can be extended for up to two months by the head of antimonopoly authority (under article 25.1(9) of the Competition Law). The inspectee should be notified about such extension not less than one day in advance by any means of communication.

On-site inspections may be conducted only, and to the extent that it is not possible for the FAS during a documentary inspection, to:

  • be assured of the completeness and validity of information contained in the documents available to antimonopoly authority; or
  • evaluate compliance of the inspectee’s activity with the competition legislation without conducting an on-site inspection.

During inspections, FAS officials have the following key rights:

  • the right of free access to the territory and premises of the inspectee (save for residential premises). The inspectee is now allowed to prevent such access;
  • the right to receive in due time (three business days) and in due form, under reasonable request, documents and information, including any confidential information and official electronic correspondence, written or oral explanations;
  • the right to free search of territory and premises (save for residential premises), things, documents and information saved on any storage. It is worth mentioning that searches of documents and information in electronic form should be incorporated into a separate report of the antimonopoly authority; and
  • the right to make picture and video recordings, and to take copies of documents during the search.

During the inspection, FAS officials are bound to:

  • conduct the inspection based on the decree issued by the head of the competent antimonopoly authority;
  • conduct the inspection only in the course of their duty;
  • prepare obligatory protocols and other statements;
  • not disclose confidential information; and
  • serve upon the certificate of inspection of check not later than the last day of the field check (or send by registered mail).

During inspections, the inspectee is entitled to:

  • demand the presentation of service certificates and a copy of the decree on inspection issued by the head of antimonopoly authority;
  • demand complete, updated and accurate information on the procedural issues of conducting the inspection;
  • prior to on-site inspection, demand a review of the Rules;
  • be present during the inspection (ie, the CEO or another manager or authorised representative) and provide explanations on the issues related to the subject matter of the inspection. The latter aspect is very important and antimonopoly authorities may describe the subject matter too broadly;
  • demand the provision of information and documents related to the subject matter of the inspection;
  • withhold documents and information not prescribed by the law (and, among other things, during a documentary inspection, not provide documents that are not related to subject matter of the inspection, as well as information and documents that can be obtained from other regulatory authorities);
  • demand to sign a transfer and acceptance certificate with respect to the transferred documents and information;
  • notify of the impossibility to provide documents and information to the extent required, specifying the reasons and new period of submission of such documents and information;
  • demand to observe the period of inspection;
  • refuse to provide explanations;
  • demand to make an entry about the conducted inspection in the company’s inspections record book; and
  • be acquainted with the results of the inspection and specify in a certificate of inspection its disagreement with the results or certain actions of FAS officials, as well as to refuse signing of the certificate.

The FAS only has administrative investigatory powers, and only the Ministry of Internal Affairs (the MIA) and its divisions have criminal investigatory powers. Thus, the law provides for material limitations of the investigatory powers to safeguard the rights of the defence of companies and individuals under investigation. The FAS is not entitled to:

  • carry out compulsory interviews with individuals;
  • carry out an unannounced search of residential premises;
  • ‘image’ (copy) computer hard drives using forensic IT tools;
  • retain original documents;
  • secure premises overnight (eg, by seal); or
  • secure any surveillance powers.

All these powers are granted to the MIA. However, the major material limitation of the MIA’s investigatory powers under the Code of Criminal Procedure is the necessity to obtain a prior court authorisation to execute some powers.

Both the FAS and MIA are not bound by the law to wait for legal advisers to arrive before the inspection starts. Dawn raids become more popular in the FAS’s activity to investigate cartels. The FAS often invite the MIA to conduct dawn raids for procuring organisational issues based on the joint Decree of MIA No. 878 and FAS No. 215 dated 30 December 2004.

Under the Administrative Code, the FAS is entitled to impose a fine in case of failure to obey the lawful prescription of the FAS’s officials issued, inter alia, during inspections, to submit information requested by antimonopoly authorities, misleading information or the untimely submission of information. The FAS often enforces these rules against offenders. The Criminal Code provides much more severe sanctions for the obstruction of the MIA’s or prosecutor’s investigations or the court’s activity including fines, compulsory community service, apprehension or imprisonment.

In order to carry out any search, the Competition Law stipulates that two witnesses must be in attendance during both scheduled and unscheduled inspections. Moreover, a search may be witnessed by representatives of a legal entity or a person. However, there is no indication that the conduct of a search in the absence of such an authorised representative composes a violation of the Rules.

