Vladimir Potapov

T

he new law on competition will replace the two existing ones, “On protecting competition on market of financial services” and “On competition and limits on monopolistic activities on commodity markets”. These legal acts were reconsidered many times over and their resource was practically exhausted.

Pundits point to a sharp increase in violations of the antimonopoly law. They are particularly numerous in advertising that proves, to a certain extent, a higher attention of law enforcement agencies to this business area. But experts are more concerned about the growth of corruption. More than half of investigations by the Federal Antimonopoly Service (FAS) have to do with activities by authorities on different level. What is more, the very nature of these law violations has changed. If before it was, more often than not, a matter of legal mistakes (for example, adopting normative acts that prevented competition), nowadays bureaucrats are quick to conspire and become direct participants of monopoly agreements. It is precisely because of this the draft provides for much tougher measures with respect to oligopolies and monopolistic structures.

Experts link the harder position of the Federal Antimonopoly Service to its head Igor Artemjev. Under his leadership this service has begun to react more resolutely to facts of cartel conspiracy and launch scandalous investigations. The new law will serve the same purpose. "It will considerably expand the authority of the Federal Antimonopoly Service", admits Artemjev, who practically led the law drafting.

Recently, FAS has registered with Russia’s Justice Ministry the rules of applying the antimonopoly law to Russian banks. Under the new law FAS will trace down activities of those banks, whose shares in the Russian market of private investments and credits are no less than 1%. Such majors of the financial market as Sberbank, Vneshtorgbank, Alfa-Bank, Bank of Moscow and many others automatically get under close attention of FAS.
The Service considers fighting against oil companies’ monopoly to be another important sphere of its activity. According to FAS, the excessive concentration of the oil market in the hands of several companies has resulted in two negative trends: low rates of growth of the country’s hydrocarbon stock and, on the contrary, too rapid a growth of prices for gasoline and other oil products. "If the situation in this market is analyzed, then it is quite possible to regard monopolies’ operations as an economic poaching", - Igor Artemjev stated firmly.

This position is shared by Yuri Trutnev, the Minister of Natural Resources. On behalf of his Ministry he proposes that licenses for developing oil fields be given to companies with their size taken into account. In other words, preference at auctions will be provided to contestants of smaller size, while all other auction terms remain equal.

Defending the need for more drastic measures, the head of FAS states that high prices set by dominating companies are the main cause of slowing down Russia’s economic growth.

The new law’s main innovation is a sharp increase in amounts of fines. For the first time the concept of "fining under working capital index" is introduced to the Code on administrative law violations. By the draft law, violators will have to pay 2% of their companies’ turnover of the previous year for the abuse of dominating position and 4% for a cartel conspiracy. In this respect FAS follows European countries, where similar actions are punished with no less severity. According to Artemjev, including the norms of the European antimonopoly legislation will play a positive role, when Russia joins WTO.
Fines are also introduced for delaying the execution of the Antimonopoly Service decisions. And apparently for the first time the concept of disqualification for violating the antimonopoly law will be adopted. The disqualification may embrace companies’ top management and high-ranking officials. "If today, under the law on competition we cannot call high-ranking officials to account for violating the antimonopoly legislation, now there will be a legal ground to seek court order to disqualify them, i.e. to prohibit them from occupying the given post for several years", explained Igor Artemjev.
"When working out the draft we were following the principle not to destroy what had been created before us, although there was a temptation to rewrite everything anew", - admitted Igor Artemjev. "But we tried to preserve the law structure that is
already familiar to the market", he said. However, in pundits’ opinion, there is no chance that the new law on competition will be easily passed by the Parliament. Monopolists’ lobby is too powerful.




Profile
Igor Artemjev
Head of the Federal Antimonopoly Service. Born in 1961 in Leningrad (St. Petersburg). Graduated from two institutes, including the one of legal affairs. Author of 43 scientific articles and inventions as well as 6 monographs on budget and economy. Has a scientific degree.
Active in politics since 1989. In 1992 was elected deputy to the City Council (Legislative Assembly), headed the committee on ecology and city economy. Later, headed the budget committee. In 1966 was appointed first vice governor and chairman of the finance committee of the St. Petersburg administration.
In December 1999 was elected to the State Duma of the Russian Federation. Became deputy chairman of the Yabloko faction and deputy chairman of the committee on credit organizations and financial markets.
Since March 2004 has been head of the Federal Antimonopoly Service.