FINDINGS OF THE PLENARY SESSION OF THE SUPREME ARBITRATION COURT OF THE RUSSIAN FEDERATION (non-official translation)

Moscow July 2008

Issues of Administering the Antimonopoly Legislation for the Arbitration Courts

Regarding the concerns raised by arbitration courts in enforcing the antimonopoly legislation, and in order to ensure a unified approach to the issues in question, the Plenary Session of the Supreme Arbitration Court of the Russian Federation, governed by Article 13 of the Federal Constitution Law «Arbitration Courts of the Russian Federation», renders the following clarifications for the arbitration courts: 

1. Under Part 1 Article 2 of the Federal Law «On Protection of Competition» (further on referred to as the Law on Protection of Competition, or the Law), the antimonopoly legislation is based on the Constitution of the Russian Federation and the Civil Code of the Russian Federation (further on referred to as CC RF).

Statutory provisions of CC RF that form the basis of the antimonopoly legislation include, in particular, Article 1 of CC RF, which prohibits restriction of civil rights and the freedom of movement of goods, except when such a restriction is introduced by a federal law (the Law on Protection of Competition is among the body of legislative acts that introduce such restrictions), and Article 10 of CC RF, which forbids using civil rights for restricting competition and abusing the dominant market position. 

The Law on Protection of Competition lays down the requirements to economic entities which enter into civil law relations with other participants of civil transactions. For instance, Article 10 of the Law introduces restrictions for the persons that have dominant position on the market; the Law prohibits competition-restricting agreements and concerted actions (Article 11), and unfair competition (Article 14) regardless whether persons have dominant position on the market. 

In view of the above, the arbitration courts should bear in mind that: antimonopoly legislation is applicable to civil law relations.

It means, in particular, that a decision or a determination of an antimonopoly body cannot be found invalid (or the claim of an antimonopoly body cannot be dismissed) only because legal relations involving an economic entity, that was issued a determination by an antimonopoly body or against which an antimonopoly body has filed a suit, are characterized as civil law relations.

2. Analyzing whether economic entities are engaged in concerted actions on the goods market (Article 8 of the Law on Protection of Competition), the arbitration courts should consider that: co-ordination of actions can be established even in the absence of documentary evidence confirming the agreement about such concerted actions. 

Conclusion on the existence of one of the conditions that must be established to recognize concerted actions, namely - each of the economic entities knew in advance about exercising such actions - can be made on the basis of the factual circumstances of the case. For instance, concerted actions can be proved, among other circumstances, by the fact that different market participants commit them simultaneously and in a relatively uniform manner, without any objective grounds. 

3. Arbitration courts should take into account that a group of persons, including members which have relations specified in Clauses 1-14 Part 1 Article 9 of the Law on Protection of Competition, also, by implication of Clause 1, includes business entities (commercial partnerships) that, due to their participation in a business entity (commercial partnership) or pursuant to the authority, granted by other persons, together possess more than 50% of the total voting shares (stock) of the registered (join-stock) capital of this business entity (commercial partnership).

4. Part 1 Article 10 of the Law on Protection of Competition prohibits actions (lack of actions) by an economic entity that has dominant market position, which result or may result in preventing, restricting or eliminating competition and (or) infringing the interests of other persons. 

Arbitration Courts must note that following a systemic interpretation of Article 10 of CC RF and Articles 3 and 10 of the Law on Protection of Competition, the presence (or a risk) of any of the listed consequences, namely: preventing, restricting or eliminating competition and (or) infringing the interests of other persons, is sufficient to classify actions (lack of actions) as abusing dominant position. 

Arbitration Courts also should note that apart from specified in Part 1 Article 10 of the Law on Protection of Competition, a court or an antimonopoly body can classify other actions (lack of actions) as antimonopoly violations because the given list is not exhaustive. Classifying such actions (lack of actions) as abusing dominant position, Arbitration Courts must take into account Article 10 of CC RF, Part 2 Article 10 and Part 1 Article 13 of the Law on Protection of Competition and, in particular, judge whether such actions are exercised within acceptable boundaries of civil rights or such actions impose unreasonable restrictions upon counteragents or set unreasonable conditions for exercising the rights of counteragents. 

