FAS likely to reorganise and take tougher stand against cartels in 2013

  • Key amendments to Russian competition law in 2012 criminalised aspects of anti-cartel law
  • Federal Antimonopoly Service to focus on greater cooperation with other domestic agencies

Russia’s Federal Antimonopoly Service (FAS) is expected to take a tougher stand against cartels in 2013, as well as reorganising its antitrust efforts in the sector, according to local lawyers.

Cartels are already regarded as the worst violations of Russian competition law, the attorneys added.

In 2012, key amendments to the existing Russian competition law criminalised competition-restricting concerted actions and "vertical" agreements.
This federal Law, dated 6 December 2011, is No. 401-FZ “On Amendment to the Federal Law on Protection of Competition and certain legislative acts of the Russian Federation”, and contains amendments to article 178 of the Criminal Code of the Russian Federation. It came into effect on 6 January 2012.

In 2013, FAS is likely to start cooperating with the Ministry of Internal Affairs and the Russian Police Service to further fulfil its enforcement powers against cartels.
During a telephone conference organised by the Antitrust Section of the American Bar Association (ABA), Andrey Tsyganov, the deputy head of FAS, noted that the agency saw itself as a “full scope” competition authority, able to detect and suppress cartels through its involvement at every stage of the law enforcement process, from evidence gathering to case handling to trial.

In 2013, high-profile cartel investigations, coupled with the increased severity in punishment, could lead to a soaring number of leniency applications, lawyers said.
Speaking during the same teleconference, Vassily Rudomino, a partner at the ALRUD law firm in Moscow, pointed out that leniency applications have increased substantially since 2009, primarily due to the more severe criminal and civil sanctions introduced at that point.

Targeted Sectors

FAS will initiate additional fisheries cartel investigations soon, Alexander Kinyev, the head of FAS’s cartel division, told PARR recently.

FAS initiated proceedings into the Norwegian fish supply sector in October 2012, involving Russian Fish Company, a leading distributor. It also recently began investigating a suspected Pollock fishing cartel, involving 53 fisheries and 46 fishing companies serving the Far East.

Nikolay Voznesenskiy, the head of the Competition and Antitrust Practice at Goltsblat BLP, said that FAS is likely to continue initiating some cartel cases in the healthcare sector because distribution of pharmaceuticals, in particular those related to state procurement tenders, is constantly within the FAS investigative sphere.
FAS is likely to conduct comparatively fewer investigations in the fast moving consumer goods (FMCG) retail area because of some recent self-regulations in this sector, Voznesenskiy noted. Nevertheless, the agency will pay more attention to the automobile sector, which already attracts a lot of attention, said Voznesenskiy.

FAS is likely to further scrutinise automobile producers to make further amendments to the distribution of vehicles and spare parts, he added.
Alternatively, FAS would introduce some sector regulations, Voznesenskiy suggested.

FAS to undergo changes

In 2013, FAS is likely to undergo some internal changes to become more effective. On 28 December 2012, the government introduced the so-called competition road map for FAS, which is designed to develop competition in Russia.

FAS is going to introduce new assessment criteria for its employees to become in some way responsible for insubstantial investigations, which are consequently quashed in courts, Voznesenskiy said.

This policy is designed to decrease the quantity and improve the quality of FAS investigation, he explained.

FAS may also stop investigating consumer rights cases that are not connected with violation of competition, said Oleg Moskvitin of Moscow’s Muranov, Chernyakov & Partners Law Firm. This would allow FAS to concentrate on antimonopoly issues and would free up FAS resources, he added.

By Natalia Lapotko and Oliver Adelman in London

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