OECD is interested in FAS experience on considering mergers

Can merger decisions with determination prevent an adverse impact of mergers upon competitive market conditions?

On 29 November 2016, Deputy Head of FAS Andrey Tsyganov shared Russian experience of making decisions on merger cases with his foreign colleagues at a Round Table of the Working Group on Cooperation and Enforcement, of the Organization for Economic Cooperation and Development (OECD). The event focused on “Adopting decisions on merger cases: from prohibiting to allowing with determinations”.

OECD Secretariat was interested in the practice of Russian antimonopoly body, particularly, in its decisions to allow mergers with a number of determinations instead of simply prohibiting mergers.

The line of reasoning in such FAS decisions is based on a possibility to set structural and conduct determinations necessary to maintain and develop competition, ex-post control and evaluating of a long-term merger impact upon the state of competition by the antimonopoly authority.

According to Andrey Tsyganov, if a merger is prohibited, the parties interested in completing the transaction will find alternative methods of cooperation – joint ventures, sectoral associations or agreements, which later on will require a new intervention by the regulator.

The statistical data presented by Deputy Head of FAS showed that the number of merger refusals, particularly, allowed with determinations, in the overall number of petitions considered by the antimonopoly body, differs insignificantly from other jurisdictions: in 2015 for 1749 petitions considered by FAS 65 were allowed with determinations and 46 refused. In the same period, in the European Union, for instance, out of 337 merger petitions considered by the European Commission in 2015, 20 were allowed with determinations and no one was refused. In both Russia and the EC a downward trend for the merger-prohibiting decisions is observed.

Andrey Tsyganov explained that the experience of Russian antimonopoly body showed a clear intention to consider multiple factors in merger cases, including the position of the companies involved in and a possibility to improve the well-being of the population following the transactions. As an example, he discussed the merger of “Polar Airlines” and “Yakutia” air carriers.

Deputy Head of the Antimonopoly Service pointed out that Russian antimonopoly body actively applies structural conditions, popular in the world practice. Examples can be dozens of FAS determinations on splitting-off the grid business from the companies involved in generating or selling electric power, as well as FAS determinations on merger cases in the field of oil products and retail trade.