On September 22, 2015, the State Duma approved the “Fourth Antitrust Package” in the third reading
The amendments adopted by the Duma are of a substantial nature and will have a serious impact on the antitrust regulation and protection of competition in Russia. The most significant amendments deal with the rules regulating abuse of a dominant position, anti-competitive agreements and unfair competition, as well as procedural aspects of examining cases on alleged antitrust violation.
- The antitrust authority will no longer have the powers to maintain a register of businesses holding a dominant position. This means that every time a case is examined on alleged abuse of a dominant position, the antitrust authority will analyze the market in order to determine whether the entity suspected of a violation is a dominant one.
This change is certainly good news that will give companies the opportunity to prove to the antitrust authority (or the court when contesting the regulator’s decision) that their position on the market is not that of a dominating entity. Earlier, if a company was included in the relevant register, this automatically meant that it is dominant and this status could not be contested either as part of a case on abuse of dominant position or in court when appealing FAS decisions.
In addition, the State Duma is examining in the first reading a so-called “anti‑crisis” set of amendments to the antitrust law. Pursuant to the planned amendments, a company with a market share of less than 35% is presumed to be a non‑dominant entity.
- If it is discovered that an entity with a share over 70% on a particular market abuses its dominant position, the Government will establish rules for non‑biased access to the goods and services of such an entity. Earlier, such rules were in effect only for natural monopolies. These rules presume strong regulation of the company’s behavior on the market.
- The provisions concerning acceptability of a vertical agreement have been made clearer. The current edition of the Competition Law qualifies as acceptable the vertical agreements between entities where the share of each such entity on any goods market does not exceed 20%. Now this has been clarified, and the share of a participant of an agreement cannot exceed 20% on the market for which the relevant agreement is in effect.
- Now not only agreements among sellers of goods, but also among buyers of goods can be deemed a cartel. This approach is fully in line with international practice and is quite logical.
- Agreements on joint activity of companies that has previously been approved by the antitrust authority cannot later be deemed a cartel. It should be noted that if actions of the agreement participants go beyond those approved by the antitrust authority or if new non-approved provisions are added to the agreement itself, then the agreement (or actions of the parties to the agreement) can be deemed as being anti-competitive.
- A new chapter is being introduced to the Competition Law, dedicated to unfair competition. The chapter sets out in detail the possible types of violations that will be deemed unfair competition. Among them are the following:
- Discrediting, that is, dissemination of false, inaccurate or distorted information about a competitor or its goods or services;
- Intentional misleading in respect to goods or services or the sale terms thereof;
- Improper comparison of a business and/or its goods with a competitor and/or its goods;
- Unfair competition tied to acquisition and use of an exclusive right to means of individualization of a legal entity or means of individualization of goods, works or services;
- Unfair competition tied to use of intellectual property;
- Creation of confusion, that is, actions capable of being confusingly similar with a competitor’s activity or with goods or services offered to the public by a competitor in the Russian Federation;
- Unlawful obtaining, use or divulging of information comprising a commercial secret or other secret protected by law.
Furthermore, the antitrust authority can qualify as unfair competition other actions that are not directly named in the relevant chapter of the Competition Law, but which bear its general traits.
It is important to understand that changes in the rules on unfair competition do not expand powers of the FAS and do not add new types of violations. The changes merely set out the legal provisions in greater detail and simplify their enforcement, as well as their comprehension for business entities.
Procedure for examining cases on breach of antitrust law
- Prior to making the final resolution on a case, the Committee working on the case will adopt a report drawn up as a separate document, which will contain all the circumstances of the case, as well as evidence on which the Committee based its conclusions. The report will be provided to all participants of the case and will in essence be a draft of the final resolution.
The opportunity to review such a procedural document will allow the entities being part of the case to work out their line of defense more thoroughly and based on valid arguments, since they will have an understanding of what specifically, in the regulator’s opinion, is indicative of a violation in their activity.
- There is an opportunity to appeal the decisions of territorial bodies in the FAS central administration. An entity can exercise this right only if the territorial body has breached the uniform manner and practice of applying antitrust law. Using this right does not deprive a company of the right to later on contest the decisions and actions of the FAS in court.
- The entities participating in the case have additional procedural rights, including recusal of committee members and experts of the case, engagement of their own experts and more.
- If based on the results of case examination a company is instructed to transfer to the state budget the income received from unlawful activity, this entity cannot be held liable for an administrative offence for this violation (provided it fulfills the instructions). This is a just provision, since it rules out the application of double liability for the same violation.
- Amendments to the Competition Law establish that entities who voluntarily inform the antitrust body about an anti-competitive agreement will be imposed the least possible administrative fine for such a violation.
Development of the prevention institute
- The antitrust authority’s powers have been expanded as regards issuing warnings on ceasing activities with signs of antitrust violation. The FAS can serve warnings not only to entities holding a dominant position, but also to other business entities and to state bodies. Furthermore, the list of violations for which warning can be served has been expanded. It now includes actions on creating discriminatory conditions and unfounded differences in prices (for dominant entities), anti-competitive actions and acts of state bodies, as well as certain types of unfair competition.
Antitrust law in Russia is among the most dynamically developing areas. Most experts and practicing lawyers are always glad to see new changes prepared by the antitrust service. The “Fourth Antitrust Package” is of a liberal and progressive nature. Entities participating in investigation of cases on signs of violation of antitrust law now have new procedural tools that will allow them to defend their interests, and should cause a drop in the number of FAS decisions contested in court.
The amendments will come into force 90 days from the time they are officially published.
Should any questions arise in connection with the above or if you need any additional materials, please contact Irina Akimova or Dmitry Gavrilenko, Moscow Office of Capital Legal Services.
This Information letter keeps the clients of Capital Legal Services and other interested parties abreast of information that may, to any extent, affect their activity or cater to their particular interests. The opinions and commentaries expressed in this information letter shall not be deemed as legal opinions and do not cancel the need to obtain legal advice or legal opinion on separate issues.