Over the past few years, the legal obligation to develop a trade policy, as proposed by the Federal Antitrust Service, has raised many questions. What benefits does a trade policy provide and which problems can it solve? What provisions should such a policy contain? Are there any adverse consequences in having a trade policy? This update considers the pros and cons.
The Federal Anti-monopoly Service has stated that adoption of the fourth antitrust package will help to reduce administrative workloads for businesses and facilitate a more competitive environment. Despite the business community's criticism of the proposals, the government recently approved this package of amendments to antitrust law.
Federal Law 423-FZ, which amends the Federal Law on the Protection of Competition, has now entered into force. The new law abolishes the requirement to notify the Federal Anti-monopoly Service (FAS) of a number of transactions involving economic concentrations. In particular, the FAS has lifted a significant administrative barrier for transactions with no significant impact on competition.
The Law on Protection of Competition clearly states that its provisions extend to both Russian and foreign legal entities. Moreover, they apply even to agreements and transactions between such entities that are concluded outside Russia. This application is limited to cases in which the agreements or transactions affect competition in Russia; however, this limitation is unclear and gives rise to certain issues.
Unlike in most countries, the concept of 'discrimination' in Russian competition law primarily refers to non-pricing conditions. However, although the concept might seem transparent and explicit at first glance, practical application has revealed a number of issues that distort this initial focus of the legal construction of discrimination. Companies should be aware of recent regulatory activity to ensure compliance with the law.
Regulations awaiting approval from the Ministry of Justice will change the antitrust notification requirements for companies contemplating reorganization, particularly those involved in a simultaneous spin-off and merger. Although the new regulations do not fully cover such processes, recent practice may give an indication of how to proceed.
An amendment to the Administrative Code revises the calculation of penalties to be imposed on entities in breach of anti-monopoly regulations. However, a commercial entity which suffers the consequences of anti-competitive conduct, such as a purchaser which has been affected by discriminatory pricing, is not guaranteed to recover its losses in a civil claim for damages or unjust enrichment.
The Duma has been discussing amendments to the Administrative Code on stricter penalties for violations of the Anti-monopoly Law since mid-2006. However, the procedure for introducing new legislation gathered pace in March 2007 when a final draft of the changes was approved.
The Law on the Protection of Competition revises the concept of a 'group of entities'. There are no exceptions to the rules on disclosing information on group structures to the Federal Anti-monopoly Service when applying for approval of transactions; in certain circumstances, non-resident companies which conduct business in Russia may be subject to the same requirements as Russian companies.