Crusade against monopolies

The governmental control in potentially competitive sectors is ineffective

Development prospects of Russia's competitive policy was discussed at a session of the Federal Anti-monopoly Service November 15. The round-table discussion on the subject “Competition policy as a factor of steady economic development” gathered the world's best experts of the anti-monopoly sector from the USA, Finland, Italy and Russia's best experts. 

At the round-table discussion, Head of the Federal Anti-monopoly Service Igor Artemyev said the Ministry for Economic Development and Trade was the best partner in the activity of the department. Thus, he destroyed some rumors about a conflict between both departments that allegedly emerged from their different attitudes toward Svyazinvest privatization. Deputy Minister for Economic Development and Trade Andrey Sharonov criticized the gas sector and said the ministry registered no success in the gas sector reforming. Experts participating in the session stated the governmental control was still very strong in the gas sector.

Head of the Federal Anti-monopoly Service Igor Artemyev says he is anxious about the Rosneft merger deal even though it was concluded in accordance with the legislation in force. This means there is no leverage to make Gazprom sell part of the assets. The period of limitation in case of violation of the anti-monopoly legislation makes up one year. If there is any political reason, within a year something may be invented to make Gazprom sell the assets.

As is seen from a report delivered by deputy head of the Federal Anti-monopoly Service Anatoly Golomolzin, some mechanisms may be developed soon to split up the gas company. He said “the governmental control in potentially competitive sectors is ineffective and connected with uncivilized lobbying.” Anatoly Golomolzin believes the business and the authority must establish a dialogue; it is also important to divide the market into monopolistic and potentially competitive sectors. He adds this is the way to carry out the gas sector reforming. Anatoly Golomolzin says exchange trade in gas may be started soon to bring independent gas operators having 15 per cent of the gas output to the market.   

As soon as governmental officials recovered from the accusations of general corruption they were blamed for making barriers to free competition. Deputy head of the Federal Anti-monopoly Service Andrey Tsyganov reported statistics according to which one thousand of criminal cases are initiated against authorities every year as concerning violation of the antimonopoly legislation. He emphasized majority of violations of the antimonopoly legislation fall on authority. The Railway Ministry, the Ministry for Communications and the Ministry for Energy are among such violators.

The Federal Anti-monopoly Service is expected to deliver a report as concerning wider and tougher sanctions applied to violators of the antimonopoly legislation at a session of the government on November 25. International experts from the Economic Cooperation and Development Organization also insist that sanctions must be toughened.

The Federal Anti-monopoly Service also insists that officials must be prosecuted for abuse of power in the interests of monopolists and unfair competitors. The service will soon offer the government to consider disqualification of governmental officials for some period as a measure to fight abuse of power.

Experts of the Anti-monopoly Service want to introduce amendments to the Code of Administrative Violations to normalize amalgamation and merger processes. Having this scope of the punitive measures at its disposal the Federal Anti-monopoly Service may soon turn into another power department.

In fact, the antimonopoly authority does not believe the government will approve of all the suggestions the Anti-monopoly Service has developed. However, head of the Service Igor Artemyev hopes that in the nearest future the Russian antimonopoly legislation will resemble the western one.

The team headed by Igor Artemyev has done a lot over the past six months and has become one of the most popular topics discussed in the press. It is an open secret now that several large companies consider the Federal Anti-monopoly Service a new form of racket. In any case, reaction of the government to the suggestions of the Service will be clear after November 25.

Sergey Malinin