Russia: Federal Antimonopoly Service
Russian Federation
Abstract Shape Background
Russia: Federal Antimonopoly Service

Russia: Federal Antimonopoly Service

Russian Federation

Russia: from the enforcer

Address: 11 Sadovaya-Kudrinskaya Street, 125993, Moscow, D-242, GSP-3, Russia
Tel: +7 499 755 23 23 (ext. 455)
Fax: +7 499 755 23 24
Email: [email protected]
Web: http://en.fas.gov.ru

Contacts

image 62
Igor Artemiev
Head

image 63
Andrey Tsarikovskiy
Stats Secretary, Deputy Head

image 64
Alexey Dotsenko
Deputy Head

image 65
AMikhail Evraev
Deputy Head

image 66
Daniil Fesyuk
eputy Head

image 67
Anatoly Golomolzin
Deputy Head

image 68
Andrey Kashevarov
Deputy Head

image 69
Vitaly Korolev
Deputy Head

image 70
Sergey Puzyrevskiy
Deputy Head

image 71
Alexander Redko
Deputy Head

image 72
Andrey Tsyganov
Deputy Head

image 73
Pavel Zaborsсhikov
Deputy Head

Questions and answers

How long is the head of agency’s term of office?

The Head of the Federal Antimonopoly Service (the FAS), the State Secretary-Deputy Head and the deputy heads are appointed or released by a decree of the Government of the Russian Federation. Igor Artemiev, head of the FAS, was appointed in March 2004. The duration of employment term either of the head of the FAS or of his deputy heads is not limited.

When is he or she due for reappointment?

There is no reappointment limitation or other specific rules.

Which posts within the organisation are political appointments?

The head of the FAS, the State Secretary-Deputy Head and the deputy heads of the FAS are appointed or released by a decree of the government of the Russian Federation.

What is the agency’s annual budget?

In 2019, the budget of the FAS was 5.6 billion roubles.

How many staff are employed by the agency?

In 2019, there were 3,504 members of staff at the FAS, including 1,299 public servants in the Central Office and 2,205 public servants in 84 Regional Offices of the FAS.

To whom does the head of the agency report?

The FAS reports directly to the government of the Russian Federation. The First Vice-Chairman of the government of the Russian Federation lends assistance to the FAS in its activity.

Do any industry-specific regulators have competition powers? If so, how do these relate to your agency’s role?

No. The FAS is the only regulator with competition law enforcement powers. It implements antimonopoly control over all industries and sectors of the economy without any exceptions.

Moreover, the FAS carries out the following functions:

  • compliance with the legislation on advertising, trade, foreign investments into strategic enterprises, public procurement, for example, in the sphere of defence and security, control over state aid granting, anticompetitive actions of state authorities, as well as tariff regulation (state control in the area of price (tariffs, additional charges, rates) regulation);
  • opening and maintenance of the Federal data register of last resort providers and areas of their operation;
  • opening and maintenance of the Data register of natural monopolies under the state regulation and control.

Areas of tariff regulation include heat supply; truck pipeline oil transportation; pipeline gas transmission; railway services; transport terminal, port and airport services; public electric and postal communications services; electricity transmission services; electricity industry operative-dispatch management services; heat power transmission services; inland waterway infrastructure utilisation services; radioactive waste disposal services; and water supply and drainage services.

Moreover, most of the public servants of the FAS are involved in competition advocacy, e.g. in interaction with other state authorities.

May politicians overrule or disregard authority’s decisions? If they have ever exercised this right, describe the most recent example.

No. Neither the government nor any politicians have the power to overrule or disregard authority’s decisions. Decisions and rulings of the antimonopoly body may be appealed in court (for claims made by individuals and officials) or commercial court (for claims in the field of business and other economic activity by way of consideration of economic disputes and other cases referred to their competence by the Arbitration Procedure Code and by other federal laws, based on the rules established by the legislation on legal proceedings in arbitration courts), within three months from the date of decision-making or issue of a ruling.

There has not been any case of challenging the FAS’s decisions at the claim of the government of the Russian Federation.

Does the law allow non-competition aims to be considered when your agency takes decisions?

In accordance with article 1 of the Federal Law on Protection of Competition the aims of the antimonopoly regulation are:

  • securing the unity of the economic area;
  • free movement of goods;
  • freedom of economic activity;
  • protection of competition; and
  • establishing conditions for effective functioning of the product markets.

These are the aims the FAS is guided by when making decision.

Which body hears appeals against the agency’s decisions? Is there any form of judicial review beyond that mentioned above? If so, which body conducts this? Has any competition decision by the agency been overturned?

Decisions of the FAS can be appealed in courts within three months from the date the decision was made.

Since 4 January 2016 (the date amendments of the ‘fourth antimonopoly package’ came into force), in some cases decisions of the Regional Offices can be appealed to a collegial body of the FAS. In accordance with article 52 of the Law on Protection of Competition, in case decision or ruling of the Regional Office is appealed to collegial body of the FAS, acts determined with regard to the case on violation of antimonopoly legislation can be appealed to an arbitration court within one month of the decision of the collegial body of the FAS coming into force.

All decisions adopted by the court on appealed cases are published on the official website of the FAS. In accordance with the Arbitration Procedure Code, the Supreme Court has the power to review decisions taken by courts of lower instances.

In August 2014, the Supreme Court became the only supreme judicial body for civil, criminal and administrative cases, as well as economic disputes.

Previously, the Supreme Arbitration Court was able to consider economic disputes, but now such cases are carried out by a panel of judges on economic disputes of the Supreme Court, comprising 30 judges.

The panel of judges is the second cassation instance on economic disputes. First, the cassation claim is considered by one Supreme Court judge personally, and then he or she makes a decision as to whether it is necessary to forward this claim to the panel of judges.

The decision of the panel of judges can be appealed to the Presidium of the Supreme Court. Supervisory and cassation claims are considered by one Supreme Court judge and then forwarded, if necessary, to the Presidium of the Supreme Court (Federal Law of 28 June 2014 No. 186 FZ On Making Amendments to the Arbitration Procedure Code of the Russian Federation). On 14 October 2010 the Supreme Commercial (Arbitration) Court adopted Resolution No. 52, which introduced amendments to its 30 June 2008 Resolution No. 30 On some questions arising during enforcement of antimonopoly legislation by arbitration courts, aimed at the specification of certain provisions for the purpose of ensuring a common judicial approach during the consideration of cases on antimonopoly violations. It was kept in force.

The Constitutional Court is responsible for considering issues regarding the conformity of standards of the legislation of the Russian Federation to the Constitution. For the entire existence of the FAS, there have been six cases related to the Constitutional Court.

In 2019, thanks to the development of the system of warnings, antimonopoly compliance and a number of other changes in competition legislation, the number of competition law violation cases brought by the FAS continued to decline: 3,029 cases were initiated (for instance, in 2016 – 4,040 cases, in 2017 – 3,534 cases, in 2018 – 3,223 cases), 2,236 decisions were made on the existence of a violation, 1,184 of them were appealed to the court (47.6 per cent); 132 of them were declared invalid by the court (11.2 per cent of appealed decisions and 5.9 per cent of the total number of decisions).

Has the authority ever blocked a proposed merger? If yes, please provide the most recent instances.

In 2019, 1,052 pre-merger and 144 post-merger notifications were submitted to the FAS. Of these, 40 pre-merger notifications were blocked.