The actions (lack of actions) specified in Part 1 Article 10 of the Law on Protection of Competition presume the presence or risk of certain circumstances, so there is no need for an antimonopoly body to prove them.

5. To enforce the antimonopoly legislation, an antimonopoly body, upon establishing the fact of abusing the dominant position by an economic entity (which includes imposing contract prices or wrong use of regulated prices (rates)), undertakes measures necessary to stop the violations and support competitive environment as well as to impose administrative charges upon the violators. 

It is important to bear in mind, however, that putting an end to the above antimonopoly violations, antimonopoly bodies do not have the authority to resolve civil disputes between economic entities. In particular, antimonopoly bodies do not have the authority to defend civil legal rights of affected persons by issuing a determination to the violator for paying its debt to the counteragent or compensating the losses. 

6. Arbitration Courts should note that based on the outcome of an antimonopoly case with regard to a particular contract, an antimonopoly body can (provided there is a relevant petition), under Sub-Clause «i» Clause 2 Part 1 Article 23 of the Law on Protection of Competition, issue a determination on changing the contract conditions or terminating the contract. 

Should it be established that the contracts with similar conditions were signed with other persons, an antimonopoly body can oblige an economic entity, that has dominant market position, to send an offer to its counteragents on changing or terminating such contracts in the absence of a relevant petition.

7. Article 11 of the Law on Protection of Competition forbids competition-restrictive agreements or concerted actions between economic entities. The Article forbids the agreements between economic entities or concerted actions of economic entities if such agreements or concerted actions lead or can lead to the consequences listed in Part 1 of the Article; as well as other agreements between economic entities or concerted actions of economic entities if such agreements or concerted actions restrict or can restrict competition (Part 2 Article 11 of the Law).

Parts 1 and 2 Article 11 of the Law on Protection of Competition forbids agreements, unless otherwise provided for by the legislation, including «vertical» agreements, that is, the agreements between economic entities which are not in competition with each other, when a market participant buys goods or is a potential buyer and another market agent offers the goods or is a potential seller (Clause 19 Article 4 of the Law). 

Part 4 Article 11 of the Law on Protection of Competition provides otherwise: an economic entity can give evidence that the concluded agreements or exercised concerted actions can be allowed under Article 12 and Part 1 Article 13 of the Law.

Applying Article 12 of the Law on Protection of Competition, arbitration courts should bear in mind that allowable «vertical» agreements are exceptions from the agreements, forbidden under Part 2 Article 11 of the Law, and are not applicable to the agreements listed in Part 1 Article 11 of the Law.

The courts should note that under Part 1 Article 13 of the Law on Protection of Competition, it is possible to allow the agreements (including the «vertical» ones) and concerted actions forbidden by Part 2 Article 11 of the Law, but not by Part 1 Article 11 of the Law. 

8. Part 1 Article 15 of the Law on Protection of Competition prohibits the federal executive bodies, authorities of the constituent territories of the Russian Federation, self-government bodies and other bodies or organizations exercising the functions of the above bodies, as well as the state-owned extra-budgetary funds and the Central Bank of the Russian Federation adopting acts and (or) undertaking actions (lack of actions) that lead or may lead to preventing, restricting or eliminating competition, except adopting acts and (or) undertaking actions (lack of actions) in the cases provided for in the federal laws. 

Judging the cases on recognizing the acts of the above bodies inoperative or invalid, and or recognizing their actions (lack of actions) illegitimate upon the claims of the antimonopoly bodies, filed due to a breach of Part 1 Article 15 of the Law on Protection of Competition, an arbitration court must take into account the following: if an antimonopoly body has proved that the acts or actions (lack of actions) result or may result in preventing, restricting or eliminating competition, and the relevant body has failed to specify the norm of a federal law enabling this body to adopt the act in question or exercise actions (lack of actions), the claim must be allowed. 

