MEETING OF MIKHAIL MISHUSTIN WITH THE HEAD OF THE FEDERAL ANTIMONOPOLY SERVICE MAXIM SHASKOLSKY
Issues of price control in socially important commodity markets were discussed, including monitoring prices for food, medicines, gasoline, building materials, cellular communication services, as well as in the field of e-commerce
From the transcript:
M. Mishustin: Dear Maxim Alekseevich!
On the eve of the 20th anniversary of the Federal Antimonopoly Service, I would like to congratulate you on this holiday. Moreover, in your person, the entire FAS team, everyone who is related to the Service, thank you for your work.
The Federal Antimonopoly Service has done everything to ensure that Russia has a competitive environment, and all the mechanisms of a market economy are created, and all the necessary elements are carried out and implemented. First of all, these are competitive procurement opportunities, when the most effective participants of auction and tender gets an advantage according to the criteria.
In addition, a very important function of the FAS is related to pricing. That is, you monitor prices on commodity markets, commodity markets. This directly affects inflation and the country's economic performance.
I want you to tell us in more detail how is the work on price monitoring going on in general, who do you interact with and what is the current market situation.
M. Shaskolsky: Dear Mikhail Vladimirovich, thank you for the kind words addressed to the Service, as well as for the constant attention to competition protection issues.
Indeed, the Federal Antimonopoly Service is engaged in monitoring pricing in socially significant commodity markets on an ongoing basis. First of all, it applies to food products.
There are a large number of manufacturers and sellers of such goods, and a high level of competition in Russia, so antimonopoly regulation measures are not always applicable. We have to use measures of soft regulation and prevention.
Thus, in the second half of last year, due to the increase in prices for chicken meat, we worked with the largest producers. And as a result, the companies decided to reduce the selling prices. Moreover, retail chains were also asked to reduce retail prices proportionately. The Service monitors the implementation of this decision on a weekly basis. Prices are going down.
We also studied the reasons for the price changes for chicken eggs. A higher rate of growth of wholesale producer prices were revealed in comparison with the increase in cost and profitability in the wholesale segment. As a result of the work carried out, 10 cases of violation of antimonopoly legislation were initiated in 10 regions of the Russian Federation, including on the grounds of concluding anti-competitive agreements and implementing coordinated actions.
We are constantly working with the largest federal retail chains to reduce the average aggregate level of margins. These margins for the observation period from August 2021 decreased by 16 %: from 22 to 6.
In order to increase food production, the Government of the Russian Federation has created an effective mechanism to provide domestic agricultural producers with mineral fertilizers at affordable prices. Currently, fertilizer prices are approximately at the level of 2022.
It should be noted that the Federal Antimonopoly Service has agreed on the trade and sales policies of mineral fertilizer manufacturers, and we monitor their compliance.
The Government of the Russian Federation adopted Resolution No. 662, which was prepared by the FAS Russia. It allows regions to quickly take measures to reduce prices and curb trade margins.
Currently, such agreements are in force in 34 regions, where over 2, 200 manufacturers and sellers have accepted price commitments.
The practice of concluding agreements has proved well in the work on stabilizing prices for chicken eggs. We have sent recommendations to the regions on the procedure for concluding price agreements with producers and sellers of chicken eggs, and now there is a tendency to lower prices.
The automotive fuel market is also socially significant. On behalf of the Government, we check the economic validity of various components that are included in the final price for consumers. In case of detection of economically unjustified prices, we take antimonopoly measures. Thus, according to the results of the inspections, 30 antimonopoly cases were initiated in 19 regions. As a result of the joint work of ministries and departments, the change in retail fuel prices in 2023 did not exceed the rate of inflation.
As for medicines. First of all, with regard to the list of vital and essential medicines. We constantly conduct a comparative analysis of registered prices, comparing them with prices in the reference countries. If we find out that our prices are higher, we notify manufacturers of the need to reduce prices. Thus, in 2023, we managed to reduce prices for 252 medicines from this list. There are 815 drugs in the list.
By presidential decree, a special fund “Circle of Goodness” was created to provide children with rare diseases with expensive medicines and medical products. It should be noted that our accumulated experience in reducing drug prices helped the fund to save 12.5 billion rubles.
Both the ability of citizens to purchase or build housing and the pace of construction of socially significant facilities that are being built within the framework of national projects depend on the systematic work of the Authority in the construction materials market. On behalf of the Government, we checked various manufacturers and found that there are monopolistically high prices in the market of hot-rolled flat products, flat glass, aerated concrete blocks, reinforcement, cement, raw materials for the production of clay, wood materials. As a result of the consideration of cases, these companies were issued orders aimed at curbing prices and ensuring competition. In addition, it was found that the companies received economically unjustified income, therefore turnover fines were imposed on them, and the position of the FAS in many cases has already been supported in the courts.
We receive a large number of complaints from consumers about cellular services and tariffs. Mobile operators occupy a collective dominant position. For this reason, we check the economic validity of the established tariffs. If we see revenue growth, while reducing costs, non–fulfillment of investment programs, costs that are not related to the development of communication services, we issue an order to reduce prices to an economically reasonable level or cancel the tariff increase completely. Such a case was considered against the largest mobile operator, and tariffs were reduced to an economically reasonable level.
Another one example. In September 2023, carefully considering the appeals of citizens, we found that the “big four” charge economically unjustified fees for distributing the Internet from subscriber devices. A warning was issued about the need to cancel such a fee. And this warning has been fulfilled, the fee has been canceled.
M. Mishustin: It is such a difficult time right now. There is no doubt that it is necessary to keep in touch with both manufacturers of goods and services, products, and networks. Because pricing is a complex process and the chain directly affects the end user.
It is very important to protect the consumer from an unscrupulous manufacturer or from poor-quality delivery, it is also one of the functions of the FAS.
But against the background of demand development, the supply of goods and services, labor productivity, and innovative solutions that are offered, especially in modern trading tools, should develop.
Now a lot of trade is moving into the e-commerce sector. These are platforms that sell goods and services, carsharing, taxi services, and many other platforms. And here, as they say, in pricing you need to keep an eye out. Therefore, it is necessary to understand how this business works, all its elements, and control pricing.
What does the Service do in this direction? How well do you feel what is happening there now?
M. Shaskolsky: Indeed, when considering consumer appeals, we are increasingly faced with examples of so-called dynamic (or arithmetic, algorithmic) pricing. Such pricing mechanisms are used to determine the price of railway transport, air services, taxis, hotel business, and so on.
At the same time, obviously, as a rule, no cost increase occurs. But there is additional price pressure on the consumer, which cannot be called economically sound and justified.
The issue of dynamic pricing, of course, is in the area of supply and demand balance. So far, we are using soft regulation tools here in order to find optimal solutions to curb prices for certain services, taking into account the balance of the need for payback of the service and the social responsibility of this business.
For example, in February of this year, we issued a warning to one of the largest airlines about the need to develop a commercial policy that will provide for the establishment of tariffs at an economically reasonable level.
M. Mishustin: Maxim Alekseevich, the Service has enough authority to control pricing, including in such, I would say, complex tools and structures as electronic platforms. It is necessary to identify unscrupulous suppliers of goods and services or those who unreasonably inflate prices for services and supplies, and respond with the means and methods available in the arsenal of the Federal Antimonopoly Service.
And of course, to interact with the Federal Treasury and the Federal Tax Service. Such close cooperation is necessary here in order to immediately take response measures in case of unjustified price increases. And I would like to emphasize that it is especially important to do this when working with the state defense order. It is a very important area, and the FAS has all the powers here to effectively address, including monitoring activities.