In accordance with the Federal Law on Protection of Competition, the merger control requirements only apply to the following transactions:

  • acquisition of voting shares and participatory interests in joint-stock companies and limited liability companies respectively;
  • acquisition of rights in respect of a legal entity;
  • transfer of assets;
  • establishment of a legal entity;
  • corporate restructurings in the form of merger or accession; and
  • entrance into a joint venture agreement.

The antimonopoly legislation provides for the following thresholds for the application of merger control:

  • acquisition of voting shares in joint-stock companies (more than 25 per cent, 50 per cent and 75 per cent of the voting shares) and acquisition of participatory interests in limited liability companies (over one-third, one half and two-thirds of participatory interests);
  • acquisition of rights that enable the purchaser to determine the course of business of another legal entity or to carry out functions of an executive body of such a legal entity;
  • transfer of assets where the balance sheet value of the transferred assets exceeds 20 per cent of the balance sheet value of the total fixed and intangible assets of the transferor (excluding land plots and non-production buildings);
  • establishment of a legal entity if its charter capital is paid by shares, fixed assets or intangible assets; and
  • corporate restructurings (in form of merger or accession).

Pre-merger clearance by the FAS is required if:

  • the purchaser and the target, together with their groups of persons, exceed materiality thresholds either by the aggregate book value of assets on a worldwide basis or by annual turnover on a worldwide basis (7 billion roubles for the assets and 10 billion roubles for the turnover);
  • the aggregate book value on a worldwide basis of all companies within the target’s group exceeds 250 million roubles;
  • as a result of the transaction, the purchaser will have the right to dispose of more than 50 per cent of voting shares or stakes in respect of a foreign company that supplies goods to the territory of the Russian Federation in the amount of more than 1 billion roubles during the year preceding the date of the transaction.

In 2019, the FAS considered the acquisition by the State Transport Leasing Company (company specialises in the leasing of railway and aviation equipment, also leases automobile and road equipment, sea and river vessels) of Brunswick Rail, which is carrying out a similar activity.

Analysis of the state of competition showed that strengthening the dominant position of State Transport Leasing Company in the financial or operating carriage leasing market through the acquisition of private companies could negatively affect the state of competition.

The FAS decided to block the merger and issued remedies with a requirement for the State Transport Leasing Company to pay the strictest attention to the inadmissibility of leasing the carriage rolling to the end consignors through a long chain of intermediaries, the use of which leads to a doubling of prices for provision of carriages for the economy.

In addition, the State Transport Leasing Company, as a development institution, was recommended to use limited budgetary resources for leasing new carriages, adding supply to the network and contributing to reducing the deficit in carrying capacity, and not buying used carriages and private companies on the secondary market.

Has the authority ever imposed conditions on a proposed merger? If yes, please provide the most recent instances.

Behavioural and structural remedies apply to transactions as a result of amplification (occurrence) of a dominant position or of competition restriction, including in the related markets in cases when the performance of such remedies allows for the avoidance of negative consequences (paragraph 2 of Part 1 of the article 23 of the Law on Protection of Competition). In 2019, the FAS issued 99 decisions with remedies on pre-merger notifications.

In 2019, the FAS approved the acquisition by Bristol Myers Squibb of the rights to determine the terms of conducting business for Celgene, which was carried out as part of a global transaction.

The purpose of the transaction was to create an innovative pharmaceutical company capable of meeting the needs of patients with cancer, inflammatory diseases, diseases of the immune and cardiovascular systems, through the development of costly innovative pharmaceutical products and the use of the existing significant scientific potential. The parties expected that the combined efforts to develop and manufacture pending medicine would lead to significant business development for the consolidated company and new opportunities for patients regarding a range of serious illnesses.

As part of the state control over economic concentration, it was established that Bristol Myers Squibb and Celgene produce and sell medicine with different international non-proprietary names (INN). Thus, Bristol Myers Squibb, by acquiring the rights to determine the terms of conducting business for Celgene, expanded the range of its pharmaceutical products.

In addition, the FAS found that there are no analogues of medicinal products corresponding to the INNs Azacytidine, Pomalidomide, Paclitaxel+ [Albumin] and Apremilast within the territory of the Russian Federation, the only supplier of which is Celgene.

With regard to INN Lenalidomide pharmaceutical products, the FAS established the presence of several medicines registered within the territory of the Russian Federation, including those of domestic production. However, the FAS had information that Celgene possessed intellectual property right for such medicine. Thus, before the expiration of the patent, participation in the procurement of other manufacturers does not seem possible.

After having carefully studied the materials of the application, as well as analysed the product markets in which the acquired company operates, the FAS established its dominant position in the product markets of medicines corresponding to the INNs Azacytidine, Pomalidomide, Paclitaxel+ [Albumin], Apremilast and Lenalidomide.

In order to avoid adverse impact on the state of competition in the respective product markets, the FAS has decided to issue a general ruling on Bristol Myers Squibb, which should ensure that Celgene (or any company that is part of its group of persons) fulfils all contracts (agreements) for the supply of the aforementioned medicinal products, develop a document regulating the interaction of the seller of medicinal products with contractors, do not carry out economically and technologically unjustified reduction or termination of sales of medicines, if demand for them exists.

Has the authority conducted a Phase II investigation in any of its merger filings? If yes, please provide the most recent instances.

In 2019, the FAS opened a Phase II investigation in 254 merger fillings.

An application to the FAS should be provided together with information and documents as required by the Competition Law. All documents should be provided in hard copy or in electronic form. If the package of documents is not complete, it may be returned to the applicant.

Since the merger filing, the FAS has one month to consider it. If there are factors that indicate that competition can be restricted or limited, the authority can extend the period for consideration of the application for two more months (in general, the examination takes three months). If the agency issues preliminary conditions to the merging companies, the companies are given nine months for their implementation. Then the FAS issues a final decision on whether to approve a transaction including a ruling aimed at ensuring competition where appropriate.

For example, an in-depth market analysis was carried out by the FAS as part of the consideration of the Siemens/Alstom transaction.

In September 2017, the planned merger of the railway engineering divisions was announced and it was assumed that the joint company would be called Siemens-Alstom. Its annual revenue was supposed to be about €15.3 billion, staff – 62,000 employees.

The analysis of the Siemens/Alstom deal included not only research of the European Union market, but also of the global market.

The FAS Russia, based on the results of the consideration of the acquisition of Siemens (Germany) of shares of Alstom (France), came to the conclusion on the negative impact on the state of competition of railway engineering in Russia (markets for electric trains, electric locomotives and components for them (traction systems and electric drives).

The deal is global in nature. In the event of its completion, it could be the merger of the two largest producers of railway rolling stocks in the territory of the European Union. The merged company Siemens-Alstom could become one of the key players in the world market for the production of high-speed electric trains and electric locomotives.

In the event of a transaction completion, the merged company Siemens-Alstom would receive partial control over two Russian railway equipment manufacturers that, prior to the transaction, were independent of each other and competed with each other: 50 per cent share in Ural Locomotives LLC (affiliated person of Siemens) and 20 per cent share in Transmashholding CJSC (affiliated person of Alstom).

Despite the small share of Alstom in Transmashholding CJSC, the company under the terms of the shareholder agreement has the opportunity to influence individual decisions of the Russian manufacturer, including limiting technological cooperation with other companies. At the same time, due to the dependence of Transmashholding CJSC on modern foreign technologies, the transaction in question may lead to a decrease in the competitiveness of the production of Transmashholding CJSC and, as a result, to a deterioration of the competitive environment in the territory of the Russian Federation.

