Federal Law No. 147-FZ (I) "On Natural Monopolies"

16.03.2006 | 17:11

Type: Archive

Of August 17, 1995

(As Amended On August 8, December 30, 2001)

Section I. General Provisions (articles 1-5)

Section II. Government Regulation and Control over

the Activities of Natural Monopoly Entities (articles 6-8)

Section III Natural Monopoly Regulatory Agencies, Their Functions and Authorities (articles 9-14)

Section IV Liability for Violations of This Federal Law (articles 15-20)

Section V Procedures for Taking Decisions (Orders) by Natural Monopoly Regulatory Agencies, and Procedures for Their Implementation and Protest (articles 21-25)

Section VI Concluding Provisions (articles 26, 27)

Section I

GENERAL PROVISIONS
Article 1. Purposes of this Federal Law


The present Federal Law shall determine the legal basis of federal policy in the field of natural monopolies in the Russian Federation and is intended to achieve а balance between the interests of consumers and natural monopoly entities which ensures that commodities sold by said natural monopoly entities will be accessible to consumers, and likewise that the said natural monopoly entities operate efficiently. .

Article 2. Scope of Application of This Federal Law

The present Federal Law shall be applied to relationships arising in the commodity markets of the Russian Federation the natural monopoly entities, consumers, federal and regional agencies of executive authority and agencies of local self-government are involved in. This Federal Law shall not be applied to other than natural monopolies spheres, unless otherwise provided by the federal laws.

Article 3. Definition of Basic Terms

For the purposes of this Federal Law, the following basic terms shall have the following meanings:

«natural monopoly» shall mean the state of the commodity market in which demand is more effectively satisfied when due to technological peculiarities of production there is no competition (due to substantial reduction of the production cost per unit of commodity as а result of increasing output), and in which commodities manufactured by natural monopoly entities cannot be substituted with other commodities in the market, thus causing the demand in the given commodity market to be less responsive to changes in price compared to the demand for other types of commodities.

«natural monopoly entity» shall mean commercial entity (legal entity) engaged in the production (sales) of commodities under the conditions of natural monopoly; 

«consumer» shall mean individual or legal entity acquiring commodities produced (sold) by natural monopoly entities;

«manager of а natural monopoly entity (or commercial entity)» shall mean an individual authorized to act (without the power of attorney) on behalf of а natural monopoly entity (or other commercial entity).

The concepts of «commodity», «commodity market», «commercial entities» and «group of persons» are employed in accordance with the meaning stipulated in Article 4 of the Law of the Russian Federation «On Competition and Limitation of Monopolistic Activities in Commodity Markets».

Article 4. Scope of Activity of Natural Monopoly Entities

This Federal Law shall regulate the activities of natural monopoly entities in the following fields:

transmission of oil and oil products through trunk pipelines;

pipeline transportation of gas;

services on the transmission of electric power and heat energy;

railroad transportation;

transportation terminal, port and airport services;

public telecommunications and postal services.

Article 5. Authorities Regulating the Activities of Natural Monopoly Entities

1. For the regulation and control over the activities of natural monopoly entities, federal executive authorities for regulating natural monopolies (hereinafter referred to as the «natural monopoly regulatory agencies») are formed pursuant to the procedures established for federal executive authorities.

2. In order to exercise their authorities the natural monopoly regulatory agencies may set up regional affiliates and authorise them respectively within the scope of their competence.

Section II
GOVERNМENT REGULATION AND CONТROL OVER THE ACTIVIТIES OF NATURAL MONOPOLY ENTIТIES

Article 6. Methods of Regulating the Activities of Natural Monopoly Entities


Agencies regulating natural monopolies may employ the following methods to regulate the activities of natural monopoly entities (hereinafter referred to as the «regulatory methods»):

price regulation implemented by means of determination (fixing) of prices (rates) or price ceilings;

identification of consumer groups that shall receive services under а mandatory service arrangement and (or) the fixing of а minimum level of services rendered in the event that full consumer demand for the commodities produced (sold) by the natural monopoly entity cannot be satisfied, while taking into the account the necessity of defending the rights and legal interests of citizens and ensuring state security, environmental safety and cultural values.

