The 6th Annual ICN Conference, Moscow, 2007 -About FAS of Russia -International Competition Network

About FAS of Russia

Dear colleagues!

Transition to market relations at the beginning of 90th demanded new regulation mechanisms of economic activities to emerge. It was antimonopoly regulation that became one of those mechanisms.

Competition encourages freedom of choice, freedom of entrepreneurship and freedom of entrance to the market. Development of competition results in increasing labor productivity, cost saving, strengthening and developing small business, enhancing quality and competitiveness of Russian made goods at international markets, mounting economic growth rate.

Despite its relatively short lifetime – the Russian competition authority celebrated its 15 anniversary in 2005 – necessity of existence of antimonopoly authorities is beyond any doubt with protection of competition becoming a task of both national and government levels.

FAS Russia intends to advance the struggle with cases of monopolism throughout the country. The service is expected to provide actual results. By applying rules of the newly adopted law “On Protection of Competition” the FAS Russia is going to protect and develop competition even more efficiently.

Igor Artemiev
Head of FAS Russia

FAS Russia Aims and Objectives

The Federal Antimonopoly Service of the Russian Federation is an authorized federal executive power authority responsible for control and supervision of observance over the Federal Laws on competition, natural monopolies and public procurements and advertising. The Service was established pursuant to the Decree of the President of the Russian Federation № 314 dated March 9, 2004.

The Antimonopoly Service is a major part of the governmental economic block and reports to the Russian Government.

FAS Russia is aimed at securing the freedom of competition and restricting monopolistic activities within the common economic space of the Russian Federation.

FAS Russia is designed for developing competition and entrepreneurship, providing equal access to goods and services rendered by natural monopolies and development of competition in competitively potential types of activities, raising social welfare.

FAS Russia performs its activities either directly and through its regional offices located in 75 subjects of the Russian Federation.

FAS Russia activities

Supervision and control at commodity and financial markets
FAS Russia:

 suppresses violations of the Antimonopoly Legislation
 controls activities of all governmental authorities with regard to their compliance with the Antimonopoly Legislation
 estimates consequences of commercial deals having significant effect on the market environment
 monitors markets with regard to their competition conditions

Supervision over Natural Monopolies
FAS Russia

suppresses violations of the Natural Monopolies Legislation
 verifies equal access to goods and services provided by natural monopolies
 develops suggestions for reforming natural monopolies to make their activity more transparent

Control over Advertising
FAS Russia

 prevents, reveals and suppresses emergence of unfair advertisements which may mislead the customers or cause damage to their health

Control over Government Procurement
FAS Russia

 maintains control over placing orders for procurement of goods, performance of work, rendering of services for public needs

FAS Russia – statistics (2005)

75 regional offices throughout the country
128 FAS Russia’s cancelled decisions by courts (20.7 per cent of all appealed decisions)
160 millions rubles of fines imposed for violation of the Antimonopoly and Advertising Legislation in 2005 (5.3 times as much as compared to 2004)
618 FAS Russia’s appealed decisions disputed at the court annually (4.6 per cent of all decisions taken)
1827 employees
2780 decisions taken annually
5725 opened files annually
7 194 petitions filed by economic entities and considered by FAS Russia in 2005 (by 20 per cent less as compared to 2004)
16 670 notifications received from economic entities in 2005 (by 1 per cent more as compared to 2004)
108,293.2 thousand rubles of illegally acquired income returned to the Federal Budget.

International cooperation

FAS Russia:

develops cooperation with international and interstate organizations, foreign competition authorities within its competence;

participates in elaboration of conditions for investigating cases of violation of the Antimonopoly Legislation of transnational nature;

represents the Russian Federation within its competence at international organizations (OECD, UNCTAD, APEC, ICN), promotes joining the country into WTO, OECD and a number of other organizations as a full-right member;

implements more that 20 international agreements (memorandums, joint-statements, etc.) on cooperation in the sphere of competition policy with EC member states, Latin America, the Republic of Korea, the People’s Republic of China, etc.;

participates in processes of economic integration with CIS member states aimed at creation a common economic space within the territory of the Commonwealth, as well as in processes implemented within the confines of various CIS integration structures such as the Russia-Belarus Union State, the Eurasian Economic Community, Common Economic Space created between the Republic of Belarus, the Republic of Kazakhstan, the Russian Federation and Ukraine.