Thus, when considering Siemens/Alstom transaction the FAS came to the conclusion that significant technological potential that could be developed by the Siemens/Alstom, as well as its access to the huge amounts of data relating to the unique technologies for the production of rolling-stock and railway safety systems, could be critical for other market participants. The FAS was not alone in its concerns and after the European Commission blocked the Siemens/Alstom transaction, respective merger notifications were withdrawn in several countries, including the Russian Federation.

Has the authority ever pursued a company based outside your jurisdiction for a cartel offence? If yes, please provide the most recent instances.

According to the Part 2 of article 3 of the Law on Protection of Competition:

The sphere of application of the Federal Law On Protection of Competition in the provisions of this Federal Law is applicable to any agreements and deals concluded between the Russian and (or) foreign persons or organisations outside the Russian Federation, as well as to their actions, provided such agreements or deals or actions influence considerably competition environment in Russia.

Liner shipping case

The FAS found that AP Moller-Maersk A/S (Denmark), CMA CGM SA (France), Hyundai Merchant Marine Co Ltd (Korea), Orient Overseas Container Line Limited (Hong Kong) and Evergreen Marine Corp (Taiwan) violated Paragraph 1 of the Part 1 of article 11.1 of the Federal Law On Protection of Competition. The above-mentioned companies are competitors and exercised prohibited concerted actions that led to fixing mark-ups (extra payments) to freight rates on the market of liner container shipping on the Far East/Southeast Asia–Russian Federation (St Petersburg, Ust-Luga) routes in 2012–2013.

The FAS established that in 2012–2013, information about mark-ups to freight rates was published on a website of one of the carriers, after which other market participants fixed the same mark-ups. Such concerted actions are prohibited for competitors, whose consolidated share of a relevant market exceeds 20 per cent and the market share of each entity exceeds 8 per cent. No Russian company is included in the "top 50" marine liner container operators. Therefore, domestic participants of international economic activities fully depend on the quality and the costs of services supplied by foreign companies. Sudden changes in prices increase the prime costs of goods for domestic consumers.

The shipping companies filed a lawsuit to invalidate and abolish the FAS decision. However, on 7 September 2016, Moscow Arbitration Court supported a decision of the antimonopoly body regarding international container lines.

In 2017, the FAS reached a settlement with companies, within the framework of which the carriers stopped the violation and undertook obligations, executing which will enable fair conditions for consumers of liner shipping services.

The FAS, together with the market participants, devised the Guidelines On Publication of Freight Charges by International Shipping Lines to determine the common conduct rules and principles on the market of liner marine transportation.

Do you operate an immunity and leniency programme? Whom should potential applicants contact?

Yes. The legal basis for the leniency programme is set out in the notes to Article 14.32 of the Code of Administrative Offences of the Russian Federation. A person who voluntarily reports to the FAS or its Regional Office on the conclusion of an agreement prohibited by the antimonopoly legislation of the Russian Federation, or about exercising concerted actions prohibited by the antimonopoly legislation of the Russian Federation, is relieved from administrative liability for administrative violations specified in Parts 1 and 3 of article 14.32 of the Code of Administrative Offences of the Russian Federation, provided the following conditions are met as a whole:

  • at the time of the person filing an application, an antimonopoly body did not already have relevant information and documents about the committed administrative offence;
  • the person refuses to participate or further participate in the agreements or to exercise or further exercise concerted actions; and
  • the information and documents presented are sufficient to establish the administrative violation.

The FAS’s website contains information on how a person is released from an administrative penalty, if the person voluntarily applies to the competition authority, as well as the contact details to report a cartel. Confidentiality of information is ensured by the FAS in accordance with the current legislation of the Russian Federation.

The legislation of the Russian Federation also oversees the mitigation of administrative liability. Companies that do not apply for leniency may use the mitigation mechanism (fourth antimonopoly package provides minimal administrative fine for second and third voluntary reported persons, except for leaders of a cartel: 20,000 roubles for executive officers of the company; 1 per cent of the company’s earnings from selling goods or amount of costs for acquiring goods at the relevant markets; 10 per cent from value of bid cost; or 100,000 roubles from aggregate revenue of all goods and provided services).

Currently, the leniency programme and the mitigation mechanisms tend to be the most effective instruments in combating cartels and other anticompetitive agreements. In accordance with FAS Order dated 26 September 2008 No. 369, the Deputy Head of the FAS and the Head of the Anti-Cartel Department are in charge of receiving claims (applications) on facts of concerted actions or other anticompetitive behaviour in accordance with the antimonopoly legislation of the Russian Federation. Heads of the Departments of the FAS and of its Regional Offices should immediately inform mentioned persons if they have received such applications. The Anti-Cartel Department of the FAS exercises the reception, registration and storage of applications. Receipt of such an application is recorded in a special register. Applicants submitting a request receive a copy of their statement and a unique registration number confirming the receipt. If the applicant has informed the FAS that the information provided is a commercial secret, such information is marked "For internal use only". Disclosure of such information for other (third) parties is possible only by court order.

Information concerning application to the FAS for leniency can be submitted via all possible methods of public communication. In particular, the FAS website contains a special section called "Report cartel collusion", containing information on liability for participation in cartels, obtain a release in accordance with Russian legislation, contact persons in the FAS and other useful information.

The FAS has created a special website, located at www.anticartel.ru, devoted to providing information about the dangers of cartels and how to fight them. A person can find easy-to-read guidelines, ask questions, observe anti-cartel enforcement practice and other relevant features of Russian legislation. One of the main goals of this project is to bring together all Russian anti-cartel enforcement practices, sum up foreign experience and create a unified useful database.

Currently, the FAS is taking active steps in formalising a marker system in the leniency programme. Related drafts of legal documents have been developed. In future, a special FAS Regulation will be adopted on this matter, which describes:

  • the prospective benefits for marker applicants of the marker system;
  • who has a right to receive a marker;
  • what steps should be taken to initiate the process;
  • what the requirements for obtaining a marker are;
  • when the marker stops being a proposition of the leniency programme;
  • the procedure for obtaining conditional options of the leniency programme and what is necessary for this step; and
  • what the content of the marker should be.

In 2019, 147 leniency applications for cartels were submitted to the FAS, 92 of which were first-in leniency applications.

What discounts are available to companies that cooperate with cartel investigations?

The Russian competition legislation provides a mechanism for mitigating administrative liability. Economic entities that are unable to use the leniency programme (as the first to fulfil all necessary requirements) can take action to mitigate the administrative penalty. In accordance with article 4.2 of the Code of Administrative Offences of the Russian Federation, the following are deemed as circumstances mitigating administrative liability:

  • voluntary termination of offending behaviour of the person committed an administrative offence;
  • voluntary reporting on the offence to the competition authority by the person committed an administrative offence;
  • the establishment of the circumstances of the case
  • administrative offence with the assistance of the person committed an administrative offence;
  • preventing the harmful effects by the person who committed the offence;
  • voluntary compensation or elimination of the damage by the person committed the offence;
  • voluntary compliance regulations to undo the violation;
  • the person who committed the offence does not organise the competition-restricting agreements or concerted actions, or received binding instructions to participate; and
  • the person who committed the offence has not begun to fulfil the competition-restricting agreement.

Depending on the number of mitigating actions by the company, the competition authority may reduce the amount of the fine from 15 per cent to 1 per cent of company’s earnings from selling goods, or amount of costs for acquiring goods at the relevant markets, from 50 per cent to 10 per cent of the value of the bid cost, but not less than 100,000 roubles from the aggregate revenue of all goods and provided services.