9. Sub-Clause «k» Clause 2 Part 1 Article 23 of the Law on Protection of Competition allows an antimonopoly body to issue determinations on transferring the income obtained due to antimonopoly violations to the federal budget. Correspondingly, under Part 3 Article 51 of the Law, a person, who was issued such a determination, must transfer the required income to the federal budget within the period specified in the determination. Should it fail to execute a determination within the designated period, the antimonopoly body collects the required income in a judicial proceeding (Sub-Clause «e» Clause 6 Part 1 Article 23 and Part 3 Article 51 of the Law). 

Articles 14.31 - 14.33 of the Code of the Russian Federation on Antimonopoly Violations (further on referred to as CoAV RF) establish administrative liability for abusing dominant position on the goods markets, concluding competition-restrictive agreements or exercising competition-restrictive concerted action, and engaging in unfair competition. 

It should be noted that both collecting the income, gained due to antimonopoly violations, to the federal budget and imposing the fines, set forth in the above-mentioned CoAV RF Articles, are public liability measures imposed for the same antimonopoly violations and they cannot be applied simultaneously. Public liability measures in the form of collecting the income, gained due to antimonopoly violations, to the federal budget can be applied only if administrative charges cannot be imposed upon a person because. based upon the nature of the violations. it is impossible to determine the fine in accordance with the rules set by Articles 14.31 - 14.33 of CoAV RF. 

Imposing administrative charges upon the violator as well as collecting the income to the federal budget do not deprive the injured persons of the right to seek compensation for the damages incurred as a result of the antimonopoly violations.

10. Judging the cases on administrative liability under Articles 14.31 - 14.33 of CoAV RF or appeals against determinations of the antimonopoly bodies on imposing administrative charges under Articles 14.31 - 14.33 of CoAV (as well as the appeals against the determinations of the antimonopoly bodies for transferring the income gained due to antimonopoly violations to the federal budget, or the claims of the antimonopoly bodies on collecting such income to the federal budget), arbitration courts should take into account that any member of the group of persons, that gained income due to antimonopoly violations, can be made administratively liable (determinations can be issued and claims made to any member of the group of persons that gained the income due to antimonopoly violations).

11. Under Clause 3 Part 1 Article 23 of the Law on Protection of Competition, an antimonopoly body can issue mandatory determinations to the federal executive bodies, the executive bodies of the constituent territories of the Russian Federation, local self-government bodies and other bodies or organizations exercising the functions of the above bodies, as well as state-owned extra-budgetary funds, and their officials, except the cases specified in Clause 4 Part 1 Article 23 of the Law. 

Applying this standard, arbitration courts should note that under Article 34 of the Federal Law «General Principles of Local Self-Government in the Russian Federation», local self-government bodies include the representative body of a municipality, the Head of a municipality, the local administration (the executive-administrative body of a municipality), other bodies and elected self-government officials as required by the Regulations of a Municipality that have the authority over local issues. 

Clause 3 Part 1 Article 23 of the Law on Protection of Competition states that there are no restrictions on the range of local self-government bodies to which the antimonopoly authorities can issue determinations; therefore, an antimonopoly body can issue a determination to any local self-government body. 

12. Arbitration court must consider the following, when judging the appeals against decisions of the antimonopoly bodies on including (excluding) an economic entity to/from the Register of economic entities with over 35% share on the market of particular goods or having dominant position on the market of particular goods, if other federal laws establish the cases for recognizing dominant position of an economic entity (further on referred to as the Register of economic entities, or the Register):

An antimonopoly body maintains the Register of economic entities under Clause 8 Part 1 Article 23 of the Law on Protection of Competition. The Government of the Russian Federation sets the procedures for building up and maintaining the Register. Currently the «Rules for Building Up and Maintaining the Register of Economic Entities with over 35% Share on the Market of Particular Goods» are approved by No.896 Decree of the Government of the Russian Federation of 19.12.2007 (further on referred to as the Rules). 

Clause 4 and 9 in their interrelation imply that economic entities, acting as a group of persons, should be included in the Register of economic entities based on their total share. 

