Spotlight on Moscow: Recent
Developments in Russian Competition Law
26 April 2012
Grigory Chernyshov
Russian Competition Law
 Federal
Law No.
dated 26 July 2006
135-FZ
“On
the
Protection
of
Competition”

All antitrust issues are regulated in the one law in Russia

Entered into force on 26 October 2006 and has been amended several times
(so-called “antimonopoly packages” of amendments)

Recent amendments (“3rd antimonopoly
in the beginning of January 2012
“Spotlight on Moscow:” Recent Developments in Russian Competition Law
package”)
entered
into
White & Case
force
2
3rd Antimonopoly Package of Amendments
 Was initiated and developed by the Federal Antimonopoly Service (FAS)
 Trend of liberalization of antimonopoly regulation in Russia
 Aimed at clarification of certain provisions of the Competition Law
to eliminate problems of their practical application
 Concerned not only the Competition Law
 Amendments
were introduced into the Code of Administrative Offences
(establishing fines for violations of the Competition Law)
 Criminal Code was also amended to clarify criminal liability issues
“Spotlight on Moscow:” Recent Developments in Russian Competition Law
White & Case
3
Competition Law: Extraterritorial Application
 General criteria

The Competition Law applies to all agreements reached between Russian and (or)
foreign entities outside Russia, as well as to actions performed by them, if such
agreements or actions affect competition in the Russian Federation
 Criteria for Merger Control

The Law applies to agreements reached between Russian and (or) foreign entities
outside Russia with respect to:

Shares of or rights to control Russian companies;

Shares of or rights to control foreign companies which had sales into Russia in the
preceding financial year in the amount over approx. EUR 25 million;

Assets of Russian or foreign companies, provided that such assets are located in
Russia and their book value exceeds 20% of the total book value of assets of the seller
“Spotlight on Moscow:” Recent Developments in Russian Competition Law
White & Case
4
Group of Persons

7 criteria of the group
 Ownership (individually or as a result of agreement with other companies) of controlling stake
in a company
 Performing functions the sole executive body of a company (CEO, general director or
management company)
 Controlling rights: ability to give binding instructions to the company
 Cross-management (same persons constitute more than 50% of the Board of Directors or
Management Board)
 Election of the sole executive body of a company (CEO, general director or management
company) upon proposal of a company
 Election of more than 50% of the Board of Directors or Management Board upon proposal of a
company
 Family relations (for individuals)

Additional criterion allowing to include into one group two or several partially
overlapping groups (e.g. having the same majority shareholder)

“Group” is widely used for the purposes of merger control and for other
purposes (e.g. establishing dominance of the group on the market)
“Spotlight on Moscow:” Recent Developments in Russian Competition Law
White & Case
5
Cartels
 The term “cartel” was introduced by the 3rd antimonopoly package
 Five agreements are qualified as cartels:
 fixing or maintaining of prices, discounts or markups;
 price fixing in the course of bidding;
 division of market by territory;
 creating artificial shortage of goods; and
 refusal to enter into agreements with particular sellers or customers
 Cartels cannot be admissible, except for a few cases:

If concluded between entities connected by control relations

If represent a part of the joint venture agreement and meet certain criteria

If concern the transfer of IP rights
“Spotlight on Moscow:” Recent Developments in Russian Competition Law
White & Case
6
Cartels: Liability
 New procedure of calculation of fines

Under the Code of Administrative Offences, participants of a cartel are subject to
turnover fines (1-15% of turnover achieved on the market affected by cartel)

Now base amount of fine is 8%, which is then either increased or reduced by 1.75%
for each aggravating or mitigating circumstance
 New list of aggravating and mitigating circumstances

adapted to antimonopoly violations
 Criminal liability for participation in cartels

up to 7 years in prison for directors of participants
“Spotlight on Moscow:” Recent Developments in Russian Competition Law
White & Case
7
Dominant Position
 Dominant position

More than 50% of the market – presumed dominance

More than 35% of the market – dominance must be established by FAS

Less than 35% of the market – may be established by FAS in exceptional cases based on the
analysis of competition on the market, stability of an entity’s market share and other criteria