Is there a criminal enforcement track? If so, who is responsible for it? Does the authority conduct criminal investigations and prosecutions for cartel activity? If not, is there another authority in the country that does?

Cartels are prohibited by law and participation in a cartel is the basis for administrative or criminal liability. If a cartel is proven, the FAS shall bring its participants to administrative liability.

If the FAS discovers signs of a criminal offence in the actions of a cartel participant, the materials of such case shall be submitted to the Russian Ministry of Internal Affairs (MIA). In case of serious economic crimes, it shall be submitted to the Federal Security Service.

Thus, the FAS is not empowered to initiate criminal cases, the MIA initiates them with all necessary assistance of the FAS.

Criminal liability for cartels occurs in case of large-scale or especially large-scale damage caused to individuals, companies or the state, or as a result of gaining large-scale or especially large-scale income. Income exceeding 50 million roubles is recognised as large scale and if it exceeds 250 million roubles, it is recognised as especially large scale. Large-scale damage exceeds 10 million roubles; especially large-scale damage exceeds 30 million roubles. Up to seven years imprisonment is the most severe penalty provided for cartel activity, in accordance with article 178 (Restriction of Competition) of the Criminal Code of the Russian Federation.

Cases where state officials are found to be involved in anticompetitive agreements are submitted to the Investigative Committee of the Russian Federation (IC). Cooperation between the FAS and the IC is regulated by a special agreement on cooperation signed between the authorities.

In 2014, the FAS and MIA issued joint Order No. 878/215 On Approval of the Regulation on Procedures of Cooperation between the Ministry of Internal Affairs and the Federal Antimonopoly Service.

The interaction of the FAS with the MIA can be conducted in three ways.

  • After the decision on violation of the antimonopoly legislation has been issued, the FAS sends materials, the decision and the case file to the MIA for an initiation of a criminal case.
  • The MIA sends materials to the FAS in which there are signs of violation of the antimonopoly legislation, the FAS initiates an investigation and if a violation is recognised, it sends a decision on the case to the MIA for inclusion in the criminal case file.
  • Authorities conducting operational investigative activities transfer materials with signs of violation of the antimonopoly legislation to the investigating authorities for a decision in accordance with articles 144 (Procedure for examining a crime report) and 145 (Decisions made following the examination of a crime report) of the Code of Criminal Procedure. Copies of the materials of the pre-investigation check are sent to the FAS with the request to give an expert opinion. Further, the investigator (detective) initiates a criminal case, taking into account the opinion of the FAS. At the same time, the FAS initiates a case on violation of the antimonopoly legislation. If there has been a violation, the materials of the case and the decision of the FAS are transferred to the investigator (detective) to be attached to the criminal case.

In 2019, the FAS transferred materials of 157 cases to the MIA, 96 of which concerned article 178 of the Criminal Code. The remaining cases concerned other articles of the Criminal Code, such as fraud, offence of criminal association, and other economic and corruption crimes.

Based on materials of the FAS, there were 37 criminal proceedings initiated in 2019, including 22 in accordance with article 178 of the Criminal Code.

Of these, seven cases were sent to the court with an indictment. However, FAS doesn’t have information on the actual number of individuals imprisoned.

In October 2015, Primorie OFAS made a decision that Vladivostok City Authority, Vladivostok Roads Municipal Unitary Enterprise and Vostokcement Ltd violated article 16 (prohibition on the creation of cartels by the authorities) of the Federal Law on Protection of Competition. Materials of the case were transferred to the MIA, which following judicial proceedings, held the violators criminally liable.

As part of the case, it was found that the MUPV Roads of Vladivostok purchased inert construction materials for the needs of the administration from the group of companies Vostokcement, controlled by the family of the former Mayor of Vladivostok, for more than 1.4 billion roubles.

As a result of court proceedings on 9 April 2019 on the aggregate of several articles of the Criminal Code of the Russian Federation criminal court sentenced the former Vladivostok Mayor to 15 years imprisonment and fined him 500 million roubles, Director of Vostokcement Ltd received an eight-year suspended prison sentence and is fined 500,000 roubles. The former Director of Vladivostok Roads Municipal Unitary Enterprise also is sentenced to 10 years’ imprisonment and is fined 500 million roubles.

Are there any plans to reform the competition law?

In order to protect and develop competition modern antimonopoly regulation should take into account specific nature of the digital economy. In this regard, the FAS developed a draft law on the digital economy and antimonopoly regulation in digital markets – the "fifth antimonopoly package".

The draft law defines new concepts, including "network effects", in the presence of which an economic entity can be recognised as dominant with a market share of more than 35 per cent and revenue for the past calendar year exceeding 400 million roubles.

In addition, the "fifth package" introduces new approaches to controlling economic concentration. In particular, a new criterion for preliminary approval of transactions is being introduced – volume of the transaction should exceed 7 billion roubles.

In line with the legislative regulation on combating cartels and other anticompetitive agreements, the FAS has developed draft laws, which are currently submitted to the State Duma of the Federal Assembly of the Russian Federation:

  • Draft Federal Law No. 848246-7 On Amendments to the Criminal Code of the Russian Federation and the Criminal Procedure Code of the Russian Federation. The changes will affect the wording of article 178 of the Criminal Code of the Russian Federation (restriction of competition) in terms of toughening criminal liability for anticompetitive agreements, as well as the introduction of alternative investigative jurisdiction under this article for the Investigative Committee of the Russian Federation and the Ministry of Internal Affairs of Russia.
  • Draft Federal Law No. 848392-7 On Amendments to the Federal Law On Protection of Competition and Certain Legislative Acts of the Russian Federation in terms of increasing the efficiency of identifying and suppressing anticompetitive agreements and concerted actions, which provides for the introduction of new provisions:
  • the right of the antimonopoly body to seize (suppress) documents and receive explanations;
  • the right of the antimonopoly body to obtain the results of operational-search activities;
  • the right to provide experts with case materials containing legally protected secret;
  • maintaining a register of anticompetitive agreements participants; and
  • the procedure for concluding an agreement on cooperation between the antimonopoly body and an economic entity, submitted to mitigate liability or release from liability for the conclusion of anticompetitive agreement or for the implementation of concerted actions restricting competition.
  • Draft Federal Law No. 848369-7 On Amendments to the Code of Administrative Offences of the Russian Federation (on administrative liability for concluding an anticompetitive agreement). Paragraphs 1, 5, 7 of the Note to article 14.32 of the Code of Administrative Offences of the Russian Federation are set out in a new edition. A new article 19.4 has been developed, which provides for liability for impeding the lawful activities of an official of the FAS or its Regional Office.

In addition, a draft federal law On Amendments to the Code of Administrative Offences of the Russian Federation was developed (on reducing the amount of administrative fines). It is proposed to supplement article 32.2 with Part 1.3 related to reducing the administrative liability for persons recognised as participants of anticompetitive agreements that are willing to voluntarily pay a fine no later than 20 days from the date of the issuance of a decision on imposition of an administrative liability.

