How to direct antitrust
policy to support
competition
Moscow
2014
A large number of antitrust
cases does not improve
competition
The share of eterprises of all respondents who believe that
the competitive environment has improved in last year
Cases
initiated by FAS 135-FZ
R= -0.52
source : www.fas.gov.ru, calculations NP «NAIZ»
2
Total number of cases of FAS
Russia more than in the rest of
the world combined
2006
2007
2008
2009
2010
2011
2012
4187
5068
6443
9664
11431
11276
10009
1166
1331
1639
2411
2742
3199
2582
agreements and concerted practices
124
232
359
488
607
482
292
anticompetitive actions of authorities
2002
2250
3523
5003
6102
5763
5065
372
448
517
687
927
1065
1132
94-FZ (public procurement)
8626
14186
12817
17138
17626
18511
Federal Law "On Advertising"
2806
3508
4480
5395
5451
5238
152
213
163
135-FZ:
abuse of dominant position
unfair competition
Federal Law "On Trade"
Administrative Code
Total
16500
9025
12908
19688
20672
22000
33162
39869
53804
55238
55921
Source: www.fas.gov.ru, calculations NP "NAIZ"
10 thousand antitrust cases per year - more than in all countries in the world together (a little
more than 100 countries have antitrust authorities).
This means:
1) The number of cases is redundant and should be radically reduced
or
2) The cases do not affect the behavior of monopolists
In any case, Russia should take a political decision on the level of the Government
about the Russian anti-monopoly policy
Bay Fire, strangers still
do not fear: the proportion of cases
against foreign companies
US
Russia
Cases
70%
Less 10%
Fines levied
90%
Less 1%
Source : calculations NP «NAIZ»
4
SME share in the cases of
FAS and in the Register of
monopolists
Cases, contested in court
Register of
Companies,
having a
market share >
35%
Cartels
Total
Abuse of
Agreements and
(p. 1 art. agreements
dominant
abuse of
dominant
11 135- (art. 11 135- position (art. 10
position (art. 10 &
FZ)
FZ)
135-FZ)
11 135-FZ)
2/3
64%
49%
36%
38%
Total of the
cases in Total cases*
court
(march
2012)
56%
80-90%*
*assessment of NAIZ
5
Examples of FAS cases
against SME
•
«Cartel» (concerted actions ) of individual entrepreneurs E.V. Avtonomova and I.S. Koshechkina as establishing the
same price of 50 RUR for the rental of inflatable trampolines on the Lenin Scuare in Gorno-Altaisk
•
Individual entrepreneur from Khabarovsk fined for improper advertising of beer (hung on the wall of the shop poster of
shrimp)
•
Maslyansky grain-collector (Tyumen region). Fined for failure to provide information in time for 300 thousand RUR, which is
comparable with the expenditure on salaries and utilities for 2 months
•
HOA «Tikhaya ploshad» from Novosibirsk recognized monopoly on supplying hot water to his tenant within a single house
and fined (geographical market borders – 1 house)
•
«Center of Eye Microsurgery «Visus -1» from Tyumen fined for lack of advertising in the personal number of the doctor
•
Taxi from Primorye (LLC «Evrobus») fined for what went in one time with bus
•
Cinema theatre in Novosibirsk recognized monopoly on popcorn (geographical market borders - city mall) and fined
•
Individual entrepreneur of Resp. Komi fined for implementing counter cream hair to another individual entrepreneurs , due to
the fact that the agreement leads or may lead to the establishment of the resale price of service (hair-dressing).
•
Sellers of food products from Kazan recognized «cartel» and fined for having established the same margin of buckwheat as a
percentage of the purchase price
6
Examples of FAS cases
against SME-2
•
Individual entrepreneur from Magadan (car-washing), accused as monopolist and fined, with monopoly profits for 5
months was only 70 thousand RUR (300 EUR per month)
•
Shop economy «Svezhachok» from Belgorod, who created «cartel» with his wholesaler - (both - individual
entrepreneurs)
•
«Cartel» food supplier LLC «Yudana» from Ryazan with its customers individual entrepreneurs Fedorovskiy A.E.
