Important developments in the anti-monopoly legislation (on prevention and preclusion of monopolistic activities)

27.07.2009

Legal Update No. 54

Goltsblat BLP advises that Federal Law of 17 July 2009 No. 164-FZ “On Amendments to the Federal Law “On Protection of Competition” and Certain Legislative Acts of the Russian Federation” will take effect on 23 August 2009.

One of the most important of many amendments to the Federal Law “On Protection of Competition” relates to dominant position. Dominant could be considered any organization with the market share below a 35 per cent if its share exceeds those of other businesses and it can exercise a dominant influence on the general conditions for the commodity’s sale on the given market.

The amended legislation contains articles on monopoly high and monopoly low prices that include among comparable markets not only domestic but also foreign ones. Furthermore, a price can now be deemed monopoly high/low if it involves, respectively, an increase/reduction in the previous price or maintenance of the same price or refusal to reduce/increase it. In this respect, an increase/decrease in the commodity production and sales costs, the characteristics of buyers and sellers and the market sales conditions for the commodity (including as a result of government regulation) should be taken into account.

At the same time, under certain conditions, a commodity price resulting from innovative activities will not be recognised as monopoly high even if these entail a cut in production costs and (or) a quality improvement. It has also been stipulated that the price of a commodity may not be recognised as monopoly low if introduction of that price did not and could not restrict competition by reducing the number of buyers or sellers on the relevant commodity market not belonging to the same group of persons.

It should be noted separately that, for the first time, the amendments determine in detail the rules on non-discriminatory access to commodity markets and (or) commodities manufactured or sold by natural monopolies.

The provisions on agreements and concerted practices have been changed significantly. "Vertical" agreements are now exempt from per se prohibitions on agreements but still are forbidden if they result in a resale price being established for the commodity or if, by means of such an agreement, the seller demands that the buyer preclude sale of competitive goods (with the exception of agreements on the sale of goods under a trade mark or trade name of the seller or manufacturer).

The regulation prohibiting other agreements resulting or potentially resulting in restraint of competition has been retained. "Vertical" agreements between business entities with shares of no more than 20 per cent of any commodity market are still permitted, as are franchise agreements.

It should be emphasized that no exemptions have been introduced to the prohibition on anticompetitive coordination.


For additional information, please contact:

Eugenia Borzilo, Head of Group,
Corporate/M&A,
Goltsblat BLP;
T: +7 495 287 44 44
E: info@gblplaw.com

Contact details

For all issues related to publications, news and press releases, please contact:

Ksenia Soboleva

Head of PR and Communications

Subscription

If you would like to receive our legal alerts and updates highlighting current legal issues relevant to your areas of interest and providing expert commentary by our lawyers, please click on "Sign Up" and fill out the form.