The most significant planned amendments to the antimonopoly legislation of the Russian Federation include:

  • extension of the prohibitions contained in the antimonopoly legislation of the Russian Federation to actions (inaction) and agreements with the use of exclusive rights to the results of intellectual activity;
  • assessment of legal and organisational foundations of state regulation of trading activity, control over its organisation and conduct, including adoption of uniform rules for conducting auctions, publishing information on such auctions in the unified state information system (with the exception of cases related to state defence and security); ensuring conduct of these auctions in the form of electronic auctions with the assistance of operators of electronic platforms functioning in accordance with the legislation on the contract system, with the exception of cases provided for by acts of the President of the Russian Federation and the government of the Russian Federation;
  • reforming the legislation on the contractual system in the field of procurement of goods, works, services to increase the openness and transparency of procurement for small and medium-sized businesses, ensure promotion of competition, as well as respect of the rights and legitimate interests of both procurement participants and customers, including taking into account the use of exchange and over-the-counter price indicators for exchange commodities;
  • statutory regulation of the formation of a unified base of the results of intellectual activity created at the expense of budgetary funds for the purpose of their replication and use;
  • reforming the statutory regulation of the procedure for granting state and municipal preferences, which includes unifying and systematising state and municipal preferences;
  • establishment of administrative liability for officials for failing to perform the obligation to take inventory and put state or municipal property into economic turnover;
  • imposition of restrictions on the ownership (creation, establishment) by the state, municipal or economic entities in the commodity and financial markets in a competitive environment, with the exception of cases provided for by federal laws;
  • introduction of a ban on the use of discriminatory approaches in the tariff setting for services for maintaining bank accounts of legal entities and individual entrepreneurs;
  • improving tariff regulation and increasing the efficiency of natural monopolies, including through the adoption of the Federal Law On the Basics of State Regulation of Prices (Tariffs), strengthening of control over cartels, extension of antimonopoly requirements to the results of intellectual activity, an active contribution to ensure the implementation of the Competition Development Standard in the subjects of the Russian Federation; and
  • ensuring the execution of powers for state control and supervision over compliance with antimonopoly legislation, legislation on the contract system, legislation on the procurement of goods, works, services by certain types of legal entities and legislation on natural monopolies in the framework of the implementation of national projects.

In particular, the following draft laws have been developed, which are undergoing interagency approval procedures:

  • Draft Federal Law On Amendments to the Federal Law On Protection of Competition and Certain Legislative Acts of the Russian Federation (on the provision of information constituting banking and tax secret to the antimonopoly authorities). It was proposed to provide the antimonopoly body with the right to receive information constituting tax and banking secrets, as well as submission to the antimonopoly body information on connections between subscribers and (or) users of communication services.
  • Draft Federal Law On Amendments to the Tax Code of the Russian Federation (on the provision of information constituting tax secret to the antimonopoly authorities).
  • Draft Federal Law On Amendments to the Federal Law On Protection of Competition and Certain Legislative Acts of the Russian Federation (on the provision of information constituting secrecy of communication to the antimonopoly authorities). The draft law provides for granting the antimonopoly body the right to obtain information constituting a secrecy of communication required to fulfil the assigned mission, when conducting inspections on compliance with the requirements of articles 11, 16 and (or) paragraph 1 of part 1 of article 17 of the Federal Law of 26 July.
  • 2006 No. 135-FZ "On Protection of Competition", as well as when considering cases on violation of antimonopoly legislation, initiated on the grounds of violation of the aforementioned articles.

In 2019, the FAS together with the federal executive authorities developed a draft National Competition Development Plan for 2021–2025.

The main goal of the new National Plan will be the transition from quantitative indicators to qualitative ones. One of the primary objectives for the next five years is the digitalisation of antimonopoly regulation. In addition, the draft National Plan provides for deregulation of natural monopolies, involvement of state and municipal property in the economic turnover, as well as development of exchange trade.

The priority sectors for the development of competition are healthcare, agro-industrial complex, financial markets, road construction, science and education, information technology, telecommunications, housing and utilities sector, electric power industry, natural resources and transport.

When did the last review of the law occur?

The main goals and objectives of the FAS in 2019 were related to the implementation of the National Competition Development Plan for 2018–2020, approved by the Decree of the President of the Russian Federation of 21 December 2017 No. 618 On the Main Directions of State Policy on the Development of Competition.

As part of the implementation of the National Plan, the President of the Russian Federation instructed the Government of the Russian Federation to develop a comprehensive "roadmap" for competition development in 2018–2020.

At the end of 2019, 19 out of 38 goals set in the "roadmap" were achieved, including:

  1. Introduction of Federal Law No. 485-FZ of 27 December 2019 On Amendments to Federal Law On State and Municipal Unitary Enterprises and Federal Law No. 135-FZ of 26 July 2006 On Protection of Competition, which prohibits the creation and operation of unitary enterprises in competitive markets. The elimination of state and municipal unitary enterprises in all competitive sectors of the economy is one of the necessary measures to eliminate excessive state regulation. Currently, in Russia there are a lot of state-owned enterprises that work in areas with developed competition: heat supply, water supply, sanitation, housing management, trade and the provision of services. The FAS believes that they adversely affect competition and lead to monopolisation due to granting unreasonable privileges to state-owned enterprises. In carrying out the industrial policy of the state, the FAS should ensure the implementation of progressive changes in the structure of industrial production without harm to competition. The transformation of unitary enterprises will help to eliminate such disadvantages of this form of organisation as low labour productivity, "protected demand" for the company's products, additional opportunities for its capitalisation by the property owner, as well as the lack of market signals for changing inefficient management team.
  2. Coming into force on 1 June 2019, Federal Law No. 527-FZ of 27 December 2018 ‘On Amendments to Articles 46 and 54 of the Federal Law "On Communications’, which secured the abolition of charging fees for incoming voice connections throughout the Russian Federation, equal conditions for tariffication of communication services in the home region and when traveling across the territory of the Russian Federation in the communication network of your operator. In 2019, the FAS managed to complete the process of cancellation of intranetwork roaming – a service that operator provides to its users when they travel across the country and automatically get connected to their operator’s network. From the beginning, companies refused to comply with the requirements of the FAS and later set the cost of services in the region of residence equal to the ones in home region, but introduced a fee for incoming long-distance calls to compensate for the lost income. Finally, the FAS succeeded in establishing equal pricing conditions for communication services in the home region and for travellers across the territory of the Russian Federation in the network of its operator. On average, the cost of communication services for travellers across Russia reduced from two to five times when person was in the network of another operator. It is worth mentioning that the FAS won the competition advocacy contest of the World Bank and ICN in the category "Promoting competitive digital infrastructure, digital platforms and digital finance" with the project on abolishing intranetwork roaming. Experience has shown that due to this initiative, customer loyalty increased and reduction in tariffs led to a comparably sized increase in traffic. Abolition of roaming will contribute to the development of the telecommunications market, more active involvement of customers in the usage of telecommunications services, increase transparency in this area and make telecommunication tariffs clearer, which will benefit both users and telecom operators.
  3. Introduction of Federal Law No. 509-FZ of 27 December 2019 On Amendments to Article 52 of the Law on Protection of Competition, which excludes the possibility of suspending the actions of decisions and orders of antimonopoly authorities in relation to state authorities.
  4. Introduction of amendments to the Federal Law No. 135-FZ of 26 July 2006 On Protection of Competition that include the concept of antimonopoly compliance (adopted in 2020). To comply with the antimonopoly legislation and prevent its violation, economic entity may introduce a system of in-house conformity to the norms of the antimonopoly legislation.
  5. Increased efficiency of state control over compliance with the legislation of the Russian Federation on the contract system and the legislation of the Russian Federation on the procurement of goods, works, and services by certain types of legal entities was obtained by enhancement of regulatory framework in connection with the Federal Law No. 71-FZ of 1 May 2019 On Amendments to the Federal Law On the Contract System for Procurement of Goods, Works, Services for State and Municipal Needs that came into force aimed at electronification of the procurement system
  6. In the field of gas supply, a transition to market pricing has been ensured through the formation of exchange and over-the-counter indicators of natural gas prices by the Decree of the Government of the Russian Federation No. 1063 of 17 August 2019.
  7. Coming into force of the Federal Law No. 134-FZ of 6 June 2019 On Amendments to the Federal Law On Medicine Circulation in relation to the state regulation of prices for medicinal products included in the list of vital and essential medicines, developed by the FAS, and Resolution of the Government of the Russian Federation No. 1683 of 16 December 2019 On the revision (reregistration) of maximum ex-works prices for medicinal products included in the list of vital and essential medicines registered in the period from 2010 to 2019. In addition, an obligation on manufacturers to reduce prices when they decrease in reference countries has been introduced.