Enforcement

The FAS and its territorial divisions enforce the cartel prohibition under the Competition Law and Administrative Code through hearing the cases on violations of the competition law. Criminal offences are investigated by the MIA subject to the Criminal Code and the Code of Criminal Procedure No. 174-FZ dated 18 December 2001. Usually, once a violation of the Competition Law is discovered and a cartel case is closed by the FAS, the antimonopoly authority sends the case materials to the MIA for initiation of criminal proceedings. Unfortunately, it is expected that the FAS should be the sole initiator of criminal investigations (though the MIA may do the same on its own initiative). The MIA only prosecutes cartel cases, which amount to serious or complex fraud. However, its cooperation with the FAS is not reflected in the law. The MIA conducts criminal procedures under the Code of Criminal Procedure and the Federal Law ‘Law Enforcement Operations Act’, dated 28 August 1995, No. 144-FZ, as amended.

In August 2012, the new FAS regulations on the initiation and conduct of the proceedings on cases of competition law infringements, based on the Competition Law, came into force.

The FAS opens an investigation within its powers and on its own initiative. The ground for the investigation is based on information received from other state or municipal authorities, individuals and legal entities, mass media sources and on the results of the FAS’s own inspections or discovering evidences of a cartel. The FAS considers whether it may initiate a case and open proceedings within one month of the day the respective information was submitted to the FAS. This period may be extended for up to three months if additional information is required. In each initiated case, a special commission shall be established, which as a rule is composed of FAS officials and – if the investigation concerns the Competition Law violation in the bank sector or committed by financial institutions licensed by the Federal Service on Financial Markets of Russia (FSFM) – representatives of the Central Bank of Russia or FSFM, respectively. During the hearings held by the commission, undertakings and interested parties are entitled to submit written and oral explanations. The commission passes its final decision and binding prescription by simple majority of its members within three months of the assignment of the case, providing that this term may be extended for up to six months (without regard to procedural suspensions).

In accordance with article 41.1 of the Competition Law, the limitation period for initiating a case on competition law infringement constitutes three years from the date of the breach or detection of the breach (in the case of a continuing breach) of the Competition Law. The limitation period under the Criminal Code is a 10-year period from the date a crime was committed. However, the FAS officially declared its intention to harmonise both periods in administrative and criminal procedures.

Sanctions

A pecuniary penalty for Competition Law infringement has administrative nature as a measure of public liability. The FAS may impose a fine on cartelists for entering into or participating in a cartel, the amount of which depends on the share of a company’s income from sales of a product on which market the violation has been committed.

If the cartelist’s income from sales of the above-named product does not exceed 75 per cent of the total company’s income, then the imposing fine will range from 1 to 15 per cent of the company’s income from sales of the above-named product.

Calculation of fines has been made very simple as a result of the latest amendments to the Administrative Code. The default amount will be 8 per cent of the relevant income. Any mitigating circumstance will reduce the standard fine amount by 1.75 per cent of the relevant income, while aggravating circumstance increases it by the same percentage.

If the cartelist’s income from sales of the above-named product exceeds 75 per cent of the total company’s income or the violation has been committed on the regulated price market, then the imposing fine will range from 0.3 to 3 per cent of the company’s income from sales of the above-named product, but not less than 100,000 roubles. The default amount will be 1.65 per cent of the relevant income. A mitigating circumstance will reduce the standard fine amount by 0.3375 per cent of the relevant income, while an aggravating circumstance will increase it by the same percentage.

A special fine amount is provided for cartels that lead or may lead to increasing, reducing or maintaining prices on tenders, ranging from 10 to 50 per cent of the tender object amount but not less than 100,000 roubles.

Any of the following circumstances shall be deemed as aggravating the administrative liability, if an offender:

  • initiated a cartel;
  • forced other undertakings to participate in the cartel;
  • continues performing the cartels arrangements in spite of the binding prescription of the FAS to terminate doing the same;
  • repeatedly committed the similar offence, to the extent that the offender had been held administratively liable up to one year from the date of the performing of the relevant decision on the case of administrative offence;
  • committed an ongoing offence for the duration of over one year; or
  • inflicted damages to individuals, organisations or the state as a result of the offence in the amount exceeding 1 million roubles or derived income as a result of the same in the amount exceeding 5 million roubles.

As mentioned above, a new system of fine calculation makes it very easy for undertakings to understand the risks.

