WHY THE ANTIMONOPOLY SERVICE WANTS TO INTRODUCE A COMPLIANCE SYSTEM?

Head of FAS Anti-Cartel Department Andrey Tenishev discussed preventative capabilities of antimonopoly compliance in detail, speaking at the International Research-to-Practice Conference – “Compliance as a risk management system: Russian and European Experience”.

He pointed out that “today the Antimonopoly Service opens more than 600 cases per year against various anticompetitive agreements, of which approximately 300 – are cartels, other 300 – collusions with the authorities and government customers”.

Answering the question how potential violators can be deterred, Andrey Tenishev stated: “First – inevitability of punishment, second – its severity and fairness, and third – moral deterrence – breeding intolerance to cartels in our corporate culture”.

The legal sanctions are rather severe: fines imposed upon legal entities – up to 15% of the market turnover and up to 50% of the initial (maximum) contract price upon each contract participant. For officials and top executives – criminal liability, up to 7 years imprisonment, or administrative liability up to disqualification.

Head of FAS Anti-Cartel Department explained that “such sanctions do apply. Fines for cartels reach hundreds of million RUB. Criminal prosecution for competition restriction has become a reality. First sentences for participation in the cartel in question are passed – 3.5 years imprisonment”.

Andrey Tenishev continued: “If cartel participants made arrangements with a government official under the frame of a cartel, it incurs criminal liability for the latter for abuse of office. There are such cases and such sentences.  A former Head of the Kamensky District in the Rostov region restricted competition at an auction for construction of a day-care centre – he instructed to unlawfully reject all applications, keeping a particular single entity that must win. The sentence for abusing office is 1 year 4 months imprisonment. A former Vladivostok Mayor is sentenced to 15 years imprisonment with multi-million fines for abuse of office and bid-rigging collusion”.

Talking about the “third way”, he pointed out that breeding corporate values, which do not allow forming a cartel and committing other antimonopoly violations is the major strategic objective of antimonopoly compliance.

“FAS is now implementing this policy with regard to the authorities as well as economic entities. The value of compliance is that it should reduce antimonopoly risks for companies and public servants. Therefore, a significant public task can be achieved: prevent cartelization of the economy on the one hand, and on the other hand - save companies from multi-million fines and executives from criminal liability for competition restriction”, emphasized Andrey Tenishev.

Finally, Head of FAS Anti-Cartel Department discussed another leverage tool upon violators: “turnover” fines for obstructing inspections of companies’ conduct. A draft law is now submitted to the Russian Government.