Article 7. State Control in the Fields of Natural Monopoly

l. For purposes of implementing effective government policy in the fields of activity of natural monopoly entities, natural monopoly agencies shall exercise control over activities undertaken or involving natural monopoly entities and that may result in impairment of interests of consumers of products subject to the provisions of the present Federal Law, or in restraining the economically justified transition of the relevant commodity market from the status of а natural monopoly market into the status of а competitive market.

2. Natural monopoly agencies shall exercise control over:

any transactions as а result of which а natural monopoly entity acquires the right of ownership for the fixed assets or the right of exploiting of the fixed assets not designated for use in the production (sales) of the commodities regulated subject to the provisions of the present Federal law if the value of such fixed assets exceeds 10% of the natural monopoly entity' capital value under the most recently approved balance sheet;

capital investment made by а natural monopoly entity into the production (sale) of commodities, not regulated by this Federal Law, when the investment exceeds l0% of the natural monopoly entity' assets value under the most recent approved balance sheet;

the sale, lease or other transaction through which а commercial entity acquires the natural monopoly entity' fixed assets portion . designated for production (sales) of commodities governed by the provisions of this Federal Law, if the book value of the said fixed assets exceeds l0% of the natural monopoly entity' assets value under the most recently approved balance sheet.

3. To perform the activities set forth in Clause 2 of this Article, а natural monopoly entity shall submit to the relevant natural monopoly regulatory agency а petition for obtaining consent to engage in the said activities and provide information required for passing а resolution.

The requirements concerning the contents of the said information and the form of its submission as well as the procedures for petitions consideration shall be determined by rules approved by the relevant natural monopoly regulatory agency.

The natural monopoly regulatory agency may reject а petition if the activities stipulated therein may lead to the negative consequences set forth in Clause 1 of this Article and likewise in cases when the applicant has failed to submit all the required documents or, when it follows out from the review of said documents, that information contained therein essential for passing а resolution is unreliable in character.

The natural monopoly regulatory agency shall provide the applicant with а written notification regarding its resolution (acceptance or rejection) within 30 days from the receipt of the petition. Rejections shall be based on relevant grounds.

Should any additional information be required for passing а resolution, the natural monopoly regulatory agency may request the applicant to provide the said information and extend the deadline for review of the petition by 30 days under the proviso that such а request, together with the notification of an extension of the term for the review of the petition, are forwarded to the applicant within l5 days from the receipt of the petition.

If no response from the natural monopoly regulatory agency is received within 15 days from the expiration date of the petition review period, or if consent is rejected on grounds deemed by the applicant as unlawful, the applicant may appeal to а court to protect his rights.

4. An entity or group of .entities that, through а market acquisition of shares (participatory interests) in the charter (aggregate) capital of а natural monopoly entity, or as а result of other transactions (including assignment contract, trusteeship contracts, or mortgage contracts), acquires more than 10% of the total number of votes of all shares (participatory interests) comprising the charter (aggregate) capital of a natural monopoly entity, is obligated to notify the relevant natural monopoly agency of the event as well as of all the events resulting in а change in shareholding structure of the said entities within а period of 30 days from the acquisition of the said rights. А natural monopoly entity acquiring shares (participatory interests) in the charter (aggregate) capital of another commercial entity granting the former а right to dispose of more than 10% of the total number of votes, shall bear the same obligation.

In order to exercise control over the compliance with the requirements set forth in this Clause, the natural monopoly regulatory agency is authorised to request from commercial entities (companies, partnerships) information concerning their shareholders disposing of more than 10% of the votes.

Article 8. Obligations of Natura1 Мопоро1у Entities

1. Natural monopoly regulatory entities may not refuse to enter into contracts to provide commodities to particu1ar consumers given avai1able capacity for producing (selling) such commodities.

2. Natural monopoly entities shall be obligated to submit to the appropriate natural mопороlу regulatory agency:

Current activity reports within the procedure and terms set forth by the agency;

Draft capital investment p1ans.

Section III

NATURAL MONOPOLY REGULATORY AGENCIES, THEIR FUNCТIONS AND AUТНORIТIES

Article 9. Natural Monopoly Regulatory Agencies


1. Natural monopoly regulatory agencies are established in the fields of activity indicated in Article 4 of this Federal Law.

2. Overall management of the federal executive agency regulating natural monopolies is the responsibility of the agency director, appointed and …

dismissed by the President of the Russian Federation on the proposal of the government of the Russian Federation. The agency director of a natural monopoly regulatory agency shall be а member of the governing board of the given agency.

