The 47th session of the Interstate Council on Antimonopoly Policy of the CIS Member-States (ICAP) in Veliky Novgorod

The session focused on the issues of most interest for CIS antimonopoly bodies. FAS representatives were the key speakers on some items.

Participants were welcomed by Artak Shaboyan, Chairman of the State Commission for the Protection of Economic Competition, the Republic of Armenia and Head of ICAP Secretariat, an advisor to CIS Executive Committee, Azam Usmanov, who announced the agenda.

Information was given about the most important events in the antimonopoly policy of the CIS member-states in the running period.

Deputy Head of FAS Anatoly Golomolzin who leads the Headquartersfor Joint Investigations of Violations of the Antimonopoly Law by the CIS member-states, informed about investigations of a merger between “Yandex N.V.” and “Uber International C.V.” by the antimonopoly bodies.

In August 2017, FAS received a notification from “Yandex” and “Uber” on merging businesses in Russia. Apart from Russia, the changes will affect other CIS countries (Azerbaijan, Armenia, Belarus, Georgia and Kazakhstan).

“We will analyze the market of taxi passenger transportation as an integrated and multisided: passengers – on the one hand; drivers, taxi pools and platforms – on the other. We have to understand how the merger can impact all market participants and we will study relationships between all sides of the market rather than limiting ourselves to just one of them”, emphasized Anatoly Golomolzin.

Then he outlined the work of the Headquartersfor Joint Investigations of Violations of the Antimonopoly Law by the CIS member-states.

The next report by Anatoly Golomolzin focused on the experience of the CIS member-states in tariff regulation.

He put an emphasis on the legal aspects of tariff regulation. Currently all tariff issues are regulated by the Law on natural monopolies and sectoral legislative acts, that are not consolidated into a unified normative regulatory system. “FAS believes that the legislative architecture should be built up around the Law “On Protection of Competition”. It will define the terms and formalize the basic principles of decision-making on tariff regulation.  FAS has started drafting the Law on tariff regulation that will describe the methods of tariff regulation, establish unified procedural framework for tariff decision-making”, said Anatoly Golomolzin.

According to him, decisions on introducing, changing, terminating regulation should be based only on market analysis. It is necessary to restore the legitimate rights and interests of consumers rather than only regulated companies, at all stages of preparing and adopting tariff decisions. “Tariff policy should be long-term and predictable. It is essential to ensure independence of decision-making, transparency of procurement by natural monopolies and non-discriminatory access to their services” emphasized the speaker.

The tariff –setting procedures should be out into “digital”. Means of automation will help collect, store and process information more efficiently.

Current work to conclude regulatory contracts between FAS, the authorities of the subjects of the Russian Federation and regulated organizations are very important. Every method of tariff regulation should be refined and reflect actual efforts to improve efficiency of regulated companies and tale into account the economic trends. The method of marginal pricing in communications was described as one of such achievements.

Then Azam Usmanov made a report about coordinating the work of the antimonopoly bodies of the CIS member-states and developing a coherent position with regard to international competition policy to be presented at international platforms. Adding to that, Deputy Head of FAS Andrey Tsyganov outlined the results of 16^th session of the Intergovernmental Group of Experts on competition law and policy that had taken place on 5-7 July 2017 in Geneva.

Artur Karpovich, First Deputy Minister for Antimonopoly Regulation and Trade, Belarus, discussed experience of interaction between the antimonopoly bodies of CIS member-states and retail chains and their associations.

Dr. Fabio Babey, School of Management and Law, Zurich University of Applied Sciences, presented the events for the antimonopoly bodies of the CIS member-states organized by Zurich University of Applied Sciences.

Deputy Head of the Department for Social Sphere and Services – Head of the Unit for Social Sphere and Household Service, the Ministry of Antimonopoly Regulation and Trade, the Republic of Belarus, Daria Orlova hihglighted Belarus experience in ascertaining facts (absence of facts) of violating the antimonopoly law.

Head of FAS Department for Control over Social Sphere and Trade, Timophei Nizhegorodtsevshared experience of Russian antimonopoly body on reducing medicinal drug prices.

FAS conducted an international comparative survey of prices for expensive vital and essential drugs.

The comparative survey covered three groups - around 1300 medicinal drugs, for which Russia spends most funds. Prices from 43 countries were taken, of which more than 20 were the reference countries, and the decisions to reduce prices in Russia were made on their basis.

The findings proved that, on the one hand, price depreciation led to around 100 drug positions in Russia being cheaper than in other countries. Some drugs, however, were significantly more expensive than in the reference countries.

Russia has a List of vital and essential drugs that all hospitals take as the procurement basis. To get on the list is rather difficult; companies must prepare an extended set of documents and register their price.

Describing FAS efforts to reduce prices, Timophey Nizhegorodtsev pointed outthat to prevent shortage FAS did not apply tough measures and abolish price registration. Instead the companies were asked to reduce prices voluntarily.

“Eventually, the companies accommodated our request. None of them managed to overthrow our arguments corroborated with the comparative market analysis”, said the speaker. “Price reduction on average was 50% for 451 positions of expensive vital and essential medicinal drugs. It gave a significant economic effect in the health care system. Already in the first year the savings in procurement by the Ministry of Health reached more than 5 billion RUB”.

He formulated some recommendations and proposals on price registration that participants can find useful in their practical work.

Reference:

ICAP was formed in 1993 under the Treaty signed by Head of the Government of all CIS member-states. The main objectives of the Treaty is to establish legal and organizational framework for cooperation to pursue coherent antimonopoly policy and develop competition, prevent monopolistic activity and / or unfair competition of economic entities that is harmful to the economic interests of CIS member-states.

Further on, the goals, tasks and mechanisms of coherent antimonopoly policy, determined in the Treaty, were clarified and added in a new version of the Treaty signed by the Council of the CIS Governments on 25 January 2000. The Treaty particularizes the objectives of the antimonopoly bodies to ensure close cooperation in the field of competition policy, gives definitions and general competition rules on abusing market dominance; restrictive agreements; unfair competition.