FAS Russia took part in discussions at OECD Working Group on Co-operation and Enforcement

On November 29, 2016 the FAS Russia's delegation headed by the authority’s deputy head Andrey Tsyganov participated in a roundtable discussion of the Working Group on Co-operation and Enforcement with the topic "Decision-making in merger cases: trade-off between prohibitions and conditional clearances».

Discussions at the roundtable included questions on the potential harm to competition that could justify prohibition of mergers and acquisitions, as well as on effectiveness  of solutions of regulations in preventing negative impact of transactions on competition on the markets.

A specific interest for the OECD Secretariat was revoked by the Russian experience relating to the preference for conditional clearances over mergers’ prohibitions. The FAS Russia’s arguments on this are based on the possibility of imposing structural and behavioral conditions necessary for support and development of competition, on using post-control and evaluation of the long-term impact of mergers on competition by the antimonopoly agency.

According to Andrey Tsyganov, in case of prohibition the participants of deals may find alternative ways of cooperation such as joint ventures, industrial associations, agreements, which would further require a new subsequent regulator’s intervention.

Andrey Tsyganov says that structural conditions popular worldwide are also actively used by the Federal Antimonopoly Service. Examples to be mentioned here are dozens of the FAS Russia’s prescriptions concerning allocation of the electric business out of the companies’ structure in case if they are involved in electricity’s generation and sale, as well as prescriptions on merger cases in the field of petroleum products and retail trade. Mr.Tsyganov provided statistics on the number of prohibitions and authorizations of mergers in the total amount of notifications under the authorities’ consideration, noting that they do not significantly differ from other jurisdictions: in 2015, the FAS Russia considered 1749 notifications out of which 65 ended in conditional clearances and 46 were refused. In the same period, for example, in the European Union the European Commission reviewed 337 merger applications and issued 20 conditional clearances and imposed no prohibitions. At the same time in Russia and in the EU the numbers of decisions prohibiting mergers tend to decrease.

Mr Tsyganov explained that the experience of the Russian antitrust authorities demonstrates a clear commitment in the decisions on merger cases to take into account a number of factors, among of which are positions of the companies involved in mergers, as well as the possibility of improving the welfare of citizens due to transactions. An example to be provided here is the merger between airline companies "Polar Airlines" and "Yakutia", information on which was provided by the FAS Russia to the OECD.

In the frame of the further Working Group’s discussions concerning a possible revision of Recommendation concerning Effective Action against Hard Core Cartels, adopted by the Council of OECD on March 25, 1998, Andrey Tsyganov presented the Russian position on the plan and the timeframe of work on the document*. Mr. Tsyganov urged his colleagues to pay attention to the dramatic changes observed in trends of the world economy and the work of competition authorities on combatting cartels. In 2016, new methods of economic cartelization(participation in electronic trading, use of intellectual property rights, ability of instant sharing of information, application of  electronic platforms) appeared in contrast to 1998, together with some new control mechanisms inside anti-competitive agreements. At the same time, a number of competition authorities have accumulated considerable experience in dealing with these violations. Therefore, improvement of the legal apparatus to combat cartels should be explored and reflected in the Recommendations themselves both through the practice of competition authorities and experience of the cartel participants.

In addition, the deputy head of FAS Russia pointed out that today a lot of information is available to authorities through open sources, and in this context especially important is the possibility of informal "soft" co-operation between professionals working in antimonopoly bodies. According to him, it would open up additional opportunities for the correct interpretation of data available and would give a new view of "traditional" obstacles in international cooperation in the fight against cartels, such as the lack of a developed contractual framework, restrictions on exchange of confidential information and sophisticated procedures of taking decisions on joint investigations.

* The original version of the report on amending the Recommendations of 1998 will be discussed at the meeting of the OECD Competition Committee in June 2017.