3. For determining the primary fields of activity of the federal executive agency regulating natural monopolies and for making decisions а governing board of the agency is formed with up to seven members, including the director, chosen from highly qualified specialists with experience in the relevant field. The members of the governing board shall be appointed by the Government of the Russian Federation for а term of not less than four years. In order to secure continuity in the operations of the agency, starting with the fifth year of the existence of the given agency, up to one third of the members of the governing board shall be replaced each year.

4. The legal status of а government employee shall be applied to the staff of natural monopoly regulatory agencies.

5. А federal executive agency regulating natural monopolies shall be liquidated in the event that there appears а possibility of the development of competition in the relevant commodity market and (or) in case there occur changes in the character of demand for the commodities of the natural monopoly entities.

Article 10. Functions of natural monopoly regulatory agencies

Natural monopoly regulatory agencies shall perform the following basic functions:

establish and maintain а register of natural monopoly entities undergoing State regulation and control;

determine regulatory methods as provided for by this Federal Law with respect to specific natural monopoly entity;.

exercise control within the scope of competence over compliance with this Federal Law;

make proposals, subject to the established procedure, on updating the current legislation on natural monopolies.

Article 11. Scope of Authority of Natural Monopoly Regulatory Agencies

Natural monopoly regulatory agencies are authorized to:

take decisions, binding on natural monopoly entities, connected with the introducing, revising or revoking regulation, or with applying of regulatory methods stipulated by this Federal Law, including fixing prices (rates);

take decisions, within the scope of their competence, on cases concerning violation of this Federal Law;

submit to natural monopoly entities mandatory orders to cease violations of this Federal Law, as well as mandatory orders to redress the consequences of said violations, to enter into а consumer contract or to revise an existing contract, and to surrender to the federal budget profits derived from violations of this Federal Law;

take decisions regarding inclusion into the register of natural monopoly entities or expelling from such register;

submit to agencies of executive authority and agencies of local self-government mandatory orders to repeal or amend acts adopted by them that are not consistent with this Federal Law, and (or) mandatory orders to cease violations of this Federal Law;

taking decisions on imposing penalty on а natural monopoly entity;

apply administrative liability in the form of а warning or penalty on directors of natural monopoly entities or officials of agencies of executive authority and agencies of local self-government in cases stipulated in this Federal Law;

appeal or bring suit before а court and likewise participate in court proceedings connected with violations of this Federal Law;

exercise other authorities under the federal legislation.

Article 12. Grounds for Taking up Decisions of Natural Monopoly by Regulatory Agencies to Apply Regulatory Methods

1. The natural monopoly regulatory agency shall take decisions regarding applying of specific regulatory methods, stipulated in the present and other federal laws, to а specific natural monopoly entity based on analysis of its activities taking into the account the stimulating effect of such methods aimed at improving the quality of commodities produced (sold) and satisfying the demand for such commodities. This involves evaluation of the justification of costs taking into the account:

the cost of production (sales), including wages, the cost of raw materials and other materials and overhead costs;

taxes and other fees;

the value of fixed productive assets, the need for investments for replacement of the said assets, and depreciation;

forecasted profit from potential sales of commodities (services) at various prices (rates);

the remoteness of various consumer groups from the site of production of the commodities;

the degree to which the quality of the commodities produced (sold) satisfies consumer demand;

government subsidies and other support provided by the state.

2. While taking decisions on the applying of certain regulatory methods, the natural monopoly regulatory agency is obligated to consider information submitted by interested parties relating to the activities of the given natural monopoly entity. 

Article 13. Right of Access to Information on Activities of Natural Monopoly Entities

1. For purposes of performing the functions assigned to the natural monopoly regulatory agencies, their officials are granted unimpeded access to information concerning the activities of natural monopoly entities available from agencies of executive authority and local self-government and likewise from natural monopoly entities.

2. Natural monopoly entities, bodies of executive authority and local self-government are obligated, in response to requests of natural monopoly regulatory agencies to submit reliable documentation and to provide ..

written and oral clarifications and any other information required by the agency to enable the natural monopoly regulatory agencies to perform their functions as provided for by the present Federal Law.

3. Information of commercial confidential nature acquired by а natural monopoly regulatory agency under the provisions of this Article shall not be subject to disclosure.

