Russia ratifies Agreement on unified principles and rules of competition.

05.08.2011

Legal Update No. 260.

Goltsblat BLP advises that Federal Law of 11 July 2011 No. 185-FZ “On Ratification of the Agreement on Unified Principles and Rules of Competition” has been passed.

The Agreement was signed by Belarus, Kazakhstan and Russia (the Parties) on 9 December 2010, its purpose being for the Parties to develop a unified competition policy for ensuring free movement of goods, services and capital, freedom of commercial activity and efficient operation of the commodity market within the Customs Union, while avoiding any adverse effect on the trade between the Parties.  

The Agreement sets unified principles and rules for competition on the territory of the Parties and for their commercial entities on cross-border markets of two or more of the Parties. The criteria for classing a market as being a cross-border one, for the purpose of determining the terms of reference of the Customs Union Commission, will be set by resolution of the EurAsEC Interstate Commission (the supreme body of the Customs Union) within six months of the Agreement coming into effect.
The unified principles and rules of competition envisage, in particular:

  • a ban on anti-competition actions by authorities (agreements to preclude, restrict or eliminate competition; state or municipal preferences, except for cases legislated by the Parties);
  • a ban on agreements restricting competition (according to an exhaustive list) between competing commercial entities, on vertical agreements (apart from those permitted under the Agreement; at the same time, a maximum goods resale price may be set under a vertical agreement), and other agreements, if they restrict or might restrict competition (such as ones that might be recognised as permissible on fulfilment of a number of the Agreement’s conditions);
  • a ban on individuals, commercial or non-commercial organisations organising concerted actions by commercial entities;
  • a ban on abuse by commercial entities of a dominant market position (as defined by the Methodology for assessing the state of competition, approved by the Customs Union Commission);
  • a ban on unfair competition;
  • the possibility of state price regulation on non-natural-monopoly commodity markets in exceptional cases (emergencies, natural disasters, etc.), by decision of a Party, which may be cancelled by decision of the Customs Union Commission on the basis of a complaint lodged by any other Party.

The Customs Union Commission is entitled to decide to impose a fine for violation of the rules of competition on cross-border markets on the territory of two or more Parties. Such a decision is an executive document and is subject to implementation by the national authorities for enforcement of acts of the Party on whose territory the guilty commercial entity is registered.

The Agreement sets substantial fines for officials and legal entities for the following competition rule violations:

  • conclusion by a commercial entity of a prohibited anti-competition agreement or participation therein;
  • prohibited concerted economic actions of commercial entities;
  • abuse of dominant market position;
  • failure to furnish the Customs Union Commission or the competent authority of a Party with information stipulated by the Agreement or provision of deliberately incorrect information (for this violation, a fine is also envisaged for individuals).

The Agreement establishes that the competent authority exercising control over observance of the unified principles and rules of competition within the Customs Union is the Customs Union Commission. This Commission will stop commercial entities of the Parties violating the bans established by the Agreement if this has an adverse effect on competition on cross-border markets within two or more of the Parties. The relevant powers of the Commission have been determined (to consider applications, including to carry out the requisite investigations, initiate and consider cases involving violations, to issue rulings and adopt binding decisions, including on imposition of sanctions, etc.).

Acts and actions (omissions) of the Customs Union Commission relating to competition may be disputed in the EurAsEC court in the manner stipulated by the EurAsEC Court Statute and the Agreement on applying to the EurAsEC Court regarding disputes within the framework of the Customs Union.

According to the Agreement, the competent authorities of the Parties collaborate in their law-enforcement activities to protect competition by forwarding notifications, requests for information, requests and instructions on performance of individual procedural actions, exchanging information, co-ordinating their law-enforcement activities, and undertaking such activities at the request of one of the Parties (if the latter believes that anti-competition activities carried out on the territory of one of the Parties negatively affects its interests).

It is proposed that the legislation of the Parties be aligned with the unified principles and rules of competition established by the Agreement and that a model law on competition be drafted and passed within 18 months of the Agreement coming into effect.
The Agreement comes into force on the day the depository receives the last notification of the Parties having fulfilled the internal procedures required for it to come into effect.

For additional information, please contact:

Nikolay Voznesenskiy,
Head of Anti-monopoly Practice,
Goltsblat BLP,
T: +7 (495) 287 44 44,
E:   info@gblplaw.com

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