FAS and the Corporate Counsel Association had a Round Table in St Petersburg

Head of FAS Anti-Cartel Department Andrey Tenishev and Head of St Petersburg OFAS Vadim Vladimirov answered lawyers’ questions about cartels, digital technologies, compliance, tariff regulation and developing competition in the regions  

The Corporate Counsel Association (CCA) and the Federal Antimonopoly Service organized a Round Table from the “Dialogue with Power” cycle with support of an “Ernst and Young” international consulting company.

Alexandra Nesterenko, CCA President, pointed out that the tradition of discussing antimonopoly regulation with FAS representatives successfully continued in St Petersburg, the Round Table programme was formulated in accord with the wishes of CCP members.

Head of FAS Anti-Cartel Department Andrey Tenishevstarted his report with a review of statistical data on cartels. He indicated that the overwhelming majority of cartels (more than 80%) are associated with bid-rigging. Statistics often does not fully reflect the reality: in comparison with the previous years the initiated antimonopoly cases can have up to 90 respondents, and the number of episodes in a single case can reach up to 1300. Today cartels have become thoroughly different and they acquire all features typical for organized groups. It was also emphasized that traditionally there are very few cases on concerted actions: only one case was opened in 2016, and three cases - in 2015. However, the number of cases involving the authorities is going up; out of 262 cases the overwhelming majority concerns procurement by tenders. In 2017 there will be a good deal more cases due to introduction of Clause 1 Part 1 Article 17 of the Federal Law “On Protection of Competition” and extrapolating it to any government ordering parties. It is estimated that the number of cases upon Article 16 of the Federal Law “On Protection of Competition” will go down since this norm applies only to the federal bodies.

Next question was about digital technologies: use of computer programs to unlawfully coordinate economic activities and price collusion as well as use of digital technologies to expose and prove cartels. There are already cases on using computer programs in bid-rigging collusion. A case on such a cartel is already investigated and Courts of two Instances already supported FAS arguments. Andrey Tenishev also mentioned a case opened against a Russian subsidiary of “LG” upon signs of coordinating on the market and using a computer program by the company to monitor and control prices of their distributors. According to Head of the Anti-Cartel Department, it is an interesting situation in view of the antimonopoly law; all signs of unlawful coordination of economic activity are present. Using software to monitor market prices is not forbidden; however, using them to influence the state of the market is prohibited.

FAS actively employs modern technologies to expose collusions at electronic trading, and so far there are no programs for exposing cartels on the markets.

Regarding a question on unscheduled inspections, the Head of FAS Department emphasized that on average FAS carries out around 50 unscheduled inspections across Russia, that involve  visits to corporate offices. As the Unified Public Register of Legal Entities contains information about more than 7 million economic entities, 50 inspections cannot be a serious burden upon business. Andrey Tenishev also pointed out that lately FAS has increasingly more frequently faced obstacles to its inspections. In this context a law is drafted on fines from 0.5 to 1% of the annual corporate income regardless of the market when inspections are impeded. In his opinion, it is a pretty soft measure in comparison with the world practice.

Answering whether the 1% figure will be perceived differently on different markets – depending on the ratio of 1% to net proceeds in different sectors of the economy, the speaker said that in a situation of hampering inspection sometimes it is difficult to define a market, so FAS borrowed experience of other countries but significantly decreased the fines.

If FAS officers cannot obtain some data due to, for instance, software shortcomings (for example, viruses) rather than hampering, those actions will unlikely be punishable.