13. Judging the antimonopoly cases against economic entities that have allegedly abused their dominant position, arbitration courts should consider the following:

Article 5 of the Law determines the conditions for recognizing when a person has the dominant position on the market of particular goods (limited under Clause 4 Article 4 of the Law on Protection of Competition, in particular, by geographic boundaries). 

The dominant position of an economic entity is established, taking into consideration its share on the market of particular goods. It should be recognized that the share is equal to the one given in the Register of economic entities, unless proved otherwise. 

In case of disagreements regarding the circumstances of determining the share of an economic entity on the market of particular goods, an arbitration court can request an appraisal by experts under Clause 1 Article 82 of the Code of Arbitration Judicial Practice of the Russian Federation (further on referred to as AJPC RF), if it is necessary to clarify the issues requiring special knowledge. 

At the same time, judging the cases on violations committed by the persons that are not included in the Register of economic entities, the court cannot refuse to recognize that such a person has dominant position on the market simply because such a person is not included in the Register. The person's share on the market of particular goods, and on its basis - the fact of having the dominant position, can also be established using other documentation. 

The courts should also bear in mind that if the person's share on the market of particular goods exceeds 50%, than, under Clause 1 Part 1 Article 5 of the Law on Protection of Competition, it should be recognized that the person has the dominant position, unless proved otherwise. 

Under Part 5 Article 5 of the Law on Protection of Competition, the court must hold that an economic entity - natural monopoly has the dominant position on the market of natural monopoly. 

14. Clause 2 Article 11 of the CC RF and Chapter 9 of the Law on Protection of Competition provide for administrative protection of civil rights in the cases specified by the legislation. Processing the antimonopoly cases, an antimonopoly body passes decisions and issues determinations aimed at protection of civil rights violated through their infringement, abusing dominant position, restricting competition or engaging in unfair competition. 

In pursuance of the enforcement powers, listed in Clause 2 Part 1 Article 23 of the Law on Protection of Competition, a determination, issued by an antimonopoly body, can include specific actions to be exercised by the antimonopoly violator, which are necessary to enable restoring the rights of other persons infringed because of the abuse of dominant position, restriction of competition or unfair competition. 

Arbitration courts should also note that if a member of a group of persons has committed an antimonopoly violation, determinations can also be issued to other members of the group if they are able to eliminate the violations. 

15. Under Article 29 and Part 3 Article 191 of AJPC RF, contentions of regulatory legal acts are judged by arbitration courts if they are subject to the jurisdiction of arbitration courts in accordance with the federal law. 

Under Sub-Clause «a» Clause 6 Part 1 Article 23 of the Law on Protection of Competition, an antimonopoly body can file a suit to arbitration courts on recognizing inoperative or invalidating regulatory or non-regulatory legal acts of the federal executive bodies, authorities of the constituent territories of the Russian Federation, local self-government bodies and other bodies or organizations, exercising the functions of the above bodies, as well as state-owned extra-budgetary funds and the Central Bank of the Russian Federation, that fully or partially contravene the antimonopoly legislation. 

Applying the above provisions in their interrelation, the courts should bear in mind that they cannot be interpreted as ruling out the rights of other persons, apart from the antimonopoly bodies, to file suits to arbitration courts and contest regulatory legal acts, which fully or partially contravene the antimonopoly legislation. 

16. Under Clause 1 Part 1 Article 32 of the Law on Protection of Competition, in order to obtain preliminary approval of an antimonopoly body in the cases specified in Clauses 27-29 of the Law, one of the persons interested in making the transactions or exercising other actions should file a petition to an antimonopoly body. 

Under Part 2 Article 34 of the Law on Protection of Competition, the transactions specified in Articles 28 and 29 of the Law and consummated without preliminary approval by an antimonopoly body, are recognized invalid by the courts upon a law suit of the antimonopoly body if such transactions have restricted or can restrict competition, which includes developing or strengthening the dominant position.

