Brief on the Federal Law of July 26, 2006 № 135-FZ «On Protection of Competition»

On July 26, 2006 the President of the Russian Federation signed the Federal Law «On Protection of Competition» that enters into effect in 90 days from the moment of its official publication. The new Law «On Protection of Competition» essentially reduces administrative pressure upon business, thus, enters a lot of new tools allowing conducting the antimonopoly policy in the Russian Federation more effectively. The Federal Law «On Protection of Competition» unites the provisions that were included earlier into the Law of the RSFSR of March 22, 1991 № 948-I «On Competition and Limitation of Monopolistic Activity in Commodity Markets» as well as into the Federal Law of June 23, 1999 № 117-FZ «On Protection of Competition in the Market of Financial Services».

Regarding the control over economic concentration, under the new Law «On Protection of Competition» the agreement of each deal on purchase of shares is cancelled. Reception of the preliminary approval of antimonopoly authority is necessary only in case of purchases of blocking share holding (25 %), controlling share holding (50 %) and a package of shares excluding the opportunity to block decisions of the shareholder by third parties (75 %). The preliminary approval of establishment of financial organizations and increase of their charter capital disappears, and also threshold values for the preliminary approval of deals raise - up to 3 billion rubles, for notifications about deals - up to 200 million rubles. It reduces the amount of deals that are the subject for approval. 

It is expected, that simultaneously with reduction of burden on antimonopoly authority' officers, owing to reduction of the number of controlled deals, the quality of antimonopoly procedures, and consequently, state antimonopoly control as a whole, will increase. Besides, during realization of control activity over the processes of economic concentration the opportunity to issue not only behavioral but also structural instructions will appear. It was practically impossible according to the Law of the RSFSR «On Competition…».

In the new Law the procedure of consideration of cases on infringements of the competition legislation is stated in details, the list of the persons participating in consideration of cases on antimonopoly infringements as well as other participants of the process are determined, their rights and a duties and also the order of appeal in court against the acts of the antimonopoly authority adopted in the result of legal proceedings are fixed.

Essential changes were introduced into provisions forbidding the authorities of state power of the Russian Federation and institutions of local governments to issue acts or to undertake actions aimed at restriction of competition. According to the Law «On Protection of Competition»the Central Bank of the Russian Federation and state non-budget funds are included into the list of these authorities. The legislator introduced the definition of the state aid as an optional granting of individual privileges and advantages to separate economic entities as well as determined the order of granting of such aid.

The new Law establishes uniform antimonopoly requirements to holding by authorities of state power and institutions of local governments of all kinds of tenders and auctions. Besides, the competitive selection of the financial organizations by subjects of natural monopolies is established.

The new Law specifies the notions of the antimonopoly legislation. In particular, the concept of the concerted actions is introduced. This will allow proving in courts the fact of the undertaking of concerted actions by economic entities at realization of price parallelism and division of a market under the territorial principle. One of the basic innovations is the concept of the «collective dominance» in the some commodity markets. At that, the Law defines the quality characteristics of the markets where the collective dominance is possible. Besides, for the first time in the Russian antimonopoly practice the list of infringements «per se» is legislatively established, that is prohibitions from which the exceptions can not be made, and infringement of prohibitions «per se» can not be authorized by the antimonopoly authority or court.