ANDREY TSYGANOV: OUR MAIN GOAL IS TO SET EQUAL PRINCIPLES AND RULES OF COMPETITION FOR ECONOMIC ENTITIES OF ALL FORMS OF OWNERSHIP
Deputy Head of FAS discussed the constitutional principle of the equality of the forms of ownership and adverse impact of unitary enterprises upon competition, speaking at the Global Competition Forum of the Organization for Economic Cooperation and Development
On 30 November 2018, OECD Global Competition Forum in Paris had a session on Competition Law and State Companies.
Andrey Tsyganov informed the session the competitive neutrality principle in Russia is embedded in the main Russian Law – the Constitution that recognize and equally protects private, state, municipal and other forms of property.
“Russian competition law has not limits, exemptions, thresholds and exclusion for control over operations of state-run companies in any segment of the economy. The principle of FAS work is equal attitude of companies regardless of their forms of ownership and categories. A typical example of observing this principle is the so called three waves of antimonopoly cases against oil companies, each of which had different forms of ownership”.
Then Deputy Head of FAS pointed out that Russia still has a lot of companies with state or municipal participation, first of all, unitary enterprises operating on competitive markets.
The specifics of organizational-and-legal form and formalizing property determines inefficiency of unitary enterprises, particularly, due to lack of efficient corporate control (Board with independent Directors, risk management systems, etc.), while the “guaranteed” demand for products does not improve labour productivity and innovative development of such entities.
Andrey Tsyganov said that FAS drafted a law that provides for restrictions establishing companies with state and municipal participations on competitive markets:
“We suggest that state and municipal enterprises should be allowed only in three cases. First, markets in the state of natural monopoly. Second, if founders are federal executive bodies responsible for defence and security policy. Third, if establishing an enterprise is provided for by a federal law”.