Article 14. Public Disclosure of Decisions of Natural Monopoly Regulatory Agencies

1. Natural monopoly regulatory agencies are obligated to disclose to the public through the mass media decisions to introduce, revise or revoke regulation of the activities of natural monopoly entities, and also information on the addition to or expelling from the register of natural monopoly entities, on the regulatory methods applied to natural monopoly entities, and the specific indices and requirements imposed by the natural monopoly regulatory agencies on the natural monopoly entities.

Natural monopoly regulatory agencies shall annually publish а report of their activities.

2. Natural monopoly regulatory agencies are obligated to disclose through the mass media all cases of liability undergone for violations of this Federal Law.

3. Information on the liquidation of natural monopoly regulatory agencies and the grounds for such а decision shall be published in the mass media.

Section IV

LIAВILIТY FOR VIOLATIONS OF THIS FEDERAL LAW

Article 15. Consequences of Violations of This Federal Law


1.Upon violation of this Federal Law, natural monopoly entities (their directors), bodies of executive authority and local self-government (their responsible officials), in compliance with the decisions (orders) of natural monopoly regulatory agencies, are obligated to:

cease the violations of this Federal Law and (or) redress the consequences of the said violations;

restore the situation existing prior to the violation or take other actions stipulated in the decision (order);

repeal or change the act not in compliance with this Federal Law;

enter into а contract with а consumer receiving mandatory service;

amend the said contract;

рау а fine;

provide restitution for damages incurred.

2. А natural monopoly entity surrenders to the federal budget profits generated from violation of this Federal Law within the dates set forth by the decision of the natural monopoly regulatory agency.

3. Penalties imposed by decision of the natural monopoly regulatory agency are to be paid to the Federal budget within the dates set forth in the decision.

Pursuant to the Federal Law No 196-FZ of December 30, 2001, article 16 of this Federal Law lost it's force starting from July 1, 2002. 

Article 17. Restitution by а Natural Monopoly Entity of Damages Incurred as а Result of а Violation of This Federal Law

Should the activity (or inactivity) of а natural monopoly entity in violation of this Federal Law cause damages, including those resulting from overcharging another entity, such damages shall be subject to restitution by the natural monopoly entity as provided by the civil legislation.

Pursuant to the Federal Law No 196-FZ of December 30, 2001, article 18 of this Federal Law lost it's force starting from July 1, 2002. 

Pursuant to the Federal Law No 196-FZ of December 30, 2001, article 19 of this Federal Law lost it's force starting from July 1, 2002. 


Article 20. Restitution of Damages Incurred by а Natural Monopoly Entity Due to Unjustified Findings or Activities (Inactivates) of а Natural Monopoly Regulatory Agency

In case if а decision adopted by а natural monopoly regulatory agency is in violation of this Federal Law, including decisions regarding determining (fixing) of prices (rates) without proper economic substantiation, and as а result the natural monopoly entity or another economic entity suffers damages, they have а right to demand awarding of such damages in accordance with the procedure envisaged by the civil legislation.

Section V

PROCEDURES FOR ТAKING DECISIONS (ORDERS) BY NAТURAL MONOPOLY REGULATORY AGENCIES, AND PROCEDURES FOR THEIR IМPLEМENТAТION AND PROТEST

Article 21. Procedures for Taking Decisions by Natural Monopoly Regulatory Agencies Concerning Introduction, Revision and Revocation of Regulation of Activities of Natural Monopoly Entities


1. Decisions relating to all issues concerning the introduction, revision or revocation of regulation of the activities of а natural monopoly entity are adopted by the majority votes of the members of the governing board of the agency in accordance with the procedure approved by the natural monopoly regulatory agency.

Questions relating to the introduction, revision or revocation of regulation of the activities of а natural monopoly entity can be considered on the basis of proposals of agencies of federal executive authority, regional authority, and local self government, consumer organisations, associations and unions and businesses.

The natural monopoly regulatory agency shal1 take decisions relating to the introduction, revision or revocation of regulation of the activities of а natural monopoly entity as well as the application of regulatory methods provided for by this Federal Law guided by analyses conducted on the basis of Article 12 of this Federal Law. In accordance with the decision taken by the natural regulatory agency independent economic expertise can be undertaken.

А representative of the natural monopoly entity has the right to appear in the examination process for the introduction, revision or revocation of regulation of the activities of the given natural monopoly entity. The natural monopoly entity must be given in advance а notice of the date of such а consideration.

