ANDREY TSYGANOV: FAS IS NOT JUST A CONTROLLER. OUR JOB IS TO HELP AVOID TYPICAL ERRORS
On 29 June 2018, the Government of the Moscow region held a Round Table on “Subsidizing agricultural producers: the competition issues”. Representatives of FAS and the Government of the Moscow region discussed sectoral problems and relationship with the regional banking and business communities, associations of agricultural producers, and put forward their proposals on solving them and advancing cooperation.
Deputy Head of FAS Andrey Tsyganov highlighted the importance of developing competition for Russian economy and the FAS role in achieving the goals set by the Order of the President of Russia and the National Competition Development Plan1.
“In the past six months the President of Russiagave serious consideration to competition development in Russian economy twice and was absolutely definitive about the colossal significance of developing competition on Russia markets in order to achieve an economic breakthrough and fulfill the objectives specified, in particular, in the May Presidential Order”, started his speech Deputy Head of FAS.
Andrey Tsyganov pointed out that an important moment in the Order of the President that approved the National Competition Development Plan is that “developing competition is a national task because it is related to protection of constitutionally guarded values. This is the task for all government bodies”.
The second important event, to which Deputy Head of FAS drew attention to, was the State Council of the Russian Federation. “It is essential that the first meeting of the State Council after the President was elected focused on developing competition in the regions. The meaning of it is very simple. If we are pursuing at the federal level a package of measures designed to develop competition, the relevant instructions are given in the Presidential orders, it means that these measures must also penetrate the everyday life of Russian regions. The State Council had an interesting and vivid discussion and it was the President of the Russian Federation who was the most powerful promoter and protector of competition, putting all priorities correctly”, stressed the speaker.
Discussing FAS objectives for developing competition in the regions, Andrey Tsyganov emphasized significant accumulated experience and knowledge of the antimonopoly body capable to help the regional authorities to pursue the Presidential orders.
“In the efforts towards developing competition FAS does not see itself as just a controller. Yes, we are involved in control-and-supervision, particularly, in the agro-industrial complex, including the regional level. We will continue this work, improving the law on competition and enforcement practice. The question is, however, that based on market analysis, conducted by FAS on a regular basis, we can help regions correctly see the sectoral structure of the regional economy and determine the priorities and achievable targets for the near future. Relying on its colossal enforcement practice (several thousand cases annually); FAS can help regions and municipalities to avoid typical errors and implement antimonopoly compliance. I.e., implement a system of measures within the authorities that will protect officials form possible violations of antimonopoly norms by them and subsequent sanctions. This is how we see our objective”, summed up Deputy Head of FAS.
Deputy Head of FAS Department for Control over Agro-Industrial Complex, Irina Yepifanova, outlined the practice of antimonopoly enforcement in control of subsidies to agricultural producers.
The speaker pointed out that important changes had taken place in the subsidies system in 2017: consolidation of state support in some areas and expanding the power of the regions in the part of choosing particular methods to achieve the targets when using subsidies. It is now possible to redistribute subsidies between the areas of state support within the “single” subsidy. A mechanism of easy-term loans replaced subsidies to partly compensate the interest on loans.
Breaching the antimonopoly law in subsidizing can lead to inefficient use of budgetary funds, restrict the freedom of movement of agricultural products in Russia and create conditions for monopolizing markets at the regional level, which will increase prices for agricultural products.
“Therefore, providing competitive conditions when granting subsidies and other measures to support the agro-industrial complex is a FAS priority”, emphasized Irina Yepifanova.
To expose antimonopoly violations in subsidies granting, FAS analyses the regulatory framework in the regions that determine the procedure for granting subsidies, surveys regional authorities to evaluate accessibility of subsidies, and interacts with the law enforcement and investigative bodies.
“The goal is to evaluate accessibility of subsidies for agricultural producers and transparency of the procedure. Our analysis shows that some regions lack reliable information about the number of potential subsidy-seekers, which prevent evaluation of the level of subsidies accessibility for agricultural producers. There are no administrative regulations to determine the procedure for considering applications of agricultural producers for subsidies. Another issue is a low level of informational support to the subsidies allocation and granting procedure”, said Deputy Head of FAS Department for Control over Agro-Industrial Complex.
Based on the efforts of FAS and its regional Offices, more than 50 cases are opened upon signs of breaching the antimonopoly law by regional authorities granting subsidies to agricultural producers. In a number of regions amendments are drafted to the current regulatory acts of the subjects of the Russian Federation, regulating the subsidies procedures. Cooperation is established with regional authorities for drafting such regulatory acts.
Irina Yepifanova underlined the efficiency of the prevention mechanism, as a result of which most violations are eliminated voluntarily and promptly, without opening cases.
Head of FAS Department for Control over Agro-Industrial Complex, Anna Mirochinenko, focused on some problematic aspects and suggested the ways to resolve them.
An analyzing of the regulatory acts of the Russian Federation on subsidies to agricultural producers revealed significant regional differences in the requirements set to agricultural producers claiming subsidies, and the absence of a synchronized timeline for granting subsidies at the federal and regional levels. There are also excessive requirements to subsidy receivers, which reducers their range significantly.
The speaker pointed out that regulatory acts of the Government of Russia that specify the rules for granting funds from the federal budget to the regional budgets under the State Programme for developing agriculture lack common national basic criteria for selecting subsidy recipients. At the same time, the level of co-financing from the federal budget on some support areas reaches 95 %.
“FAS proposes to legislatively give the Government the right to set the main criteria for selecting subsidy recipients. It will enable to use of state support measures in auniform manner and eliminate unjustified regional disparities”, emphasized the speaker.
Anna Mirochinenko also discussed easy-term loans to agricultural producers form banks: “Most banks involved in the easy-loan programmes grant short-term easy loans at 5 % annual interest, without reducing it. FAS suggests to introduce a filing order for credit companies to take part in the easy-loan programmes and a unified principles for determining the maximum amount of easy loans per borrower that would depend on the size of crop acreage, cattle stock or other estimates. These measures will facilitate development of competition, subsidies accessibility and market unity”.
FAS proposals also concerned increasing information openness of subsidizing.
Head of FAS Department for Control over Agro-Industrial Complex drew attention to a low level of information support to subsidizing, absence of special sections on state support ion the web-sites of agro-industrial regulators and top regional authorities, and emphasized the need for open access to the registers of subsidy recipients.
“We propose to publish a list of subsidy recipients. It will be s elf-control tool for regional authorities and a control tool for agricultural producers and their associations. In our opinion, it is a necessary element of openness. Another FAS proposal is to adopt regional administrative regulations determining the procedure for considering applications of agricultural producers to grant subsidies”.
In FAS view, establishing an initiative group comprising representatives of FAS, regional agro-industrial regulators, and business-community also will help reduce antimonopoly violations. The group will identify the best practices in subsidizing agricultural producers, draft recommendations for agro-industrial regulators, designed to increase informational openness of granting subsidies and reduce the risks of breaching the antimonopoly law when granting subsidies. In the course of the discussion, representatives of the Government of the Moscow region expressed the readiness to organize the work of such an initiative group on their territory. Deputy Head of FAS Andrey Tsyganov proposed to discuss controversial issues in the filed of subsidizing agricultural producers and recommendations at FAS Expert Council on the agro-industry.
1 No. 618 Order “On the fundamental directions of the state policy towards developing competition