SERGEY PUZYREVSKY: REINFORCEMENT OF STATE MONOPOLISM IS A NEGATIVE TREND

Speaking at the “Legal and economic issues of analyzing the state of competition on the markets” Research-to-Practice Conference in St Petersburg on 7 February 2020, Deputy Head of the Federal Antimonopoly Service (FAS Russia) Sergey Puzyrevsky, focused on the problems and prospects of developing antimonopoly regulation

Sergey Puzyrevsky pointed out that Russia has some negative trends for competition – reinforcement of state monopolism. Private sector in the economy is shrinking, the share of state-controlled companies and state-run corporations is increasing, the entire sectors of the economy are monopolised, the number of unitary enterprises are growing and private business is discriminated.

To solve the issue, FAS has drafted a law on liquidating state and municipal unitary enterprises.

“At the end of 2019, the President of Russia signed the law, according to which most of state and municipal unitary enterprises must be transformed into other forms of ownership: either reincorporated in joint-stock companies, or reorganized in other, more transparent forms of ownership with state participation”, said Sergey Puzyrevsky.

“This is a big reform to roll out till 2025. Already from 8 January 2020 establishment of new unitary enterprises on competitive markets is prohibited. The constitutional principles of equality of all forms of property in Russia must be ensured”, clarified Deputy Head of FAS.

The law gives exceptions: unitary enterprises will remain in the Extreme North areas, in the fields where natural monopolies operate, and in culture.

Sergey Puzyrevsky highlighted the second issue that concerns FAS: inefficient government regulation of natural monopolies.  

“The law on natural monopolies has become obsolete and it does not reflect the modern realities. Holders of natural monopolies are subject to the tightest government regulation. If this approach applies to competitive markets, it means an artificial deterrence of development of such markets”, believes Deputy Head of FAS.

The Antimonopoly Service considers that only those entities should be categorized as natural monopolies that possess network assets (for example, grids or gas pipelines).

“Ports, airports, postal services should not fall under the new definition of natural monopolies. It means that these markets can be reformed and developed”, emphasizes Sergey Puzyrevsky.

The third issue is inefficient state tariff regulation. The antimonopoly authority is of the opinion that sectoral tariff regulation results in discrimination between particular economic entities as well as between sectors because now most tariff decisions are individualized, some sectors have a higher burden of regulation and some less.

A FAS-drafted law on the basics of state regulation of prices establishes unified methods and rules of such regulation, the procedure of tariff decision-making and improving investment programmes financed from tariff sources, as well as the procedure for interaction between the federal and regional tariff regulators, is also submitted to the Government of the Russian Federation.

Sergey Puzyrevsky also touched an immunity issue for applying the antimonopoly law to intellectual property items.

“We do not say that the antimonopoly law allows taking away this property from somebody. We do not take away Gazprom property, regulating its operations. The same relates to intellectual property items. It is necessary to abide the rules. And now they tell us: your rules are not applicable to us”, underlined Deputy Head of FAS.

In his opinion, this misapprehension plays into hands of foreing right-holders who take advantage of it in order to conquer the Russian market.  FAS will continue persuading both the authorities and business that the norms of the antimonopoly law should apply to intellectual property items, as is the practice all over the world.

“Legal and economic issues of analyzing the state of competition on the markets” Research-to-Practice Conference was organized by FAS; “Yurist” Publishing Group; the Competition Law Department at Kutafin Moscow State Law Academy; the Department of Legal Protection of Economic Competition Law, St Petersburg State University; St Petersburg State University of Economics.

The editor-in-chief of the “Yurist” Publishing Group, Head of the “Civil Society” Department of MGIMO University of the Ministry of Foreign Affairs of the Russian Federation, Vladislav Grib, pointed out: “As the largest law publishing house in Russia, “Yurist” publishes over 60 periodicals. Our authors include the leading Russia jurists with large academic potential. A lot of them publish their works in the “Competition Law” Journal, that unifies experts in the field of applying the antimonopoly law and protecting competition.  That is why the “Yurist” Publishing Group initiated the “Legal and economic issues of analyzing the state of competition on the markets” Conference and a series of integrated research-to-practice events, which will also be organized together with FAS”.