Third Antimonopoly Package

On December 6, 2011 the Federal Law № 401-FZ "On Amending the Federal Law ‘On the Protection of Competition’ and some legislative acts of the Russian Federation", dubbed by the media as ‘the third antimonopoly package’, has been published.

Rafael Kostanyan
senior associate

Muranov, Chernyakov & Partners
+7 495 783-74-50

The nickname was given not without a reason, since the law has made a large number of changes to the antitrust legislation. The law not only amends almost all chapters of the Federal Law ‘On the Protection of Competition’ (hereinafter - the Competition Law), but it changes a number of related legislation (‘On Mineral Resources’, ‘On Natural Monopolies’, ‘On Privatization of State and Municipal Property’, etc.) and even the criminal law.

The main goal of the change is another attempt to liberalize antitrust regulation. The Competition Law as adopted in 2006 was quite liberal, but it wasn’t perfect from the point of the legal technique. Later it was substantially redrafted by the so-called ‘second antimonopoly package’, heavily influenced by the economic crisis. The second package significantly expanded the scope of state regulation. It widened the range of businesses for the antitrust control.

The third package, in a way, aims to neutralize the excessive rigidity of the second antimonopoly package.

In addition to clarifying the wording of the Competition Law and clarification of the procedure, the third antimonopoly package contains a large number of refinements so that the document became easier to understand by business. And that must be welcomed.

The amendments have made a long way from the first draft to the final version signed by the President. All the way, it has been subjected to major changes. This is not surprising, since such an important law was scrutinised and criticised by various interest groups (public authorities, business communities, NGOs, etc.). Of course, the presence of conflicting interest groups made the third antimonopoly a product of compromise.

Among the major changes made by the third antimonopoly package I would like to mention the following:

  • reducing the number of grounds for declaring a person belonging to a group;
  • a division between concerted practices and agreements. The definition of a concerted practice now includes a public statement of one of the members about such activities;
  • the concept of a vertical agreements has been changed;
  • the threshold of the value of assets and turnover which requires the consent of the antimonopoly authority for certain transactions has been substantially increased;
  • the definition of a monopolistically high price has been changed. Now, prices set at the commodity exchange are excluded;
  • some provisions relating to compulsory placement in the Internet of the information about tenders and auctions, provisions about state contracts and others have been changed;
  • the criminal liability for concerted actions (article 178 of the Criminal Code) has been eliminated;
  • the control of the acquisition of foreign entities engaged in the delivery of goods to Russia in the amount 1 billion roubles a year or more has been cancelled;
  • the procedure of handling applications to the antitrust authority has been changed (it is now closer to the court procedure on cases arising from public relations).

At the same time, despite some change in the legal regulation of vertical agreements - agency agreements have been excluded, vertical agreements which set up the maximum resale price have become possible - important trade dealership and distribution agreements are still restricted by law.

A number of significant changes have been made to the procedure for handling cases on the violation of antitrust laws by the competition authorities, for example:

  • participants are able to record how the case is being considered;
  • the decision can be reviewed upon new or newly discovered circumstances.

The competition authority can send a warning of violation of the antitrust laws to those who announce the intention to act. The competition authority can change its order because of the essential circumstances occurring after the issuance of the order (e.g., changes in market boundaries, in the composition of participants, etc.).

These new features make administrative proceedings on the competition matters similar to the proceedings in court.

The jurisdiction of commercial courts in the antitrust matters has been extended by cases against the decisions and orders of the antimonopoly authorities issued in respect of individuals.

In my opinion, the third antimonopoly package generally is a positive move. However, as noted above, it is largely a product of compromise. Thus, the third antimonopoly package despite advantages has certain drawbacks.

However, the verdict on the significance of improvements or shortcomings is only possible after we see how the Competition Law works in practice.

Muranov, Chernyakov & Partners