Along with an administrative fine, the Competition Law allows the FAS to require that an offender transfer to the federal budget the revenue gained from the violation of the Competition Law. The Constitutional Court of the Russian Federation held that the FAS may use both of these forms of liability with respect to a single violation. This is a much criticised opinion that is not content with the view of the Supreme Arbitration Court of the Russian Federation. However, the FAS usually imposes pecuniary penalties.

It is also worth mentioning that the FAS may issue a prescription binding an offender to eliminate the negative consequences of the cartel’s activity and perform actions aimed at procuring the competition. The FAS is also entitled to bring actions in the commercial court to invalidate the agreements conflicting with the Competition Law.

The sanctions for company officers are dual in nature due to the existence of both administrative and criminal liability. Administrative liability for entering into or participating in a cartel may entail a fine of from 20,000 roubles to 50,000 roubles, or disqualification for up to three years. Criminal liability for the same offence having material consequences (as mentioned above) leads to either a criminal fine of up to 1 million roubles or up to five years’ imprisonment with or without disqualification of one to three years. Some qualified offences may be punished with more severe criminal liability.

Disqualification means prohibition from

  • taking a position in the executive body of a legal entity;
  • being a member of the board of directors (supervisory board);
  • conducting business activity on the management of a legal entity; and
  • conducting the management of a legal entity in other cases stipulated by Russian legislation.

The FAS states that it will actively strive to apply the new rules for disqualification. The minutes on the administrative offence is prepared by the FAS, but the court imposes the penalty.

On the subject of criminal liability, it is worth mentioning that Russian courts had enforced article 178 of the Criminal Code before the significant changes to the criminal law were made in July 2009; however, most instances were not essentially connected with the competition. Since 2009, the courts have sentenced a few people. Some important cartel investigations are currently being carried out by the MIA. The Head of the FAS, Igor Artemiev, said in June that 11 top-managers are currently under investigation. In accordance with the FAS official annual report on the competition situation in Russia for 2012, the FAS sent to the MIA divisions for initiation of criminal proceedings 31 case materials in 2011 and 18 case materials in 2010. However, only five criminal investigations were opened.

Leniency

The Third Antimonopoly Package introduced a new special set of mitigating and aggravating circumstances applied by the FAS when hearing the cartel cases. These may be referred to the leniency programme for cartel violations (in a general sense).

The FAS should take into account the following mitigating circumstances when holding an undertaking administratively liable. The offender:

  • did not initiate a cartel or receive binding instructions to participate therein;
  • did not start to perform the cartel arrangements;
  • voluntarily ceased performance of the cartel arrangements;
  • voluntarily notified the FAS of the arranged cartel;
  • assisted the FAS in establishing the circumstances of the cartel;
  • prevented harmful consequences of the cartel;
  • voluntarily compensated for damages or recovered the harm inflicted; and
  • voluntarily and duly performed a binding prescription issued by the FAS before the case on administrative violation was completed.

The current legislation does not provide for grounds to reduce the amount of fine owing to financial hardship or inability to pay. Before the amendments to the Administrative Code were made, a court, when challenging the decision of the antimonopoly authority, was entitled, at its own discretion, to decrease the amount of a fine by applying other mitigating circumstances allowed by the general provisions of the Code. Now only a limited number of special mitigating circumstances are allowed.

However, on 17 January 2013, the Constitutional Court of the Russian Federation ruled that the minimum administrative fine for not providing documents and information upon the lawful request of a competition authority, and the inability to decrease it, does not comply with the principles of reasonableness and adequacy of penalty. Lawyers share this position and consider it a sign of a shift to the same approach to turnover-based fines in future.

Full immunity from administrative liability is available to offenders. A cartelist that has voluntarily notified the FAS about entering into or participating in a cartel shall be relieved from administrative liability provided that:

  • the FAS does not already have in its possession documents and information with respect to the committed offence when the leniency application is received. It should be noted that there is no agreed opinion on the deadline for submitting the relevant information. One view states that such application may be submitted prior to announcement by the FAS of its decision on the case of competition law infringement;
  • the offender terminated the current or further participation in, or performing of the cartel arrangements; and
  • information and documents provided by an offender were sufficient to establish circumstances of the offence.

Release from liability applies for the cartelist that first satisfied all the conditions mentioned above and the FAS will not consider a joint application submitted by several cartelists.