Limitation of actions on invalidating the transaction under Clause 2 Article 181 of CC RF is one year and starts on the date when an antimonopoly body learned or must have learned that the transaction was closed with violations of the antimonopoly legislation. 

17. Part 3 Article 19.8 of CoAV RF establishes liability for failure to present to the federal antimonopoly authority, or its regional offices, petitions specified in the antimonopoly legislation of the Russian Federation, for presentation of petitions containing knowingly inaccurate information, as well as for violation of the procedures and deadlines for filing the petitions, established by the antimonopoly legislation of the Russian Federation. The above corpus delicti is formal; administrative liability does not depend on any consequences. 

Arbitration courts should note that if no person, interested in making the transactions, which are specified in Articles 28 and 29 of the Law on Protection of Competition, filed a petition for preliminary approval of the transactions, then any interested person, mentioned in Clause 1 Part 1 Article 32 of the Law cannot be made administratively liable - only a person that has acquired shares (stock), rights and (or) property and meets the conditions determined in Part 1 Article 28 of the Law, or a person that is buying shares (stock), the assets of a financial organizations or rights and that meets the conditions determined in Part 1 Article 29 of the Law.

18. Regarding the appeals against the actions related to the control of an antimonopoly body over economic concentration, the arbitration courts should note that each circumstance, specified in Clause 5 Part 2 Article 33 of the Law on Protection of Competition (a transaction or any other action stated in the petition will restrict competition; information presented in the documents and important for decision-making is incorrect) can constitute separate grounds for refusing the petition submitted in accordance with Article 32 of the Law.

19. In accordance with the Regulations on the Federal Antimonopoly Service, approved by No.331 Decree of the Government of the Russian Federation of 30.06.2004, FAS Russia is the authorized federal executive body, responsible, in particular, for enforcement of the standards of the antimonopoly legislation. It operates directly and through its regional offices. 

Therefore, arbitration courts should take into account that FAS Russia can initiate and process antimonopoly cases, regardless of the place where the violations were committed or whereabouts of the likely violators, within the scope of the Law on Protection of Competition established in Article 3 of the Law. 

20. The right to choose judicial or administrative proceedings to defend its infringed or contested rights belongs to the party to a contested legal relationship. The Law does not state that administrative protection of civil rights (processing antimonopoly cases by an antimonopoly body) is ruled out, provided there is a possibility to apply to an arbitration court, or, to the contrary, is a mandatory condition if the persons whose rights have been infringed wish to apply to a court. Therefore, if a person applies to an arbitration court for protection of its rights without submitting a relevant petition to an antimonopoly body, the court cannot leave such a claim undecided referring to Clause 2 Article 148 of AJPC RF.

If in course of judicial examination its is established that a person simultaneously approached both an antimonopoly body and an arbitration court in order to seek protection of its rights, it is recommended that the court should adjourn the judicial examination under Part 5 Article 158 of AJPC RF until an antimonopoly body arrives to a decision. 

21. Along with the right to file suits or claims to an arbitration court regarding antimonopoly violations (Clause 6 Part 1 Article 23 of the Law on Protection of Competition), an antimonopoly body, under Clause 7 Part 1 Article 23 of the Law on Protection of Competition, can participate in judicial proceedings related to application (and) or violations of the antimonopoly legislation, initiated upon the lawsuits or claims filed by other persons. Therefore, to judge the cases initiated upon the lawsuits or claims filed by other persons, an arbitration court must notify an antimonopoly body to enable its participation. The procedural status of an antimonopoly body is determined depending on the nature of the dispute in question. 

22. Under Article 41 of the Law on Protection of Competition, when an antimonopoly case is finalized, the Commission arrives to a decision; the decision can be appealed under Article 52 of the Law, in particular, by petitioning an arbitration court. 

Arbitration courts should take into account that they cannot judge the claims on contesting the above act in terms of the decision of an antimonopoly body to file a lawsuit (Clause 4 Part 3 Article 41 and Clause 5 Part 1 Article 49 of the Law on Protection of Competition). The relevant proceedings must be terminated in accordance with Clause 1 Part 1 Article 150 of AJPC RF. 