2. Decisions to introduce, revise or revoke regulation or to reject а proposal made shall be adopted by the governing board within six months from the receipt of such proposal. А rejection or partial rejectiol1 of а proposal must reasonably motivated.

Article 22. Relevant Grounds for Considering by Natural Monopoly Regulatory Agencies of the Cases of Violations of This Federal Law

1. Natural monopoly regulatory agencies are authorised, within the scope of their competence, to examine cases regarding potential violations of this Federal Law and are authorised to take decisions relating to such proceedings.

2. The grounds for consideration of such cases include appeals by commercial entities, consumers, consumer public organisations, associations, and unions, and evidence provided by agencies of executive authority and local self-government and prosecutors.

3. Natural monopoly regulatory agencies are authorised to take initiative to consider cases based on information derived from mass media and other available materials showing violations of this Federal Law.

Article 23. Procedure for Considering by Natural Monopoly Regulatory Agencies of the Cases Concerning Violations of This Federal Law and Taking Decisions Regarding Such Cases

1. The procedure for considering by natural monopoly regulatory agencies of cases concerning violation of this Federal Law is determined by the Government of the Russian Federation.

2. The decisions taken by the natural monopoly regulatory agencies on the basis of the review of the given case shall be submitted in writing to interested parties within 10 days from the adoption of such decisions. Orders issued on the basis of the said decisions shall be submitted within the same period.

3. Findings on cases associated with violations of this Federal Law affecting the public interest shall be published in the mass media within а month of their date of adoption.

Article 24. Procedure for Implementing Decisions (Orders) Taken by Natural Monopoly Regulatory Agencies

1. Decisions (orders) taken by natural monopoly regulatory agencies shall be satisfied by natural monopoly entities, their director, the agencies of executive authority and local self-government (their officials) within the time period stipulated by the decisions (orders) but no later than 30 days from their receipt. 

2. In the event of а failure of agencies of executive authority or local self-government to satisfy the decisions (orders), to repeal an act adopted in violation of legislation or to restore а condition existing prior to the violation, the natural monopoly regulatory agencies are authorised to initiate court proceedings in order to invalidate the acts (in whole or in part) and (or) to compel restoration of the situation existing prior to the violation.

3. In the event of а failure of а natural monopoly entity to comply with the decision (order) on entering into а contract or on modifying а contract, а natural monopoly regulatory agency is authorised to bring' suit to force the entering into а contract or modification of а concluded contract.

4. If the natural monopoly entity does not carry out the order to surrender to the federal budget the profits received as а result of violations of this Federal Law, the natural monopoly regulatory agencies have the right to bring suit to confiscate the unlawfully derived profit.

Pursuant to the Federal Law No 196-FZ of December 30, 2001, item 5 of article 24 of this Federal Law lost it's force starting from July 1, 2002. 

Article 25. Procedure for Appealing Against Decisions (Orders) of Natural Monopoly Regulatory Agencies

1. Natural monopoly entities (their directors), bodies of executive authority and local self-government (and their officials) as wel1 as consumers, consumer public organisations, associations and unions, and prosecutors may appeal (protest) to а court to declare invalid in part or in whole а decision (order) of natural monopoly regulatory agencies in the event of its inconsistency with this Federal Law.

2. Submission of an appeal (protest) to а court shall suspend implementation of the decision (order) for the period during which it is under consideration y the court, prior to legal enactment of the court's decision, unless otherwise ruled by the court.

Section VI

CONCLUDING PROVISIONS

Article 26. Conditions for Forming the Federal Executive Agencies for Regulating Natural Monopolies


Federal natural monopoly regulatory agencies shall be formed within the boundaries of budget allocations designated for maintaining of the machinery of state.

Article 27. On Introduction of This Federal Law 

1. This Federal Law shall come into force on the date of its official publication.

2. It is proposed to the President of the Russian Federation and the Government of the Russial1 Federation is instructed to bring their normative acts into compliance with this Federal Law within the period of six months from date of its official publication.

The Government of the Russian Federation shall be instructed in accordance with established procedure to submit within а three-month period proposals to the State Duma of the Federal Assembly of the Russian Federation concerning bringing the Laws of the Russian Federation into compliance with this Federal Law.

President
of the Russian Federation В. Yeltsin
Moscow, Kremlin
August 17, 1995 No. 147-FZ


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