Chaly V.E.
•
Newspaper «Yarmarka» (Ryazan) declared a monopoly on the printing of publications
•
Civilian Registrar Polevskoi (Sverdlovsk region) concluded “anticompetitive agreement” with the photographer (IP
Nikolaev)
•
«Cartel» Novocheboxarsk of individual entrepreneurs in the sugar market (prices were similar, because all focused
on the stock exchange)
•
The driver of Kostroma fined for insulting bread (posted advertising «if the word bread to make 5 mistakes, we get the
word «taxi»)
•
Law firm from Moscow recognized monopoly on electricity transmission and fined (geographical market borders – 1 house)
7
Good deeds have FAS, but their
number and percentage
decreasesдела
In 2013, 11% of the cases under Art. 10 and 11 135-FZ, contested in court (which
is about 3% of all antitrust cases) - against the top-100 Russian companies
(turnover). Among them there are cases with positive impact on the economy.
But the proportion of large and "good" cases, unfortunately, decreases. Year
2010 was a watershed
2009
End of 2009 - 2010
1.
2.
All important cases
were
against
big
business,
contained
market analysis and
are posted on the FAS
website
3.
4.
«2nd antimonopoly package» allowed to call
any contract cartel, a company with 1%
market share - and the dominant intruder
Amended to «antitrust» 178th article of the
Criminal Code. Bottom line: all criminal
cases pending against SMEs
Formed a «cane» motivation system in FAS
territorial control became «do stick» for
SMEs
Adopted FAS Order № 220, FAS freed from
the obligation to conduct a market analysis
on 95% of categories of cases
2013
Half of the cases of
recognized head of FAS as
the best - against SMEs,
half - not available on the
website, none provides an
market analysis
8
Register monopolists:
Irony of Fate or Ltd. «Enjoy Your
Bath»
There in the Register
No in the Register
More then 5 thousands (65% Registry)
SMEs
Many large companies
occupying 35-100% of the
market
9
10 times cut checks SMEs
Rostehnadzor and MOE,
but not FAS
1. Rostehnadzor in March and July 2013 adopted changes in FZ «On industrial
safety» SMEs assigned to the 4th (least dangerous ) object class, it will not be
checked at all, excessive requirements for inspections are excluded. The
number of scanned objects reduced almost 10 times
2. Ministry of Accidents (MCHS) : SME’s whose work is not provided in time
of war, no longer have to store food and personal protective equipment.
Ministry intends to reduce the number inspections in 10 times, the Minister
said (06.09.2013)
3. FAS: «If a small business would violate our competition law, I will continue to
punish him» (from a speech I. Artemiev the Government of the Russian
Federation 04.10.2013).
10
The presence of market analysis
decisions FAS contested
in the courts of all decisions
Carried out
Used the data of
expert
State Statistics
evaluation
3,0%
1,6%
Source: research V.V. Novikov
A survey of
consumers /
survey
Hypothetical
monopolist test
conducted
Total solutions to
meet the minimum
requirements for
market analysis
1,4%
0,3%
1,9%
11
Size FAS decisions
and the European Commission
Competition
FAS
European
Commission
1
paragraph
10-70
pages
Decisions M&A case, permitted with remedy
1-3 paragraphs
30-100 pages
Refusal to M&A case
1-3 paragraphs
30-100 pages
Several
pages
50-100 pages
Decisions on M&A case, permitted
Decisions on antitrust cases
The average values​​, with rare exceptions
Source:www.fas.gov.ru,
http://ec.europa.eu/competition/elojade/isef/index.cfm?fuseaction=dsp_merger_by_date
12
FAS transparency
Share decisions FAS Russia, on official website, up to 2014
5%
Share decisions FAS Russia, on official website, 2014
1/3
Share decisions antimonopoly authorities of the G7
countries, on official websites
100%
Share decisions of arbitration courts of the Russian
Federation, on official website
100%
Source: www.fas.gov.ru, http://ras.arbitr.ru ,
http://ec.europa.eu/competition/elojade/isef/index.cfm?fuseaction=dsp_merger_by
13
_date
Agreements with small companies market
share does not restrict competition.
