KIROV REGIONAL LEGISLATURE SUPPORTS FAS DRAFT LAW ON THE BAN TO FORM UNITARY ENTERPRISES AND THEIR OPERATIONS IN COMPETITIVE MARKETS
The Decree is submitted to the State Duma of the Russian Federation
Under FAS draft Law, unitary enterprises can be forms only for the purposes of national defence and state security, by a federal law, an act of the President of the Government of Russia or for operations in the field of natural monopolies.
In view of the circumstances, regional authorities started discussing and considering the draft amendments. Kirov region was the first.
The plenary session of Kirov Regional Legislature took place on 25 October 2018. One of the items on the agenda was FAS draft Law to ban unitary enterprise and their operations.
The draft is prepared in pursuance of 2018-2020 National Plan for Developing Competition in the Russian Federation, approved by No. 618 Order of the President of the Russian Federation “On the main directions of the state policy towards competition development” of 21.12.2017, and Government decisions of 30 August 2018. The amendments make changes to the Law “On Protection of Competition”.
The Government approved the draft Law in September 2018.
Most unitary enterprises are in the sectors with developed competition. A considerable number of state and municipal unitary enterprises operate in housing stock management, trade and services. FAS also exposed numerous facts of customers avoiding the norms of the Law on contractual system by transferring funds in the form of subsidies to subordinate unitary enterprises for procurement of goods, works, services for customer need, particularly, on competitive markets.
Deputy Chairman of Kirov Regional Legislature, Roman Titov said:
“FAS draft law bans functioning of unitary enterprises. Until 2021, there will be a transition period when state and municipal unitary enterprises must be transformed or liquidated. Such enterprises have unmatched advantages over other companies when they use their position to dominate in particular sectors of the economy”.
“In the opinion of FAS and Kirov Regional Audit Chamber, that surveyed performance of state and municipal unitary enterprises, they are channels for unlawful alienation of public and municipal property. It is transferred to them for operative management but then the property is sold without consent of the establishers, which damages the state. Municipal unitary enterprises resell property without any legal grounds. Only 35% unitary enterprises in the Kirov region have positive financial results, they are mostly loss-makers and are subsidized”.
Kirov Regional Legislature supported FAS document and submitted their Decree to the State Duma of the Russian Federation.
Deputy Head of FAS Sergey Puzyrevskiy pointed out: “FAS draft Law to ban state and municipal unitary enterprises is submitted to the State Duma of the Russian Federation. Support by the regions to the draft Law is a necessary condition, especially since the National Plan for Developing Competition, approved by the Presidential Order, provides for restricting formation of unitary enterprises in competitive markets, particularly, at the regional level”.