Do you have a separate economics team? If so, please give details.

There is no separate economics department at the FAS. However, owing to the divisional structure (with departments responsible for particular sectors of the economy), economists work in each of the departments. Moreover, Research and Methodology Division of the Administrative Department of the FAS is responsible for the organisation of market studies and methodological support to Regional Offices.

Besides this, a special institution inside the FAS, the Methodological Council, is in charge of the following functions in the economics field:

  • economic research;
  • consideration of drafts of methodological recommendations on implementation of legislation, elaborated by structural units of the FAS Central Office and the FAS Regional Offices;
  • summarisation of enforcement practice, provision of methodological support to the FAS experts; and
  • review and approval of the annual Report on State of Competition in the Russian Federation for the Government of the Russian Federation.

Experts of the FAS in the field of economics, heads of departments of the FAS Central Office and officials of the FAS Regional Offices participate in the Methodological Council. The Council may invite members of the Public Advisory Council and expert councils, established under the FAS, representatives of federal executive authorities and executive authorities of Russian subjects to its meetings. The Council may also engage with business alliances, non-profit institutions, non-governmental and scientific organisations.

The Commission for the Analysis of Commodity Markets operates at the FAS, which includes representatives of the structural units of the Central and Regional Offices of the FAS, Public Advisory Council and expert councils of the FAS, other government authorities, as well as representatives of business, public associations and scientific organisations. The Commission’s functions include consideration of proposals by representatives of the FAS and drafting plans of the agency’s work for the analysis of commodity markets, guidelines for the relevant analyses and their approval, as well as reviewing the materials and results of the analysis of commodity markets.

The Commission approves the FAS Work Plan for analysing the state of competition in commodity markets, which specifies the list of commodity markets for an annual survey.

The main issues of analysing the state of competition in sectoral commodity markets, proposals on measures aimed at developing competition, including draft legislative and regulatory acts, are considered at regular meetings of Expert Councils under the FAS Russia, consisting of representatives of the relevant Departments of the FAS Russia, industry specialists, and scientists.

Expert councils are usually headed by the deputy heads of the FAS Russia, who are responsible for the competition development and enforcement in the respective industries.

Andrey Tsyganov, the deputy head of the FAS, is the head of the FAS Methodological Council and the FAS Commission for the Analysis of Commodity Markets.

Has the authority conducted a dawn raid?

To ensure compliance with the antimonopoly legislation, an antimonopoly body can carry out scheduled and unscheduled (dawn raids) inspections of the federal executive bodies, the authorities of the subjects of the Russian Federation, local self-government bodies, other agencies and organisations exercising the functions of the above bodies, as well as state extra-budgetary funds, commercial and non-commercial organisations or individuals, including individual entrepreneurs (further on also referred to as an inspected person) (article 25.1 of the Law on Protection of Competition and the FAS Order of 25 May 2012 No. 340 On the approval of the administrative regulations of the Federal Antimonopoly Service for the execution of the state function to conduct inspections of compliance with the requirements of the antimonopoly legislation of the Russian Federation).

The FAS has the power to carry out the following activities in the framework of the investigation:

  • require documents, explanations in written or oral form and different information including commercial, official or internal data protected by law;
  • request information from individuals and legal entities;
  • perform electronic or computer search;
  • conduct planned and unplanned inspections (dawn raids) of legal entities and public authorities;
  • explore the territory, premises, documents and objects of the entity; and
  • involve specialists or experts with special knowledge when necessary.

These measures do not require court permission. During dawn raids, the FAS may examine documents and explore the territories and premises only of legal entities. Personal belongings may be inspected only by law enforcement agencies. If necessary, the FAS has the right to apply to law enforcement authorities for additional investigative actions that are beyond its powers.

In 2019, the FAS conducted 89 dawn raids.

For example, one of the priorities of the FAS is effective implementation of supervisory responsibility in the healthcare sector.

Based on the results of the dawn rides conducted together with the Dagestan Republic Office of the Federal Security Bureau, the FAS initiated proceedings against RegonPharma" Ltd, Globalmedtekh Ltd, Dagmedtechnika Ltd, Medpharmsnab Ltd and Ministry of Healthcare of the Dagestan Republic for maintaining prices at auctions for supplying medicine and medical products for medical facilities in 2015–2018.

It should be noted that these dawn raids have become a striking example of one of the most effective forms of interaction between antimonopoly and law enforcement agencies – the parallel activities of these agencies to identify, investigate and suppress cartels.

Simultaneously with the initiation of a case on violation of antimonopoly legislation (paragraph 2 of the Part 1 of article 11 of the Law on Protection of Competition), the Investigation Department of the Ministry of Internal Affairs of the Dagestan Republic opened a criminal case under paragraph "a" of Part 2 of article 178 of the Criminal Code of the Russian Federation.

This case was the largest in terms of the number of auctions at which anticompetitive agreements were implemented. Thus, according to the decision of the FAS, the anticompetitive agreements of the cartel participants led to the maintenance of prices during 1,010 procurement procedures in 2015–2018 and the total income of the cartel participants amounted to more than 2 billion roubles.

Cartel participants were brought to administrative liability in the form of fines totalling more than 116 million roubles.

Has the authority imposed penalties on officers or directors of companies for offences committed by the company? If yes, please provide the most recent instances.

Yes, the FAS has the right to bring officials and business executives to administrative liability:

  • by failing to obey the lawful request of the antimonopoly authority, officials can be fined between 2,000 and 4,000 roubles (article 19.4 of the Code of Administrative Offences of the Russian Federation);
  • by preventing the lawful activities of the antimonopoly authority from conducting inspections or by evading such inspections, officials can be fined between 2,000 and 4,000 roubles (part 1 of article 19.4.1 of the Code of Administrative Offences of the Russian Federation);
  • actions (inaction), provided by part 1 of article 19.4.1 of the Code of Administrative Offences of the Russian Federation, that make the completion of the inspection impossible, are punished by a fine on officials of between 5,000 and 10,000 roubles (part 2 of article 19.4.1 of the Code of Administrative Offences of the Russian Federation);
  • repeatedly committing an administrative offence under part 2 of article 19.4.1 of the Code of Administrative Offences of the Russian Federation, entails the imposition of a penalty on officials of between 10,000 and 20,000 roubles or disqualification for a period of from six months to one year (part 3 of article 19.4.1 of the Code of Administrative Offences of the Russian Federation);
  • in case of default in due time of the legal requirements (for example, regulations, submission, decision) of the antimonopoly body, officials may be fined between 18,000 and 20,000 roubles or disqualified for up to three years (article 19.5 of the Code of Administrative Offences of the Russian Federation);
  • in case of failure to submit or the late submission to the antimonopoly body of any data provided by the antimonopoly legislation of the Russian Federation, including the failure to present data at the request of the antimonopoly authority, as well as the deliberate submission to the antimonopoly authority of any false data, citizens may be penalised between 1,500 and 2,500 roubles, and officials may be fined between 10,000 and 15,000 roubles (part 5 of article 19.8 of the Code of Administrative Offences of the Russian Federation);
  • failure to pay the administrative fine within the time limit fixed by the Code of Administrative Offences of the Russian Federation shall result in the imposition of double the amount of the unpaid administrative fine (but not less than 1,000 roubles), an administrative arrest for a period of up to 15 days, or compulsory work for a period of up to 50 hours (part 1 of article 20.25 of the Code of Administrative Offences of the Russian Federation);
  • in case of recognition the company’s participation in the cartel, officials may be fined (according to article 14.32 of the Code of Administrative Offences of the Russian Federation) between 20,000 and 50,000 roubles or disqualified for up to three years.