23. Under Article 50 of the Law on Protection of Competition, an antimonopoly body issues a determination based on the investigation of an antimonopoly case and the decision on the case. The list of possible mandatory determinations issued to economic agents is given in Clause 2 Part 1 Article 23 of the Law.

The arbitration courts must take into account the following:

If a person fails to execute a determination within the designated period, such a person can be administratively liable for the violations under an appropriate Part of Article 19.5 CoAV RF. 

In view of the provisions of AJPC RF, the right of an antimonopoly body to file lawsuits or claims to an arbitration court on enforcing its decisions and determinations (Sub-Clause «i» Clause 6 Part 1 Article 23 of the Law on Protection of Competition) cannot be held as the right of an antimonopoly body to claim confirmation of validity of its decision and (or) issuing an order of enforcement. 

Under this right, if a person fails to execute a determination, an antimonopoly body, along with imposing administrative charges, can file a separate claim to an arbitration court related to execution of its decision and aimed at eliminating and (or) preventing an antimonopoly violation, within the terms of reference of an antimonopoly body defined by Clause 6 Part 1 Article 23 of the Law on Protection of Competition.

For instance, claims on recognizing full or partial invalidity of the contracts that contravene the antimonopoly legislation, on mandatory contract execution, on changing or terminating a contract, on recognizing the bidding invalid, etc., can be made. 

24. If examining a case on contesting a decision or a determination of an antimonopoly body an arbitration court becomes aware that the court has accepted the claim from the antimonopoly body, where it put requests to the violator, related to execution of the decision and aimed at eliminating and (or) preventing the antimonopoly violation, in association with which the antimonopoly body adopted the decision (issued the determination), the proceedings initiated upon the claim of the antimonopoly body must be suspended under Clause 1 Part 1 Article 143 of AJPC RF.

25. If an antimonopoly body adopted a decision and issued a determination to several persons (in particular, to the persons - members of a group of persons under Article 9 of the Law on Protection of Competition), and these persons filed separate claims to an arbitration court contesting the above decisions and (or) determinations, the court should bring other persons into proceedings as non-party interveners for every case because the judgment on invalidity of a decision and (or) a determination affects their rights and responsibilities. 

Under Part 2 Article 130 of AJPC RF, an arbitration court can consolidate such cases for joint proceedings due to the same composition of the persons. 

26. The courts should bear in mind that, under Part 1 Article 51 of AJPC RF, when a claim contesting a decision or a determination of an antimonopoly body is filed by a person against who the decision was made (a determination was issued), other persons, involved in an antimonopoly case under Article 42 of the Law on Protection of Competition, can participate in the proceedings as non-party interveners. 

Such persons include: the persons whose claims (or the authorities and the local self-government bodies whose materials) encouraged the antimonopoly body to initiate proceedings and investigate an antimonopoly case, as well as other concerned persons whose rights and legitimate interests are affected due to the proceedings. 

The court cannot forbid the above persons to join the proceedings invoking that the judicial action on the case would not affect their rights and responsibilities in relation to each party.

27. Under Part 4 Article 198 of AJPC RF, in its interconnection with Article 52 of the Law on Protection of Competition, the claim on invalidating a decision or a determination of an antimonopoly body can be filed to an arbitration court within three months after the date when such a decision was made or a determination was issued. 

An arbitration court can revive a missed deadline for filing the claim on the basis of valid excuses. 

28. Under Article 190 of AJPC RF, an antimonopoly body can enter in agreements regarding the cases on contesting its decisions and determinations, including the agreements on the circumstances of the case in question. In particular, the subject of such an agreement, concluded in accordance with Article 70 of AJPC RF, can be substantiating the share of an economic entity on the goods market, competition restriction, procedures for calculating the amount of income, and other circumstances, subject to be proven for the arbitration court to make a judgment. 

A. Ivanov
Chairman of the Supreme Arbitration Court of the Russian Federation

A. Kozlova
Secretary of the Plenary Session

Judge of the Supreme Arbitration Court of the Russian Federation