| The head of the FAS "agreed" on the law "On the Protection of Competition" with experts Today, the revised draft law “On the Protection of Competition” will be submitted to the government. For almost a month, interested departments, mainly the Federal Antimonopoly Service (FAS), tried to improve the document, which was reviewed and “basically approved” by the Cabinet of Ministers on February 3. However, judging by yesterday’s discussion at the Higher School of Economics, there is still a lot of work to be done on a set of rules for the fight for a competitive environment in the economy.
The head of the service, Igor Artemyev, clearly wants to turn the FAS into one of the most significant departments, so that no one will ever talk about the antimonopoly authorities in the same way as yesterday the HSE scientific director Evgeniy Yasin described their work in previous years: “They were doing all sorts of nonsense, doing what oligarchs and ministers allowed.” Mr. Artemyev set the task of elevating antimonopoly authorities to the rank of macro-regulator, “preventing the influence of restrictions on competition on economic growth.” This is precisely the goal that the Law “On Protection of Competition” pursues. As Mr. Artemyev admitted, he and his associates “wanted to write a European law” that would reduce administrative barriers to business development and at the same time severely punish unfair competition. In particular, the bill does not require the consent of antimonopoly authorities for mergers or acquisitions of companies or enterprises if the total value of their assets is less than 3 billion rubles. (even small and medium-sized enterprises fall under today’s “standard” of 20 million rubles).
“The main task is to influence the behavior of large companies,” admits Mr. Artemyev and warns that if they violate antimonopoly legislation, the reaction will be “tough, uncompromising, and as effective as possible.” The reaction is recorded in amendments to the Administrative Code. For abuse of a dominant position in the market, a company found guilty will pay 0.5-2% of revenue, and for conspiracy restricting competition - from 1 to 4% (the punishment, according to the head of the FAS, is 2-3 times lighter than in USA, where antimonopoly authorities are generally a power structure). Serious fines are also provided for officials, including civil servants (the law also applies to executive authorities), whose orders affect healthy competition.
Since the bill was prepared taking into account the antimonopoly experience of developed countries, businessmen who disagree with the sanctions have somewhere to turn for protection - in court. “Any decision of the antimonopoly authorities can be suspended from the moment an application is submitted to the court office,” Mr. Artemyev said. And those who repent of the cartel agreement in time will not be punished. It is supposed to be written in the Administrative Code that “the person who first voluntarily declared his participation in an agreement restricting competition and provided the evidence necessary to establish the fact of such an agreement” is exempt from liability.”
Moreover, in certain cases some restrictions can be neglected altogether. True, for this it will be necessary to prove that excessive concentration of business or cartel agreement will bring more advantages than disadvantages. For example, they will increase competitiveness in the global market, provide an incentive for technical or economic progress, and provide consumers with a proportionate share of the benefits.
Evgeny Yasin, without a doubt, could not help but like the fact that the authors of the bill analyzed the experience of antimonopoly struggle in the United States and the European Union. However, Russia, as is known, has a “special position”, expressed, for example, in the participation of law enforcement agencies in competition. That is why Mr. Yasin asked Igor Artemyev to explain what internal Russian phenomena require the intervention of antimonopoly authorities today. Among such phenomena, the head of the FAS identified natural monopolies (he called them “unnatural”), competition-limiting actions of executive authorities and law enforcement agencies, collective dominance in the market (oil companies are especially distinguished by this, which led to a rise in gasoline prices). In addition, Mr. Artemyev does not like the way executive authorities conduct tenders, including public procurement. According to him, 98% of land plots were distributed without competition. In other areas, Mr. Artemyev claims, “there were only 17 percent of more or less fair competitions.”
Experts, following the government, “generally” approved the legislative innovations prepared by the FAS. However, the comments made clearly diminished Mr. Artemyev’s optimism about the quality of the document prepared by his subordinates. According to him, there were as many as five pages of such comments. In the opinion of Oksana Oleynik, Dean of the Faculty of Law at the Higher School of Economics, the law does not provide for preventive actions, in particular, there are no means of preventing attempts to dominate the market.
In turn, Svetlana Avdasheva, Deputy Director of the Institute for Analysis of Enterprises and Markets, and Igor Nikolaev, Head of the Strategic Analysis Department, objected to the concept of defining collective dominance fixed in the bill. According to Mr. Nikolaev’s calculations, from 50 to 70% of Russian enterprises fall under the proposed formulation, and therefore it “absolutely cannot be left in this form.” However, Mr. Artemyev found something to reassure the experts. It turns out that collective dominance is not a violation. FAS still has to prove that these enterprises are abusing their position.
Be that as it may, Mr. Artemyev promised to take into account many of the comments made by representatives of the expert community when working on the bill in the State Duma. Unless, of course, the law is returned from the White House for revision. Mikhail VOROBYEV |
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