November 30, 2017, 02:12 / Economics Exclusively by subscription

“My dream is to create a people’s business front against monopoly”

How the transfer of tariff regulation powers to the Federal Antimonopoly Service formed a new attitude towards natural monopolies Igor Artemyev , head of FAS

After the transfer of powers on tariff regulation and in the field of state defense procurement to the Federal Antimonopoly Service, we began to look at a lot of things completely differently. This synergy forms a new attitude towards natural monopolies. Previously, we worked in an ex post mode: there is a high price that has developed as a result of monopolistic activity, we conduct an investigation and, in case of violation, fine the companies. At the same time, we did not understand either the economics of the enterprise or the logic of its leaders. Now we are trying to understand the business of corporations, identify the center of financial responsibility, look at how they make purchases, and understand where such gigantic costs come from. We work in preliminary control mode, we know what economic processes are taking place within the company, what ideology its management adheres to. And antitrust violations no longer come as a surprise to us. The combination of procurement control, antimonopoly control and tariff regulation allows us to understand which strategic decisions are necessary for the state and which may cause harm.

We have become a preventive control body: we have switched to a yellow card mechanism. And only against those who do not respond to our warnings do we begin an antimonopoly investigation. In 2016, for the first time, the number of warnings exceeded the number of cases filed. More than 75% of warnings were implemented by companies. The load on our employees and the judicial system has decreased. We began to concentrate on the largest cases that affect the state of competition throughout the country.

The seven-year work of the Association of Antimonopoly Experts and the FAS culminated in the fact that on October 11, 2017, the FAS Presidium approved the methodology for determining damages and losses to companies in case of antimonopoly violations. It analyzes the long-term practice of the FAS, provides examples of violations that create prerequisites for calculating losses, general economic principles and model calculations of damage. We are launching a broad campaign to train our employees and company employees in the use of this technique. It allows us to be involved by third parties in the process, but only in some cases - we do not participate in monetary matters.

Igor Artemyev

He graduated from Leningrad State University with a degree in biology, as well as St. Petersburg State University with a degree in jurisprudence. In 1990, he was elected as a deputy of the Leningrad City Council, chairman of the commission on ecology and urban management. In 1996, he was appointed first vice-governor and chairman of the finance committee of the St. Petersburg administration. In December 1999 he became a State Duma deputy. Deputy Chairman of the Yabloko faction, Deputy Chairman of the Committee on Credit Institutions and Financial Markets. Since March 10, 2004 – Head of the Federal Antimonopoly Service.

In different countries, private lawsuits and recovery of damages from violators of antitrust laws have long been a more effective measure than the actions of the regulator and even multi-billion-dollar fines to the budget. In the United States, a company that violates the Sherman Act pays a fine to the state in criminal proceedings and triple damages in civil proceedings. The European Commission has published practical guidance on the assessment of damages in claims for damages caused by violations of Art. 101 or 102 of the Treaty on the Functioning of the EU (on competition rules - Vedomosti).

In Russia there were two examples of recovery of damages from private claims - 1.1 billion and 1.6 billion rubles. While for the entire 2016 more than 6,000 decisions imposing fines were issued for antimonopoly violations, 890 million rubles were paid for them, in the first half of 2017 - about 3,000 decisions and 854 million rubles. fines.

We have been pushing for many years to have a class action system in place. They are needed so that our economy can breathe and develop. So that entrepreneurs stop harming each other. My dream is to create a people's business front against monopoly. It will be more effective than government agencies. It creates judicial precedents and creates intolerance towards antitrust violations.

What problems should we solve in the near future?

– It is necessary to adopt a special chapter of the Law “On Competition” dedicated to the digitalization of the economy. In the near future, we will explain how we will achieve the transfer of technology from foreign companies in favor of Russian competitors. In major transactions, we must ensure the interests of our country ( Bayer must share with Russian companies technologies in the field of seed selection necessary to create new varieties and hybrids applicable in the Russian climate, as well as databases for digital farming - this was the condition set by the FAS for approving the deal from Monsanto - Vedomosti).

– We will move further away from the protective function and will increasingly ask the government to support our efforts to develop competition institutions. These include industry programs for the development of competition, and our proposal to formalize by presidential decree the most important elements of state policy and state strategic planning for the next 20-30 years. Competition does not require a lot of money, but it is a fantastic opportunity to increase the reserves of our economy, which we are poorly using today.

– We are starting to work on changing approaches to natural monopolies and preparing a chapter in the competition law instead of the 1995 law on natural monopolies.

Only network assets will remain natural monopolies. It is necessary to release ports, airports, and the telecommunications system and prepare them for privatization. In order for private investment to come to these sectors, the FAS and other government bodies must stop constantly monitoring them.

– The history of one of the most cartelized economies in the world must gradually come to an end. We will identify and severely punish companies that most blatantly violated the law and caused harm to consumers. After all, there is criminal liability for participation in a cartel conspiracy in Russia.