Collective dominance: each of the companies is considered dominant if the aggregate market
share exceeds 50% for not more than 3 entities or exceeds 75% for not more than 5 entities,
provided that in each case the market share of each entity exceeds 8%
 Prohibited abuses
 Establishment and maintaining of high monopoly or low monopoly prices,
 Withdrawal of goods from circulation which results in increase of the prices for such goods,
 Tying to the counterparty of disadvantageous contractual terms
 Refusal to enter into or evasion from the execution of contracts with certain customers
 Setting of different prices (or tariffs) for the same goods
“Spotlight on Moscow:” Recent Developments in Russian Competition Law
White & Case
8
Dominant Position (continued)
 Warning to stop abuse

Sent by FAS to a dominant entity if FAS establishes indications of abuse

Applicable in case of two abuses:
 refusal to enter into or evasion from the execution of contracts with certain customers
 tying to the counterparty of disadvantageous contractual terms


Administrative fines


FAS can not initiate case against dominant entity without issuance of warning
Fixed amounts (if there were no restriction of competition) or turnover fines (1-15% of turnover)
Criminal liability for directors in case of a repeated abuse

Resulting in establishing high monopoly or low monopoly price, unjustified evasion from the
execution of contracts with individual customers, creation of obstacles for other entities for
entering the market

Up to 7 years in prison
“Spotlight on Moscow:” Recent Developments in Russian Competition Law
White & Case
9
Unfair Competition
 What actions constitute unfair competition:

dissemination of false, inaccurate, or distorted information

misleading of consumers as to the goods’ characteristics, or as to their producer

improper comparison by an entity of its goods with other goods

sale, barter, or other circulation of goods through the unlawful use of IP

unlawful obtaining, use, and disclosure of information constituting a commercial secret, insider
information, or other secrets protected by law
NB: The vast majority of FAS cases are connected with the unlawful use of IP
 Liability

Turnover fines (1-15% of turnover achieved on the affected market) for unfair competition
connected with the unlawful use of IP

Fixed fines (up to approx. US $16,000) for other types of unfair competition
“Spotlight on Moscow:” Recent Developments in Russian Competition Law
White & Case
10
Merger Control: Recent Trends
 Thresholds for acquisition of foreign companies having Russian sales

More than 50% of shares of the target foreign company or rights to control it

Volumes of sales of the target foreign company in the last year must exceed
RUB 1 billion (approx. EUR 25 million)
 New rules for calculation of the target’s group turnover

Turnover of the seller and its group is not included into calculation if the seller
(and its group) loose control over the target as a result of the planned acquisition
 Limitations for group disclosure

Only entities tied by control relations with a party to the transaction
(either controlling it or controlled by it) and entities operating on the same market
on which the acquisition takes place must be disclosed
“Spotlight on Moscow:” Recent Developments in Russian Competition Law
White & Case
11
W&C Moscow Antitrust: Our Team

Grigory Chernyshov, Partner, Head of Litigation Practice


Ksenia Pozdnyakova, Associate (Corporate Practice)


more than 5 years of experience in advising clients on antitrust issues
Anton Vasin, Associate (Litigation Practice)


11 years of experience in advising clients on antitrust issues and representing
the client’s interests in commercial and antitrust litigations
more than 6 years of experience in representing the client’s interests in commercial
and antitrust litigations
Membership in the Non-Commercial Partnership on Promotion of Competition

The Partnership was created in 2007 with the immediate support of the Head of FAS
Mr. Artemyev and involves leading antitrust lawyers in Russia

Grigory and Ksenia are active members of the Partnership
“Spotlight on Moscow:” Recent Developments in Russian Competition Law
White & Case
12
Worldwide. For Our Clients.
White & Case LLC
4 Romanov Pereulok
125009 Moscow, Russia
Telephone + 7 495 787 3000
Fax
+ 7 495 787 3001
www.whitecase.com  www.whitecase.ru
#714537