FAS trying to expand its powers with varying success

06.09.2013

Influence of Federal Antimonopoly Service of Russia (FAS) within the government is inhomogeneous as the competition watchdog tries to extend its powers with varying success, according to lawyers and industry sources.

In July, the Russian Deputy Prime Minister Arkady Dvorkovich has called for FAS’ powers trimmed. Dvorkovich criticised the present system that entitles FAS make decisions independently and without consulting other government institutions, as reported by PaRR.

The fact that Deputy Prime Minister proposes such an idea indicates that there is a certain tension between different groups in the government, said Andrey Shastitko, director at the Centre for competition and economic regulation studies, the Russian Presidential Academy of National Economy and Public administration. But the exact configuration of these groups is not clear, he added.

During the International Legal forum in St Petersburg earlier this year it was rumoured that FAS sometimes takes decisions without taking into account the opinion of the Ministry of Economic Development. Shastitko thought it was hard to comment on such rumour because the team of the Ministry of the Economic Development had significantly changed recently. FAS has been steadily prominent within the government since Igor Artemyev became the head of the authority, said Andrey Goltsblat, managing partner of Goltsblat BLP, the Russian practice of London-based law firm Berwin Leighton Paisner LLP.

FAS head Artemyev has reportedly mentioned a possibility of the economic regulator, the Russian tariffs agency (FST) and FAS merging into one regulator. Discussions on this project are ongoing at the Russian government. In August, the Russian Ministry of Economic Development reportedly called for the creation of a new natural monopolies regulator based on the model of the FAS and the FST.

FTS is an executive body mandated with price and tariff regulation in the country. It, for example,regulates electricity tariffs and prices of gas. It also carries out some functions of natural monopoly regulation.

Given that FAS is the active proponent of the merger and because the competition watchdog outnumbers the tariff service in terms of size, the antitrust authority reportedly would likely dominate the merged entity.

But the fact that FAS has initiated talks regarding its possible merger with FTS does not mean that the competition watchdog is becoming more influential in the government, said Goltsblat. FAS still cannot get its fourth antimonopoly package approved, he added.

As previously reported by PaRR, there have also been tensions between FAS and other agencies over possible legalisation on parallel imports.

FAS lobbies the legalisation of parallel imports, whilst Russian industry and trade ministry opposes such proposal. The Ministry of Economic Development may also have doubts over the issue because it might cause competition conditions for official dealers to worsen, as PaRR reported.

There is no definite vector which defines the influence of FAS in Russia’s government, said Shastitko. On the one hand FAS’ annual report which Artemyev represented this summer was not approved by the government, he said.

On the other hand, the strategy for antimonopoly policy development for the period of 2013-2014 (initiated and prepared by FAS) was approved in July this year, he added. In addition, Russia’s competition authority managed to become an important member of the competition Road Map project, he added.

The competition Road Map, which was approved by Russian Prime Minister Dmitry Medvedev in December 2012, is designed to provide a phased approach to improvement of competition in the country. The working group which develops policies for the Road Map project includes representatives from the business and legal communities, as well as representatives from FAS.

The current government considers competition to be an important area as the creation of a special government competition commission on competition issues, headed by first Deputy Prime Minister Igor Shuvalov illustrates, commented Shastitko. However, FAS’ jurisdiction is narrower that overall competition policy, he added. The increasing importance of competition policy does not necessary indicate growing importance of FAS.

by Natalia Lapotko in London

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