Efficiency of antimonopoly control will be increased

In recent years the Federal Antimonopoly Service (FAS Russia) weakened its control pressure on business; however, additional measures are required for substantial development of competition and increasing the number of businessmen and private companies. This opinion was expressed by the Ministry of the Russian Federation on Open Government, Mikhail Abyzov, speaking on 1 March 2017 at the final session of FAS Collegium. According to the Ministry, FAS involvement in the priority programme on improving control and supervision efforts as well as implementing the National Competition Development Plan will facilitate efficiency of the antimonopoly policy.

The past, 2016 year was not easy for FAS, pointed out Mikhail Abyzov. Integration with the Federal Tariff Service, taking the function on control over public defence procurement and adopting the forth antimonopoly package happened in 2016.

“FAS managed not only these large-scale tasks but also was able to solve a number of issues emerged in the preceding period. There were a lot of reproaches concerning the work of the Antimonopoly Service in 2011-2013, when they criticized, often fairly, a pseudo-baculine system of work of the regional Offices and their large-scale control over small and medium business. We have analyzed the issues openly. Some of them were objective, some were subjective and unsubstantiated. Now the vector of the work of FAS and its regional offices has changed”, said Mikhail Abyzov.

The Minister emphasized a considerable improvement of the quality of FAS reports on competition development, presented annually to the Government. The Reports reflect the actual situation in the antimonopoly field, and often raise acute issues, which cause discontent of some authorities. Nevertheless, the Chairman of the Government has taken a principal position that FAS should not coordinate reports with other departments.

Adopting the forth antimonopoly package has changed the position of the Antimonopoly Service towards businessmen considerably: instead of immediately opening cases against the violators, FAS started issuing warnings or admonitions.

“It led to a drastic decrease of the number of cases opened by the antimonopoly bodies across Russia. In fact, we have freed businessmen from ourselves more than threefold. It took a long while to prepare for transformation from a body of direct rights protection to a body of preventative control. Warnings are issued practically along the entire perimeter of the antimonopoly law that removes a huge burden from business”, pointed out Head of FAS Igor Artemiev.

Abandoning the “baculine” model of state control is one of the most essential principles of the reform of control and supervision activities enforced under the frame of the Presidential Council on Strategic Development and Priority Projects. Mikhail Abyzov is a senior officer responsible for the reform. 12 ministries and department, including FAS, are involved in the first stage of the relevant Priority Programme. The Minister believes that implementing new approaches to supervisory work, provided for by the Programme, will enable to significantly enhance efficiency of antimonopoly control that is currently questionable.

“A paradoxical situation is emerging: international organizations recognize that Russian law in the part of competition and antimonopoly policy is one of the best in the world. The efforts of the leadership of FAS and its regional offices are of very high quality. But there is no competition. Which means that the issue is, in particular, in efficient procurement”, said the Minister.

The Priority Program includes, for instance, a transition to a risk-oriented approach when cartels causing the most harm to the economy will be screened over in the first place. A lot of attention will be given to preventing violations. To this purpose there will be quarterly public “balance” meetings with representatives of the regulator and its regional bodies as well as businesses. where the main results of supervisory efforts will be explained. The system of evaluating public control performance and efficiency will be continuously developed. As pointed out by the Minister, FAS established it quite a while ago and their system is one of the most advanced.

“We must link the model of payroll budget and premiums allocated upon the work results to performance and efficiency and make this model absolutely clear and transparent”, stated Mikhail Abyzov.

According to the Minister, IT-support of government control required by the reform will facilitate exposing collusions and other violations of the antimonopoly law and increase the distance between the inspectors and the supervised subjects, which will help cut down the corruption risks.

In the opinion of Mikhail Abyzov, some of the outstanding issues can be solved due to the National Competition Development Plan. Earlier the Open Government and personally the Minister put forward the initiative to draft the Plan and a Presidential Decree; the idea was supported by the Antimonopoly Service. The document was drafted with an active involvement of the Government Expert Council, and is currently going through the final approvals. It is expected that the Plan will be regularly approved by a Presidential Decree, similarly with the National Anti-Corruption Plan that is approved every two years.

“The Plan contains, on the one hand, approaches to the priorities and principles of the antimonopoly policy. On the other, it outlines particular objectives for particular markets. We have 6 basic market, for which we have been able, in general, to develop the performance criteria that characterize how goals are being reached towards developing competition in certain sectors: road construction, provision of medical drugs, etc. We sorted out the principal issues. Now it is also necessary to propose a document for open expert discussion. It should not be designed “in limbo”. The National Plan should be presented to market participants, economic entities so they are able to give their comments and proposals”, said Mikhail Abyzov.

In his turn, Igor Artemiev expressed hope that adopting the National Competition Development Plan will facilitate a breakthrough in the part of FAS moving from active measures on competition protection to the active measures towards competition development.

Both the Audit Chamber and the Antimonopoly Service agree that the level of competition, particularly, in public procurement remains rather low. According to Head of FAS, there are systemic problems in procurement by state-run companies under No.223-FZ Federal Law: in 2016 the share of non-competitive procurement did not change being 95%. The Audit Chamber confirms that competition in procurement under No.44-FZ Federal Law also has not increased recently.

One of FAS “super-tasks” for 2017 should be demonstrating efficiency of public procurement at the regional level.

Public procurement has enormous reserves for saving budgetary funds. It reaches half of GDP. The state share of the economy is very large. If businessmen at the regional level see that public procurement becomes transparent in the subjects of the Russian Federation, there will be new offers and new investments. It will form confidence that will enable us to raise the work towards developing competition and the antimonopoly policy at the new level. The main KPI here is emergence of new businessmen and companies”, emphasized Mikhail Abyzov.

He described the system built up at “Rosatom” Corporation as an example of one of the best procurement systems.

The Minister also is in favour of assigning additional powers to FAS to investigate antimonopoly violations and proposed that FAS should initiate considering the issue by the Security Council. He believes that FAS response to possible concerns of businesses with regard to expanding its powers should be transparent decisions and enhanced responsibility for wrong decisions.

Igor Artemiev underlined that the Federal Antimonopoly Service is ready for close cooperation with the colleagues at all levels of government and with the expert community to elaborate measures aimed at intensifying competition.

Head of FAS stated: “Our main goal for the nearest years is to shift from active measures to protect competition towards active measures on developing competition in joint efforts with the governors, the local self-government leaders, regional parliaments, the federal government, the Presidential Office and the federal parliament. We should engage experts, opinion shapers and politicians in devising measures aimed at competition development”.

He thanked the Government for its openness to a dialogue and the readiness to get feed-back from all parties to the process.

A modernized FAS Community Council can become a platform to help ensure transparent FAS work and non-governmental monitoring over antimonopoly policy.  Mikhail Abyzov said the Council would be formed starting from mid-March in line with the new rules: its members will be NGO representatives –75% from the Public Chamber and 25% - from the Government Expert Council.