Official web-site of the FAS Russia

Web-site was created in January, 2005, to reflect the most essential aspects of the FAS Russia activities on-line:

News provided by FAS Russia’s central office and regional offices
Information on antimonopoly investigations including texts of taken decisions and issued prescriptions
Information on court proceedings where FAS Russia is a party
Legal basis for activities of FAS Russia
Information on activities of Expert councils established within the Antimonopoly Service
Publications describing FAS Russia’s activities
Other information

Web-site of the Federal Antimonopoly Service is www.fas.gov.ru

New Law

On July 26, 2006 the President of the Russian Federation signed the Federal Law “On Competition Protection” that enters into effect in 90 days from the moment of its official publication. The Law was officially published on July 27, 2006. The new Law “On Competition Protection” essentially reduces administrative pressure upon business, thus, enters a lot of new tools allowing conducting the antimonopoly policy in the Russian Federation more effectively. The Federal Law “On Competition Protection” unites the provisions that were included earlier into the Law of the RSFSR of March 22, 1991 № 948-I «On Competition and Limitation of Monopolistic Activity in Commodity Markets” as well as into the Federal Law of June 23, 1999 № 117-FZ “On Protection of Competition in the Market of Financial Services ».

Regarding the control over economic concentration, under the new Law «On Competition Protection» the agreement of each deal on purchase of shares is cancelled. Reception of the preliminary approval of antimonopoly authority is necessary only in case of purchases of blocking share holding (25 %), controlling share holding (50 %) and a package of shares excluding the opportunity to block decisions of the shareholder by third parties (75 %). Threshold values for the preliminary approval of deals raise - up to 3 billion rubles (108’695’652 USD), for notifications about deals - up to 200 million rubles (7’246’377 USD). It reduces the amount of deals that are the subject for approval.

It is expected, that simultaneously with reduction of burden on antimonopoly authority’ officers, owing to reduction of the number of controlled deals, the quality of antimonopoly procedures, and consequently, state antimonopoly control as a whole, will increase. Besides, during realization of control activity over the processes of economic concentration the opportunity to issue not only behavioral but also structural remedies will appear.

In the new Law the procedure of consideration of cases on infringements of the competition legislation is stated in details, the persons participating in consideration of cases on antimonopoly infringements as well as other participants of the process are determined, their rights and a duties and also the order of appeal to court against the acts of the antimonopoly authority adopted in the result of legal proceedings are fixed.

Essential changes were introduced into provisions forbidding the authorities of state power of the Russian Federation and institutions of local governments to issue acts or to undertake actions aimed at restriction of competition. According to the Law “On Competition Protection” the Central Bank of the Russian Federation and state non-budget funds are included into the list of these authorities. The legislator introduced the definition of the state aid as an optional granting of individual privileges and advantages to specific economic entities as well as determined the order of granting of such aid.

The new Law establishes uniform antimonopoly requirements to holding by authorities of state power and institutions of local governments of all kinds of tenders and auctions. Besides, the competitive selection of the financial organizations by subjects of natural monopolies is established.

The new Law specifies the notions of the antimonopoly legislation. In particular, the concept of the concerted practice is introduced. This will allow proving in courts the fact of the undertaking of concerted practice by economic entities at realization of price parallelism and division of a market under the territorial principle. One of the basic innovations is the concept of the “collective dominance” in the some commodity markets. At that, the Law defines the quality characteristics of the markets where the collective dominance is possible. Besides, for the first time in the Russian antimonopoly practice the list of infringements “per se” is legislatively established, that is prohibitions from which the exceptions can not be made, and infringement of prohibitions “per se» can not be authorized by the antimonopoly authority or court.
You can access full version of the law here.