THE FIRST WARNING IN RUSSIA ON LIQUIDATING A UNITARY ENTERPRISE IS ISSUED IN INGUSHETIA

Sunzh Authority is given a warning to stop actions that have sings of violating the antimonopoly law and to liquidate a local municipal unitary enterprise

According to the antimonopoly law [1]  establishing unitary enterprises is banned from 8 January 2020. The ban devised in accord with the National Competition Development Plan [2] restricts operations of such entities on competitive markets except those included in a special list [3].

In March 2020, however, the Sunzh Authority formed a unitary enterprise. The types of operation, that the enterprise planned to exercise according to an extract from the Unified State Register of Legal Entities, are not on the list of statutory exceptions. At the same time, the Sunzh Authority failed to use its right under the Federal Law “On Protection of Competition” and did not enquire to Ingushetia OFAS in order to obtain an expert opinion whether establishing the unitary enterprise complies with the antimonopoly law.

The analysis performed by Ingushetia OFAS России ascertained that in the period in question – from 18 March 2019 to 18 March 2020 – more than 10 economic entities operated in the Ingushetia Republic, including individual entrepreneurs, each of which were potential participants of the analyzed market. Formation of the municipal unitary enterprise by-passing the legal prohibitions can result in restricting and preventing competition.

Therefore, on 17 April 2020 Ingushetia OFAS issued a warning to the Sunzh Authority that it is necessary to liquidate the municipal unitary enterprise.

Unitary enterprises, that operate on competitive markets and fall under the statutory restrictions, must be liquidated or reorganized by 1 January 2025.

Background:

[1] Amendments to the Federal Law “On Protection of Competition”, that ban establishing unitary enterprises and their operations on competitive markets, are introduced by № 485-FZ Federal Law “On amendments to the Federal Law “On public and municipal unitary enterprises” and the Federal Law “On Protection of Competition” (№.485-FZ Federal Law).

[2] Approved by № 618 Order of the President of the Russian Federation of 21.12.2017.

[3] Operation of unitary enterprises is allowed in the cases specified in the federal laws, acts of the President of the Russian Federation or the Government of the Russian Federation; to support work of federal executive bodies for the needs of national defence and state security; in the field of natural monopolies; in the Extreme North areas; in the fields of culture, art, cinematography and preserving cultural values; outside the territory of the Russian Federation; in the field of radioactive waste treatment.