It should be noted that not only officers of companies but also public officials could face administrative fines.

In accordance with articles 15 and 16 of the Law on Protection of Competition, the FAS is empowered to monitor the actions of public authorities, including anticompetitive acts and actions (inactions) taken by them, as well as agreements restraining competition or concerted actions. For violation of the prohibitions established by these articles, the FAS has the right to make decisions on sanctions against the authorities. Moreover, for repeated violation public officials face disqualification without any alternatives according to the court decisions.

In 2019, the FAS considered 6,040 applications (article 15 – acts and actions that restrain competition), 331 cases were initiated. In 258 cases, a decision was made to recognise the violation and 168 rulings were issued.

In 2019, 812 applications regarding anticompetitive agreements with the participation of authorities were received (article 16, restricting competition agreements and concerted actions). Some 286 cases were initiated. In 276 cases, a decision was made to recognise the violation and 133 rulings were issued.

It is important that the FAS Russia has the authority to suppress violations of the government agencies, including their participation in cartels.

In 2019, the FAS managed to restore competition when the Governor of the Irkutsk region, government of the Irkutsk region and several entities entered into an agreement that restricted access to the works on an investment project for constructing a new terminal in the Irkutsk International Airport as a result of which, a private investor for the construction of the airport terminal was selected without any competitive procedures.

Moreover, the FAS suppressed unfair behavior in more than a thousand tenders for procurement and supply of pharmaceuticals to hospitals and the Ministry of Healthcare of the Dagestan Republic. Cartel members, the Ministry of Healthcare of the Republic of Dagestan and Dagestan Republican Oncology Treatment Clinic were found guilty of concluding an anticompetitive agreement between the customer and auction participants.

The FAS believes that rigorous compliance with the antimonopoly legislation by the authorities guarantees observance of the legitimate rights of economic entities, competition support, saving public funds and successful implementation of infrastructure projects.

What are the pre-merger notification thresholds, if any, for the buyer and seller involved in a merger?

Under article 27 of the Federal Law on Protection of Competition, the following actions shall only be performed with the antimonopoly body’s prior consent:

  • the merger of commercial organisations (with the exception of financial organisations), if the aggregate value of the assets thereof (assets of their group of persons) in accordance with the accounting balance sheets as at the latest reporting date preceding the date of submission of the petitions (further on referred to as the latest balance sheet, in the case of submission of a notice, shall be deemed to be the accounting balance sheet as at the latest reporting date preceding the date of merging the commercial organisations) exceeds seven billion roubles or if the aggregate revenues from the sale of commodities of such organisations (their group of persons) for the calendar year preceding the merger exceed 10 billion roubles;
  • joining one or several commercial organisations (with the exception of financial organisations) with another commercial organisation (with the exception of a financial organisation), if the aggregate value of the assets thereof (assets of their groups of persons) in accordance with their latest balance sheets exceeds 7 billion roubles or if the aggregate revenues from the sale of commodities of such organisations (their group of persons) from the calendar year preceding the consolidation year exceed 10 billion roubles;
  • the merger of financial organisations or joining of one or several financial organisations with another financial organisation, if the aggregate value of the assets thereof, in accordance with their latest balance sheets, exceeds the amount established by the government of the Russian Federation (in case of a merger or consolidation of landing institutions, this amount shall be established by the government in coordination with the Central Bank);
  • establishing a commercial organisation, if its charter capital is paid by stocks (shares) or property that are the main production-related assets or intangible assets of another commercial organisation (with the exception of a financial organisation), in particular, on the basis of an act of transfer or dividing balance sheets, and in relation to those stocks (shares) or property, the newly established commercial organisation shall acquire the rights stipulated by article 28 of this Federal Law and the aggregate value of the assets in accordance with the latest balance sheets of the founders of the commercial organisation (their groups of persons) and persons (their groups of persons), whose stocks (shares) or property are contributed to the charter capital, exceeds 7 billion roubles or if the aggregate revenues of the founders of the commercial organisation (their groups of persons) and persons (their groups of persons), whose stocks (shares) or property are contributed to the charter capital, from selling goods in the last calendar year exceed 10 billion roubles;
  • incorporation of a commercial organisation if the charter capital is paid by stocks (shares) or assets of a financial organisation (except monetary funds) or the new commercial organisation acquires such stocks (shares) or assets of a financial organisation, and with regard to such stocks (shares) acquired the rights provided for by article 29 of this Federal Law, and the value of the assets in accordance with the latest balance sheet of the financial organisation whose stocks (shares) or assets are being contributed to the charter capital exceeds the amount established by the government of the Russian Federation (in case of the stocks (shares) or assets (except monetary funds) of a credit organisation, this sum shall be established by the government in coordination with the Central Bank);
  • a financial organisation merging with a commercial organisation (except a financial organisation), if the asset value of the financial organisation in accordance with the latest balance sheet exceeds the value established by the government of Russia;
  • a commercial organisation (except a financial organisation) merging with a financial organisation if the asset value of the financial organisation in accordance with the latest balance sheet exceeds the value established by the government (for merging with a credit organisation such value is established by the government in coordination with the Central Bank); and
  • joint venture agreement performed by the economic entities and competitors in the territory of the Russian Federation if the aggregate value of the assets thereof (assets of their groups of persons) in accordance with their latest balance sheets exceeds 7 billion roubles or if the aggregate revenues from the sale of commodities of such economic entities (their group of persons) from the calendar year preceding the agreement exceed 10 billion roubles.

The requirement for obtaining the antimonopoly body’s prior consent for exercising actions shall not apply if actions specified in this article are performed by members of the same group of persons on the grounds specified in paragraph 1 of part 1 of article 9 of this Federal Law, or if transactions specified in part 1 of this article are completed in compliance with conditions specified in article 31 of this Federal Law, or the performance of such actions are stipulated by decrees of the President of the Russian Federation or acts of the government of the Russian Federation.

Every year the number of transactions subject to FAS control is decreasing due to amendments to the competition legislation aimed at elimination of unnecessary administrative burden to legal entities. In 2005, the FAS received around 6,000 pre-merger and 44,000 post-merger petitions. After changes to the antimonopoly law (consecutive introduction of four antimonopoly packages of amendments) as well as abolishing notifying merger control (30 January 2014) the figures fell considerably. In 2015, the FAS considered 1,793 pre-merger and 165 post-merger notifications filed by economic entities. In 2019, the FAS considered only 1052 pre-merger notifications and 144 post-merger notifications.

Are there any restrictions on investments that involve less than a majority stake in the business?

There are no restrictions for investments provided by the Federal Law on Protection of Competition. The legal regulations for foreign investments within the territory of the Russian Federation are carried out as provided for by other federal laws, regulatory acts and international agreements of the Russian Federation.

