Sergey Puzyrevsky: government regulation will never generate an effect that developed competition can ensure

On 14 January 2016, Deputy Head of the Federal Antimonopoly Service (FAS Russia) Sergey Puzyrevsky took part in an expert discussion on “Monopolism: benefit of threat to national security?” at the Gaidar Forum 2016 – “Russia and the world: looking to the future”.

Deputy Head of FAS made a report on the current issues of developing Russian antimonopoly law and outlined the main initiatives in this field.

According to Sergey Puzyrevsky, one of the key areas of the tariff policy in the near future should be liberalization of those sectors of natural monopolies where conditions for competition are formed.  

He said that “whatever efforts the regulator would undertake to reduce the costs of natural monopolies, it will be hard to achieve an effect generated by competition. Because if you have a strong competitor, you will never allow excessive expenses and inefficient spending of funds – you will be simply pushed away from the market”.

In the opinion of FAS representative, in the past ten years natural monopolies were given a possibility to accumulate significant resources that under current conditions can be focused on supporting other participants of the economy, become “donors” for their development.

Involvement of the state in the economy is another pressing issue.

“Unfortunately, experience of antimonopoly control in this field shows that when the state comes to an area attractive for private capital it typically leads to its monopolization”, emphasized Sergey Puzyrevsky. “Therefore, an important step in regulatory development can be a reform of state and municipal unitary enterprises that we have been discussing for already several years, and which, hopefully, will be adopted in the near future”.

Next, no less important issue is supporting small and medium business. In particular, one of FAS proposals is to introduce immunity from antimonopoly regulation.

“We think that small companies should not be concerned with antimonopoly regulation because their market power is too small. We very much hope that a relevant draft law will be adopted in the near future”, pointed out Sergey Puzyrevsky.

Summing up, Deputy Head of FAS reminded that FAS continue discussing possibilities to provide access for small business to procurement by large companies.

He concluded that that “many large companies objected an idea that FAS put forward at the outset - to purchase 10% of goods and services from small business. Nevertheless, FAS proposes to continue the dialogue and we hope that ultimately we will be able to work out a proposal acceptable for all parties”.