FAS develops a dialogue with French businessmen

On 15 June 2016, Deputy Head of FAS Andrey Tsyganov and Deputy Head of FAS Alexei Dotsenko took part in the meeting with representatives of French business circles: companies involved in the pharmaceutical sector, industry, legal services, electric power industry, gas supply, consulting and food products. The venue was organized by the Trade Mission of the Russian Federation in France at the site of the Movement of the Enterprises of France (MEDEF).

Andrey Tsyganov started with outlining to the representatives of French companies the expanding FAS powers due to assigning it the function for tariff regulation and control over public defence procurement. He pointed out that tariff and antimonopoly regulation and regulation of public procurement are now being built on the common pro-competitive approaches. FAS puts on the first place the interests of consumers rather than natural monopolies, and tariff indexation is based on the “inflation minus” and “costs minus” methods.

Then Andrey Tsyganov proceeded to discussing the changes to Russian antimonopoly law. The amendments to Russian antimonopoly law significantly expand the institutions of warnings and admonitions that now also apply to officials of the authorities, unfair competition and many constituent elements of abusing dominance. It will enable FAS to focus on investigating large and important cases on breaching the antimonopoly law.

The Register of economic entities with over 35% market share is abolished. It removes an excessive administrative burden – submitting information to the antimonopoly authority. Transactions by dominant economic entities, whose assets do not exceed the thresholds specified in the Law, are excluded from antimonopoly control.

Another provision of the “forth antimonopoly package” is excluding simultaneously imposing a turnover fine in accord with the Code of the Russian Federation on Administrative Violations and issuing a determination to recover the unlawfully gained income as a result of breaching the antimonopoly law.

Essential procedural changes are introduced: common mandatory requirements to the structure of the decision on antimonopoly cases, and determinations ordering examination of a case. A new procedural document – a Conclusion on the case circumstances – is introduced. To protect the interests of the persons, against whom antimonopoly cases are opened, the Commission investigating the case must, prior to making a decision, pass such a Conclusion that contains the factual circumstances of a case and the evidence, on the basis of which the antimonopoly body arrives to particular conclusions. The parties to the case must be given an opportunity to familiarize themselves with the Conclusion to be able to file objections and explanations. Therefore, before a decision is made, the persons involved in the case can familiarize themselves with the draft decision on the case.

Following OECD Recommendations, the “forth antimonopoly package” formalizes an obligation to analyze the state of competition in each particular case in the scale required to make a decision.

Next, Andrey Tsyganov outlined the main areas of FAS international cooperation.  Currently, the most intensive efforts are undertaken in cooperation between the national competition agencies within the Eurasian Economic Union and the Eurasian Economic Commission (EEC). He pointed out that the Eurasian Economic Union started functioning on 1 January 2015 and the powers for investigating violations of the common competition rules on the cross-border markets are assigned to EEC.

FAS also actively develops cooperation under BRICS framework. On 19 May 2016 in St Petersburg the Memorandum of Understanding for cooperation in the field of competition law and policy of BRICS counties was signed. The document brings cooperation between the competition authorities of the BRUCS countries to a completely new level. In particular, the Memorandum provides for formation of a Working Group to study competition in the socially-important sectors of BRICS economies. It is especially important because French companies are actively represented in the markets of all BRICS countries.

At the end of his presentation, Andrey Tsyganov pointed out that FAS values highly a possibility to inform representatives of foreign companies about the changes to Russian antimonopoly law and answer the questions of interest to businessmen because FAS work is built up on the principles of absolute transparency and openness to a dialogue.

Then Deputy Head of FAS Alexei Dotsenko outlined in detail the enforcement practice in the Russian Federation. In particular, French businessmen showed a considerable interest to the case against “Google”.

Alexei Dotsenko further said that on 20 February 2015 FAS opened a case against “Google Inc. Google Ireland Ltd”., “Google Ltd.” for elements of violating the antimonopoly law upon a complaint from “Yandex” anticompetitive actions of “Google”.

Investigating the case, the FAS Commission, chaired by Alexei Dotsenko, established that “Google” violated the law by offering Google Play application stores to its counteragents – vendors of mobile devices to be preinstalled on the mobile devices intended for commercialization in the Russian Federation, controlled by Android OS (mobile devices). The conditions included mandatory pre-installment of Google applications as well as its search engine and their mandatory placing on the priority positions on the device homepage. Google’s actions also led to prohibiting pre-installation of other applications from some other vendors.

The decision on the case was made on 14 September 2015. FAS found that “Google Inc. Google Ireland” Ltd. (further on referred to as “Google”) violated Part 1 Article 10 of the Federal Law “On Protection of Competition” (abusing dominance).

Having investigated the case, FAS issued a determination to “Google” to eliminate the violations of the Law “On Protection of Competition” in the part of abusing dominance on the market of preinstalled application stores in Android OS. Particularly, “Google” must adjust its contracts with mobile devices vendors: exclude anticompetitive requirements, restricting installation of applications and services of other vendors, from the agreements.

As a result, application developers will be able to preinstall their software on mobile devices while users of mobile devices, controlled by Android OS and available in the Russian Federation, will be informed about deactivating preinstalled Google applications, changing the search engine in Google Chrome browser, possibilities to install other search widgets and install other applications similar to those included in the GMS package, and change icons positions on the device screen in the form of a notice displayed on the  mobile device screen.

On 14 March 2016, Moscow Arbitration Court pronounced legitimacy of FAS decision on the case of “Google” abusing dominance on the market of preinstalled application stores in Android OS localized for the Russian Federation.

Finally, there was a Q&A session where participants discussed such issues as specifics of the mechanisms for investigating antimonopoly cases by the Eurasian Economic Commission as well as developing the antimonopoly law and policy in the field of medicinal drug circulation.