DRAFT LAW TO BAN OPERATIONS OF UNITARY ENTERPRISES ON COMPETITIVE MARKETS HAD PASSED

On 13 December 2019, the draft law was approved by the State Duma of the Russian Federation in the third reading

The measures specified in the draft law will help exclude an adverse impact of state and municipal unitary enterprises on competition on the local markets.

The law introduces a general ban on establishing unitary enterprises and their operations on competitive markets, as well as a clear list of exceptions form this rule. In particular, unitary enterprises can be formed to support live-sustaining activities in the regions of the Extreme North and equivalent localities. They can also be formed to exercise activities towards developing culture, art, cinematography, and preserve cultural values, in cases of operating outside the territory of the Russian Federation, to enable performance of some federal executive bodies and in the field of radio-active waste treatment and natural monopolies.

Upon an initiative of the Federation Council, norms are added to the law that the Government can make decisions to establish or keep an enterprise upon a reasoned submission from a Head of a subject (region) of Russia.

Deputy Head of FAS Sergey Puzyrevsky commented: “The draft law is designed to protect local markets from monopolization. In December 2018 the draft law was adopted by the State Duma [the lower Chamber of the Parliament] of the Russian Federation in the first reading. Throughout the entire 2019, the draft law was refined in view of the opinions of members of the State Duma and the Federation Council. In December the parliament passed the draft law in the II and III reading, and on 23 December is was approved by the Federation Council. The transitional period will last 5 years. By January 2025, operations of unitary enterprises that do not fit the antimonopoly norms must be terminated”.

The law on unitary enterprises on competitive markets is drafted to fulfill the 2020 National Competition Development Plan*.

Background:

* Under Sub-Clause “a” Clause 4 of 2018 – 2020 National Plan for Developing Competition in Russia, approved by № 618 Order of the President of the Russian Federation of 21 December 2017.