The special Federal Law No. 57-FZ of 29 April 2008 Procedures for Foreign Investments in the Business Entities of Strategic Importance for Russian National Defence and State Security sets up special rules on acquiring shares in the business entities of strategic importance. The law divides foreign investors into two groups: public foreign investors, such as foreign states, international organisations and entities under their control; and private investors meaning any other entities. Public investors are banned from acquiring controlling stake in Russian strategic company and must seek government approval to acquire a minority stake of more than 25 per cent of voting rights in strategic company and 5 per cent in a company using federal subsoil.

Russian strategic entity is considered "under control" of a foreign investor if the latter has the right, directly or indirectly, inclusive on the contractual basis, to:

  • manage more than 50 per cent of voting rights of the entity (or less than 50 per cent when the proportion of voting rights held by investor and other shareholders permits investor to determine decisions of the entity);
  • determine decisions taken by the entity, including terms and conditions of conducting its business activity;
  • appoint the CEO or more than 50 per cent of the collective executive body or the other managing body of the entity (board of directors, supervisory council, among others); and
  • act as the managing company of the entity.

Russian strategic entity using federal subsoil is considered "under control" of foreign investor if the latter has the right, directly or indirectly, inclusive on the contractual basis, to:

  • manage more than 25 per cent of voting rights of the entity;
  • determine decisions taken by the entity, including terms and conditions of conducting its business activity;
  • appoint the CEO or more than 10 per cent of the collective executive body or the other managing body of the entity (board of directors, supervisory council, among others); and
  • act as the managing company of the entity.

Foreign investments in the strategic enterprises are considered by the special Commission on Monitoring Foreign Investment under the Government of the Russian Federation. The Commission considers and gives a preliminary approval of deals entailing the imposition of control over strategic legal entities by a foreign investor or a group of private individuals and legal entities comprising a foreign investor.

The Head of the government of the Russian Federation is the head of the Commission. The head of the FAS is a member and a secretary at the Commission and reports on its meetings.

The FAS is empowered to make proposals on matters requiring consideration at a meeting of the Commission and to provide information and analytical support of the Commission’s activity.

In 2019, the Сommission considered 29 deals on foreign investments into strategic enterprises, 24 of which were approved (six of them had remedies), with five being blocked or postponed.


Russia: from the enforcer's competition economists

Address: 11 Sadovaya-Kudrinskaya Street, 125993, Moscow, D-242, GSP-3, Russia
Tel: +7 499 755 23 23 (ext. 455)
Fax: +7 499 755 23 24
Email: [email protected]
Web: http://en.fas.gov.ru

Contacts

image 62
Igor Artemiev
Head

image 63
Andrey Tsarikovskiy
Stats Secretary, Deputy Head

image 64
Alexey Dotsenko
Deputy Head

image 65
AMikhail Evraev
Deputy Head

image 66
Daniil Fesyuk
eputy Head

image 67
Anatoly Golomolzin
Deputy Head

image 68
Andrey Kashevarov
Deputy Head

image 69
Vitaly Korolev
Deputy Head

image 70
Sergey Puzyrevskiy
Deputy Head

image 71
Alexander Redko
Deputy Head

image 72
Andrey Tsyganov
Deputy Head

image 73
Pavel Zaborsсhikov
Deputy Head

Questions and answers

How many economists do you employ?

Currently, the structure of the Federal Antimonopoly Service (FAS) consists of a Central Office and 84 regional offices. The number of public servants of the Central Office of the FAS is 1,299 and the number of public servants of the regional offices of the FAS is 2,205.

It is hard to specify the exact number of economists at the FAS because many employees have several higher education qualifications as well as due to the employee turnover. We estimate the number of economists (with at least one diploma or degree in economics) to be 601. Many employees have completed special professional courses, including in economics.

Do you have a separate economics unit, or ‘bureau’?

There is no separate economics department at the FAS. However, owing to the divisional structure (with departments responsible for particular sectors of the economy), economists work in each of the departments. Moreover, Research and Methodology Division of the Administrative Department of the FAS is responsible for the organisation of market studies and methodological support to Regional Offices.

Besides this, a special institution inside the FAS, the Methodological Council, is in charge of the following functions in the economics field:

  • economic research;
  • consideration of drafts of methodological recommendations on implementation of legislation, elaborated by structural units of the FAS Central Office and the FAS Regional Offices;
  • summarisation of enforcement practice, provision of methodological support to the FAS experts; and
  • review and approval of the annual Report on State of Competition in the Russian Federation for the Government of the Russian Federation.

Experts of the FAS in the field of economics, heads of departments of the FAS Central Office and officials of the FAS Regional Offices participate in the Methodological Council. The Council may invite members of the Public Advisory Council and expert councils, established under the FAS, representatives of federal executive authorities and executive authorities of Russian subjects to its meetings. The Council may also engage with business alliances, non-profit institutions, non-governmental and scientific organisations.

The Commission for the Analysis of Commodity Markets operates at the FAS, which includes representatives of the structural units of the Central and Regional Offices of the FAS, Public Advisory Council and expert councils of the FAS, other government authorities, as well as representatives of business, public associations and scientific organisations. The Commission’s functions include consideration of proposals by representatives of the FAS and drafting plans of the agency’s work for the analysis of commodity markets, guidelines for the relevant analyses and their approval, as well as reviewing the materials and results of the analysis of commodity markets.

The Commission approves the FAS Work Plan for analysing the state of competition in commodity markets, which specifies the list of commodity markets for an annual survey.

The main issues of analysing the state of competition in industry commodity markets, proposals on measures aimed at developing competition, including draft legislative and regulatory acts, are considered at regular meetings of Expert Councils under the FAS Russia, consisting of representatives of the relevant departments of the FAS Russia, industry specialists and scientists.

Expert councils are usually headed by the Deputy Heads of the FAS Russia, who are responsible for the competition development and enforcement in the respective industries.

Do you have a chief economist?

Andrey Tsyganov, the deputy head of the FAS, is the head of the FAS Methodological Council and the FAS Commission for the Analysis of Commodity Markets.

To whom does the chief economist report?

To the Head of the FAS and to the Presidium of the FAS.

Does the chief economist have the power to hire his or her own staff?

Every employee is appointed by the head of the FAS. However, each dDeputy head and department head can fill vacancies from a list of candidates on a competitive selection basis and can express his or her own opinion about candidates to the department’s team.

Members of the Methodological Council and the Commission for the analysis of commodity markets are nominated by an order of the head of the FAS.

How many economists have a PhD in industrial economics?

A total of 29 employees have a PhD in economics.

Does the agency include a specialist economist on every case team? If not, why not?

Yes. In every particular antitrust case there is at least one economist in all case considerations by the FAS.

Is the economics unit a ‘second pair of eyes’ during cases – is it one of the agency’s checks and balances? If not, why not?

In accordance with the Law on Protection of Competition, conducting an economic analysis of commodity market to the extent required is mandatory when considering each case on violation of antimonopoly legislation.

According to the FAS’s orders, every case team should have at least one lawyer, one economist and a specialist in the relevant economic sector. Decisions on cases are reached through joint discussions with all the case team members, hence economic considerations are always taken into account during investigations and the decision-making process.

How much economics work is outsourced? What type of work is outsourced?

Some researches for issues determined by the FAS are outsourced. Most of these concern general research and development.

The types of research and development that are outsourced are determined by internal documents of the FAS on an annual basis.

In the framework of particular cases, economic analysis is usually carried out in-house.

View all profiles

Get unlimited access to all Global Competition Review content