Unfortunately, Russian legislation does not provide clear and effective guarantees for undertakings who wish to use the leniency programme. The FAS expressly declares the guarantee of confidentiality of a leniency application on its official website. However, this regime is not reflected in legislative acts. Notwithstanding that an offender may admit the fact of a cartel and notify FAS officials orally, the risk of disclosure of this information continues to exist. Moreover, the applicant is not exempted from providing the evidencing documents.

From one point of view, if a company intends to take advantage of the leniency policy, the application shall be made in written form. Due to the absence of a ‘marker’ system in Russia, a written application may minimise the risk of being beaten by another cartelist. In any case, such information may be announced orally at first (eg, via the phone number on the FAS’s website).

From another point of view, the complainant and any other concerned persons have access to the antitrust case materials, but the law does not bar them from access to written, or transcripts of oral, leniency statements and supporting documents. Complainants can now use the ‘trade secret regime’ to limit access to such documents.

The current legislation also does not provide detailed regulation for ‘continuous cooperation’ with the FAS. Generally, the applicant should provide the FAS with the information and documents that the FAS requires and that it considers to be sufficient to identify a competition law infringement. But it seems difficult to determine the exact moment when such cooperation requirement ceases to apply, while the expression ‘sufficient for detection’ is of an evaluative nature and depends on each case.

The competition legislation does not provide for any special early resolution or settlement procedures (other than leniency). The FAS may close the cartel investigation early if the violation of the Competition Law was ceased and its consequences were eliminated voluntarily by cartelists.

The leniency programme provides decisive release from the administrative liability of a legal entity, but it does not guarantee the ‘automatic’ release for a private individual who participated in a cartel agreement. Such individual should actively cooperate and compensate damages, or otherwise effect restitution.

On 18 June 2013, the State Duma passed, in the first reading, the draft Federal law on amendments to the article 178 of the Criminal Code, which is aimed at the synchronisation of FAS activity with the activity of law-enforcement authorities. This draft law stipulates:

  • guarantees of criminal prosecution relief for breach of competition legislation for private individuals who first provide the necessary data for holding liable the members of the cartel (plea bargain);
  • a procedure of cooperation between antimonopoly and law-enforcing authorities during the investigation of cartel cases, including information exchange; and
  • a provision for members of an operational investigation activity to transfer the information and materials to antimonopoly authorities.

The FAS has also agreed to increase the size of the material consequences of the offence, so that a significant part of cartel violations may be decriminalised.

We assume that this new regime will significantly improve the leniency system in Russia, so that undertakings may use its benefits in full.

Appeal process

The appeal process in Russia is generally represented by a judicial procedure. A cartelist may appeal a decision in a competition law infringement or binding prescriptions issued by an antimonopoly authority to a competent state arbitration (commercial) court. The Rules also provide for the possibility to appeal actions and decisions of the commission in administrative procedure, which is a form of control for the performance of state functions and procedural rules.

Procedural violations committed by a territorial subdivision of the FAS or its officials may be appealed to the FAS Central Office or to the head of such subdivision respectively. An appeal shall be considered within 30 days of the date of its registration. If additional information or documents are required then the antimonopoly authority is entitled to extend the term for another 30 days. As the current regulations do not provide the applicant with the right to attend the out-of court hearings, this form of appeal is only used very rarely in practice. The creation of a full out-of-court appeal procedure is now widely discussed among lawyers. The plan is to introduce this form of appellation for the decisions of territorial subdivisions of the FAS by May 2015.

Pursuant to the Competition Law, decisions and binding prescriptions of antimonopoly authorities may be appealed within three months from the day they are passed or issued respectively. In judicial proceedings, a commercial court should try a case within three months (without taking into account any allowed postponements). If the case is particularly complex, the chairman of the court may extend this term for up to six months.

Bringing an appeal to the court suspends the execution of the binding prescription issued by the antimonopoly authority until the court decision comes in force.

Damages actions

The Third Antimonopoly Package stipulates a clear rule granting the right to claim damages on persons whose rights and legal interests were breached by the antimonopoly law infringement (article 27(3) of the Competition Law). This rule, based on articles 10, 12, 15 and 1064 of the Civil Code of the Russian Federation, provides the general provisions of civil liability for damages and respective remedies.

The procedure for civil damages actions is governed by the Civil Procedure Code of the Russian Federation and the Commercial Procedure Code of the Russian Federation without any specifics. The Commercial Procedure Code establishes the exclusive competence of commercial courts to consider disputes concerning business and any other economic activity.

