27.07.2016 Star Ratings GCR Global Competition Review
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RATING ENFORCEMENT 2016
STAR RATINGSWednesday, 6 July 2016 (2 weeks ago)
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Every year, Global Competition Review evaluates the performance of the world’s leading competitionauthorities. Pallavi Guniganti, Ron Knox, Tom Webb, Tom MadgeWyld, Mark Briggs, Sonya Lalli, Alex Wiltsand Charles McConnell present the agencies’ results from 2015.
Agency Star Rating
ELITE
France’s Competition Authority
Germany’s Federal Cartel Office
Korea's Fair Trade Commission
US Department of Justice Antitrust Division
US Federal Trade Commission
VERY GOOD
European Commission’s Directorate General for Competition
Japan’s Fair Trade Commission
Australia’s Competition and Consumer Commission
Brazil’s Administrative Council for Economic Defence
UK’s Competition and Markets Authority
GOOD
Canada’s Competition Bureau
Greece’s Hellenic Competition Commission
Italy’s Antitrust Authority
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The Netherlands’ Authority for Consumers and Markets
Norway’s Competition Authority
Spain's National Commission of Markets and Competition
Austria’s Federal Competition Authority
Chile’s National Economic Prosecutor
Colombia's Superintendence of Industry and Commerce
Finland’s Competition and Consumer Authority
Israel’s Antitrust Authority
Latvia’s Competition Council
Lithuania’s Competition Council
Mexico’s Federal Economic Competition Commission
New Zealand’s Commerce Commission
Pakistan's Competition Commission
Poland’s Office of Competition and Consumer Protection
Portugal’s Competition Authority
Russia’s Federal Antimonopoly Service
Singapore's Competition Commission
Sweden’s Competition Authority
Switzerland’s Competition Commission
Turkey’s Competition Authority
FAIR
Belgium’s Competition Authority
The Czech Republic’s Office for the Protection of Competition
Denmark’s Competition and Consumer Authority
Ireland’s Competition and Consumer Protection Commission
Romania's Competition Council
India's Competition Commission
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27.07.2016 Russia's Federal Antimonopoly Service GCR Global Competition Review
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RATING ENFORCEMENT 2016
RUSSIA'S FEDERAL ANTIMONOPOLYSERVICETuesday, 12 July 2016 (2 weeks ago)
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Russia’s Federal Antimonopoly Service (FAS) remained extremely active in 2015. The authority handed down300 cartel decisions, all accompanied with fines, and launched 3,059 abuse of dominance investigations.These numbers don’t significantly vary from those featured in previous editions of Rating Enforcement, exceptthat now the FAS has more money to match its large volume of cases.
STAR RATING:
PERFORMANCE:
HEAD OF AGENCY: Igor Artemiev
In 2015, the FAS’s budget was €67.4 million, almost double thebudget in 2014. “This change reflects the government’s efforts tofurther strengthen the competition enforcement in Russia,” a lawyersays.
The increase in the authority’s financial resources also led to a boostin the number of new hires at the agency: more than 700 nonadministrative staff joined in 2015 to focus on competitionenforcement, compared to a gain of about 500 people the yearbefore. According to a source, the growth could partially be explainedby the transfer of about half of the staff from the Federal Tariff
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Service, which was abolished last year, to the authority. The FAStook over several of the former tariff service’s responsibilities, whichinclude creating and maintaining a registry of natural monopolies, aswell as tariff regulation.
Observers say the upturns in budget and staff demonstrate growth inthe FAS’s functionality, which has frequently been criticised bypractitioners in the past. The authority has a history of beingunderstaffed compared to other Russian governmental bodies andmany of its foreign peers. One lawyer also says the authority’sbudget in previous years was too low to ensure quality enforcement,while another notes that the agency’s level of professionalism andthe sophistication of its case handlers could be improved. Out of the2,133 nonadministrative staffers who focus on competitionenforcement, 423 – or about 20 per cent – have worked at least fiveyears in the private sector. From 2014 to 2015, the agency’s attritionrate was about 20 per cent, which is much higher than the rates ofother European competition authorities.
