ANDREY TSYGANOV: COMPETITION IS A FUNDAMENTAL CONCEPT IN THE ECONOMY OF ANY DEVELOPED COUNTRY
On 7 May 2018 Deputy Head of FAS held talks with representatives of the International Monetary Fund
The event took place during annual IMF consultations with Russian public officials. The focus was on the state of competition on the markets of the Russian Federation and control over public procurement.
“Our official position is that preserving and, moreover, increasing the share of state participation across sectors of the economy harms competition. This is because private and state-run companies operating in particular sectors of the economy a priori find themselves in unequal positions. Some can enjoy state support and others can rely only on their own possibilities”, started his speech Deputy Head of FAS. “At the same time, the state share in the economy, measured in quantitative parameters, is not as important as the role of the state. Therefore, we talk not so much about the size of the state sector but about pro-and anti-competitive tools possessed by the state to control the economy. From this point of view public procurement constitutes one of the most significant issues”.
Today public and corporate procurement is geared towards active development of electronic procurement, particularly, among small and medium businesses.
Large-scale changes to Nos. 44-FZ and 223-FZ Federal Laws took place in December 2017 designed to improve public and corporate procurement, first of all, to make procurement electronic.
For public procurement, for example, the concept “electronic procedures” and definitions of suppliers are formalized, the specifics of such e-procurement is determined and the procedure of electronic tenders is regulated.
The transition to the electronic form of public procurement will take place gradually: from 01.07.2018 it is the right of government customers and from 01.01.2019 all procurement should be organized in the electronic form.
“We believe, e-sites are an advantage of Russian legislative system”, emphasized Andrey Tsyganov.
The amendments to No.223-FZ Federal Law set, in particular, a closed list of procurement methods from small and medium companies and their complete transition to the electronic form. Such procurements will be performed on universal trading sites operating under No. 44-FZ Federal Law. These measures will support small and medium business in the course of procurement of state-run companies.
The transition to the electronic format is aimed primarily at reducing subjective factors in procurement, increasing anonymity of bids and their consideration by the ordering parties, excluding possibility to engage “insider” suppliers by the ordering parties, reducing the risks of corruption and collusion, enhancing procurement efficiency.
It also simplifies requirements to bidders and reduced the costs of participation.
“The system of procurement is very important for developing business. We are glad that we can influence not only competition but also public procurement and procurement by state-controlled companies”, pointed out Andrey Tsyganov.
The speaker also commented on the issues emerging in the course of regulation and control:
“The current version of No.223-FZ Federal Law allows companies with state participation and state corporations to invent schemes that help apply procurement procedure from a single supplier and other non-competitive methods of procurement. FAS is aware of the issue and together with our colleagues from the Ministry of Finances and the Ministry of Economic Development we are working on it, constantly improving the law. It is pretty evident that we are facing colossal resistance and heavy lobbyism, when people used to “appoint” executors on their contracts are employing all possible methods and mechanisms to obstruct FAS efforts to make the right changes to the law. FAS, however, has learned how to overcome such lobbyists”.
The parties also discussed interaction between FAS and the Bank of Russia on developing competition.
“An important feature is that in the financial sectors we act on the basis of co-regulation: enforcement is exercised jointly with the Central Bank of the Russian Federation”, commented Andrey Tsyganov.
Deputy Head of FAS specially emphasized the importance of the Road Map for developing competition on the market of financial services, drafted jointly with the Bank of Russia.
Currently FAS and the Bank of Russia launched efforts, particularly, aimed at:
- Restricting the share of a single creditor in estimating the average market value of the true interest costs (TIV) to ensure fair market conditions for the pricing for consumer loans and reduce the impact on prices from potential violations of the antimonopoly law by the dominant players
- Studying the conditions for representing insurance recovery services in the regions by insurance companies offering compulsory civil liability insurance of motor vehicles owners in order to devise proposals to expand the list of possible representatives
- Clarifying and detailing approaches to determining the costs of repairing damaged vehicles to support bona fide conduct of insurers determining insurance claim payments under the agreements on compulsory civil liability insurance of motor vehicles owners
- Potentially changing the procedure of forming the Committee of the users of the Central Depository ‘s services to provide a possibility to service users to exercise the necessary influence upon the tariff policy of the Central Depository
- Developing competition on the market of forex-leaders by excluding the practice of attracting customers by persons that do not have a Central Bank’s license, particularly, through training centers. In this part, the Bank of Russia and FAS have already made arrangements to exchange information about signs of breaching the law on advertising
- Suppressing infringements of civic rights for choosing entities, including banks through which the population can receive social and other types of payments
- Establishing a single standard for accepting payments through official web-sites of the authorities and other online resources facilitating provision of public services.
Talking about a system of indicators enabling to evaluate the state and development of competition in various sectors of the economy, Andrey Tsyganov mentioned that the indicators are specified directly in No.618 Order of the President of the Russian Federation "On the main directions of the state policy towards developing competition" of 21.12.2017 and in the National Competition Development Plan approved by the Order.
He emphasized that at the recently the State Council of the Russian held a meeting on developing competition in the subjects of the Russian Federation and discussed extrapolating the indicator system to the regional level and using then to evaluate performance of the regional authorities.
Deputy Head of FAS Department for Control over Financial Markets, Lilia Belyaeva; Deputy Head of FAS Legal Department, Larisa Vovlivskaya; Deputy Head of FAS Department for Public Procurement Control, Maria Tomakh; Deputy Head of FAS Administrative Department – Secretariat, Larisa Vovkivskaya also attended the event. Representatives of the International Monetary Fund included Resident Representative, IMF Office in the Russian Federation, Gabriel Di Bella and a senior economist Oksana Dynnikova.