It is obvious that the FAS has substantial power to investigate antimonopoly law infringements by a single company or individual. Therefore, ‘follow-on’ actions, in comparison to ‘stand-alone’ actions, may be considered more easily arguable since a claimant has the opportunity to use the evidences collected and deliverables made by the FAS in its decision on the particular case of antimonopoly law infringement. In this respect, the decision of the FAS may be a reasonable ground to justify one’s claims before the court. Still, we are not aware of any court decision regarding damages actions derived from a cartel agreement.

There are few cases of private damages actions in Russian practice, but we are not aware of examples of cases based on cartel infringements.

On the subject of group damages actions, it is worth mentioning that class action regulation in Russia is not well developed. The Commercial Procedure Code in general allows class actions as well as representative actions, but civil procedure rules do not. However, the Civil Procedure Code provides, in the theory of Russian procedural law, for public and organisational (or institutional) actions. A civil case may be initiated (with some limitations) by a procurator acting on its own behalf to secure the rights, liberties and legal interests of other persons or an indeterminate group of people, or to protect the interests of Russia, constituent entities of the Russian Federation or municipal authorities. In some other cases set forth by the laws, state and municipal authorities, as well as organisations and individuals, may bring a claim to the court for the protection of the rights, liberties and legal interests of other persons or an indeterminate group of people.

The general concern is that the Commercial Procedure Code requires that class members be connected by a common legal relationship (the objective criterion of a class action). Private property class actions seem not to be available under Russian law as each member of a group has the right in personam against the defendant derived from breach of contract or civil injury.

Professional society continues to advocate the necessity of amendments to be made into the procedural legislation. As mentioned above, the plan to develop competition and antimonopoly policy is the first legislative act aimed at the effective instrument of infringed rights restoration as group actions. Currently, a federal law on group actions is being drafted and is expected to be introduced for public negotiation this year. We hope that the results of these efforts can be seen in the near future.

In accordance with the Civil Code of the Russian Federation, the general limitation period of three years from the day a claimant learned or should have learned about the infringement of its rights is applied to private damages claims.

The common discussing matters with respect to private damages action are also applicable to Russia. So, the current Russian legislation does not regulate the ‘passing-on’ defence. Some basic approaches set by this doctrine are rarely applied by the Russian courts in single antitrust cases for abuse of a dominant position.

The court practice of private damages claims has been gradually developing in Russia over the past two years. It proves that both courts and claimants are likely to adduce the FAS’s decision on recognising the violation of competition law. At the moment, the practice of defending the interests in court by submitting private damages claims has not yet been formed. We expect that the plan to develop competition and antimonopoly policy will significantly change the practice of damages actions.

Tendencies

The next important stage in the progression of anti-cartel activity, in the view of the FAS, should be the development of cooperation between antimonopoly authorities of different countries with the goal of revealing and suppressing international cartels. This aim has been declared by the FAS officials, which may also favour the FAS’s international ranking in antimonopoly authority’s effectiveness in accordance with the statistics of Global Competition Review.

The practice of entering into international agreements providing the grounds for joint inspections, information interchange and other forms of cooperation, is one of the circulated method.

In terms of business expectations, and subject to further enhancement of the enforcement practice, we strongly believe that the latest developments of the lenience programme and the introduction of antitrust group damages actions will significantly improve the Russian system of competition legislation, putting it in line with the world’s best practices in this area.

Art De Lex Law Firm

4/17 Pokrovsky Boulevard
Bldg. 1, Offices 25, 26
101000 Moscow
Russia
Tel: +7 495 937 71 23
Fax: +7 495 937 71 23

Yaroslav Kulik
kulick@artdelex.ru

www.artdelex.ru

Art De Lex is a Russian law firm advising Russian and foreign businesses in Russia and abroad. Art De Lex has substantial experience providing comprehensive legal support in multiple jurisdictions. The firm is a results-driven adviser, and values its reputation and the reputation of its clients. It is committed to the careful selection of projects and jobs, and keeps any information received from clients strictly confidential.

Key areas of practice include: corporate and M&A, competition, real estate and development, dispute resolution and mediation, legal support of investment projects and public-private partnerships.

Art De Lex is a reliable partner and offers a bespoke approach to every client, depending on their individual preferences and needs. It comprises a team of experts who, as part of their job, frequently go beyond the boundaries of their subject area and always take into account the political, social and economic situation, industry specific factors and any other requirements the client may have.

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