No. 61. Enhanced Administrative and Criminal Liability for Violations of the Anti-monopoly Legislation

10.08.2009

Goltsblat BLP advises that:

Federal Law No. 160-FZ of 17 July 2009 “On Amendments to the Russian Federation’s Code of Administrative Offences and Certain Other Legislative Acts of the Russian Federation” will come into effect on 22 August 2009; and

Federal Law No. 216-FZ of 29 July 2009 “On Amendments to Article 178 of the Criminal Code of the Russian Federation” will come into effect on 30 October 2009.

These federal laws establish new bodies of administrative offences, increase the administrative penalties and enhance the criminal liability for violations of the anti-monopoly legislation. For instance, the articles of the Code of Administrative Offences of the Russian Federation (the RF CAO) dealing with departures from the procedure for awarding contracts for federal or municipal government needs have been expanded substantially; articles on disqualification, on restriction of competition by federal and municipal government bodies, on conclusion of agreements restricting competition and on coordination of economic activity have been revised; new articles have been added on abuse of dominant position by a business entity holding less than a 35 per cent market share, etc.

The new administrative penalties for business entities engaging in monopolistic activities are summarised in the table below:

Officers

Legal Entities

Article 14.31 of the RF CAO

“Abuse of dominant position on a commodity market”

A fine of 20 to 50 thousand roubles or disqualification for up to 3 years

A fine of 1% to 15% of goods sales revenues on the market on which the violation was committed (but no more than 2% of the aggregate goods sales revenues and no less than 100 thousand roubles)

If the goods sales revenues on the market on which the violation was committed exceed 75% of the aggregate goods sales revenues – a fine of 0.3% to 3% of the goods sales revenues on the market on which the violation has been committed (but no more than 2% of the aggregate goods sales revenues and no less than 100 thousand roubles)

Article 14.31.1 of the RF CAO

“Abuse of dominant position by a business entity holding less than a 35 per cent share on the market for certain goods”

A fine of 15 to 20 thousand roubles

A fine of 300 thousand to 1 million roubles

Article 14.32 of the RF CAO

“Conclusion of agreements restricting competition, engaging in concerted actions restricting competition, and coordination of economic activity”

A fine of 20 to 50 thousand roubles or disqualification for up to 3 years

A fine of 1% to 15% of the goods sales revenues on the market on which the violation was committed (but no less than 100 thousand roubles) (and in consideration of the overall ban on levying a fine exceeding 4% of aggregate goods sales revenues)

If the goods sales revenues on the market on which the violation was committed exceed 75% of the aggregate goods sales revenues – a fine of 0.3% to 3% of the goods sales revenues on the market on which the violation was committed (but no less than 100 thousand roubles)

Release from administrative liability for concluding agreements and engaging in concerted actions restricting competition is now possible only for the first person to make a voluntary statement on the violation, provided that other conditions associated with such a statement are also satisfied. Collective applications for release from liability filed on behalf of several persons in connection with such agreements or concerted actions will not be considered.

It should be emphasised that the statute of limitations for imposing administrative liability for the violations stipulated in article 14.9 “Competition restriction by federal and municipal government bodies”, the above articles 14.31, 14.31.1 and 14.32, and article 14.33 “Unfair competition” of the RF CAO now runs from the day on which a relevant decision by the anti-monopoly authority commission establishing violation of the anti-monopoly legislation comes into effect.

Revised article 178 of the Criminal Code of the Russian Federation dealing with criminal liability for barring, restricting or eliminating competition (including repeated abuse of dominant position) establishes a new range of penalties (depending on the body of the crime), from a monetary fine to seven years’ imprisonment with possible deprivation of the right to occupy certain positions or engage in certain activities for a term of one to three years. Criminal liability only attaches if the named offences caused serious damage (exceeding 1 million roubles) to individuals, entities or the state or generate large-scale revenues (exceeding 5 million roubles).

For additional information, please contact:

Eugenia Borzilo, Head of Group,
Corporate/M&A,
Goltsblat BLP;
T: +7 495 2874444
E: info@gblplaw.com

Contact details

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Ksenia Soboleva

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