This is the opinion everywhere –
except Russia
Market share or size of the company, below which restrictive agreements are
recognized valid
Horizontal
agreements
Vertical
agreements
Other agreements
(conglomerate)
Coordination of
economic activity
Coordinated
actions
Russia, 2014 г.
0%
20%
0%
0%
20%
ЕС
Allowed agreement
SMEs with a turnover
<€ 40 million
not a violation
only for the insurance
market
5%
10%
Allowed agreements with SMEs
turnover <EUR 40 million
20-25%
20%
USA
China
Russia, our
suggestion
20%
but de facto does not
constitute an
infringement
Allowed all agreements between the companies to small and medium businesses
20%
Recognize valid all agreements between SMEs*
50%
*except for a closed list of the most dangerous types of agreements to competition (eg, maintenance of prices at
auction), which should be recognized violations per se.
14
Merger Control:
Consider the application, all
Of them refused to satisfy
2007
2008
2009
2010
2011 2012
6097
5821
4160
2964
3282
2494
90
141
106
57
60
50
<10
<10
<10
6
6
- due to the possible restriction of
<10
competition **
6 prohibited mergers - mergers are medium-sized businesses, all large
mergers (Uralkali-Silvinit, Rosneft, TNK) FAS allowed
Source: Report on the state of competition in the Russian Federation for 2012,
http://www.fas.gov.ru/about/list-of-reports/list-of-reports_30065.html
15
Fifth antimonopoly package
At the end of December 2013, FAS sent federal
executive authorities, public organizations, the draft law
"On Amending the Federal Law" On Protection of
Competition "and some legislative acts of the Russian
Federation" (the "fifth antimonopoly package ", then – 5AMP)
16
Positive shifts 5-AMP
compared with 4-AMP
1. Rejecting the idea of ​rules to regulate trade practices - all
commercial policies of private companies
2. The proposal «Delovaya Rossiya» to cancel the Registry of
Companies, having a market share of certain goods in the
amount of more than 35% (2/3 up the registry defendants
SMEs)
17
Conclusions of 5-AMP
1. Contrary to the idea of the Roadmap for competition
2. Not aimed at implementing instructions of the Government and the OECD
Recommendments
3. Introduces redundant amendments that do not meet international
experience
4. Except for 2 positions (Registry and trade practice regulation) duplicates
the 4-AMP, which was criticized by business associations, experts of the
Presidential Council on Codification, Ministry of Economic Development
and was rejected by the Government
18
Ministry of Economic Development
proposed to reform the FAS
Key provisions of the reform:
1.
2.
3.
4.
5.
To stop the practice of cases against SMEs
Reduce the number of employees of the FAS by increasing their salaries, leave only
territorial control in the federal districts
Divide lawmaking and control functions
Review the system of motivation, repealing "cane" system
Inspect only with court approval
Source : http://www.vedomosti.ru/finance/news/21715371/konkurenty-fas?from=newsletter-editorchoice&utm_source=newsletter&utm_medium=content&utm_campaign=editor-choice
Key provisions of
the Alternative draft law
•
•
•
•
•
•
•
Introduces immunities for SME under Art. 10 and 11 135 -FZ for SMEs ( not a natural
monopoly and is not included in the group of persons with big business )
Introduces mandatory market analysis for all cases, FAS
Excludes from the 135 -FZ provision allowing the institute proceedings in the interests of a 1
enterprise
Introduces “de minimus” for agreements of companies with a market share of less than 20 %
(except for the price cartel and bid-rigging )
Transmits some powers (rulemaking explanations KPIs for FAS control most major
transactions , etc.) from FAS to Ministry of Economic Development of Russia
Introduces the concept of “cartel” and “horizontal agreements” clearly distinguish between
these concepts
Cancels agreement with FAS transactions do not affect the competition
20