Although the FAS’s caseload continues to expand, one observercommented that the budget was not enlarged to increase theagency’s number of enforcement actions. “FAS already has toomany, and its head continues to promise to reduce their number,” alawyer says. Currently, the FAS’s high volume of activity bogs staffdown with less meaningful cases, observers say.
But it’s important to keep in mind that many smaller cases aregenerated by the authority’s 85 regional offices, while the centraloffice takes on the bigger matters. Observers also comment on thegrowing sophistication of the agency’s anticartel unit. The FAScontinues to investigate major oil companies that are believed tohave inflated petrol prices through irregular, highfrequency trading.
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Additionally, in February 2015 the authority became the firstcompetition agency to open a formal investigation into Google’sAndroid operating system. In September, the FAS announced thatthe tech behemoth was found to have abused its power over preinstalled applications on Android smartphones and tablets.
Despite these successes, observers have commented that the officecould enhance the quality of its economic analysis and become morewilling to use independent economics experts on certain matters.One lawyer says that some cases that the FAS brings seem to beinspired more by political motives rather than strong economicanalysis, which could be a result of the authority being under thepurview of the executive branch. He says the agency has stated overand over again that it will improve its economic analysis, but so farthere has been no visible evidence that it is doing so.
However, observers praise the agency for its transparency comparedto other government offices in Russia. One lawyer says: “In myexperience, it is one of the best Russian government authorities interms of transparency, openness, access to officers, friendliness,compliance with statutory deadlines and absence of corruption.”
The FAS has recently begun to follow the lead of the EuropeanCommission and other competition agencies by publishing decisionsin antitrust cases, as well as issuing guidelines explaining theauthority’s processes in investigating cases. A new amendment alsomandates that the FAS provide a statement of objections to the partyit is charging with anticompetitive behaviour.
Those who deal with the authority frequently view Igor Artemiev, whohas an unlimited term as head of the FAS, positively. But observersstill say the agency has room for improvement. One lawyer saysArtemiev seems to be saying all the right things but is struggling to
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actually implement change: “Promises need to materialise.”
General Information
Head of agency Igor Artemiev
Previous employment
Member of the State Duma (Russia’s lower legislative house)
Mandate expires No fixed term
Salary of head of agency €123,993
Appointment of head of agency Government decree
Agency head reports to Russian government
Budget €67.43 million
Amount spent on salary €47.13 million
Percentage of budget spent on salary 70%
Total staff3,260 (865 in the central office)
Staff working on competitionenforcement
2,553
Percentage focused on competition 78%
Nonadministrative staff 2,133
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Percentage who are lawyers 52%
Percentage who are economists 31%
Percentage who are others 17%
Other areas of focus
Unfair competition; advertising; state aid; public procurement;anticompetitive conduct by state authorities; competition complianceduring foreign trade; foreign investment review; energy regulation;trade regulation; advocacy.
Average age of staff 36 years
Male/Female 38%/62%
Average tenure 4 years 6 months
No. of staff who left in 2015 514
No. of staff who retired 44
No. of staff who remained in civil service 29
No. of staff who joined in 2015 705
No. of staff who joined from the civilservice
284
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No. of staff who have spent at least 5years in private practice
423
Percentage of staff who left 29%
Percentage who retired 9%
Percentage who remained in civil service 6%
Percentage who joined from civil service 40%
Percentage who joined in 2015 33%
Standalone bureau of economics Yes
No. with PhDs in economics 29
Name of chief economist Alexey Sushkevich
Priorities
No. of staff working on mergers Not available*
No. of staff working on anticartel Not available*
No. of staff working on dominancerelated issues Not available*
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No. of staff working on other areas Not available*
Percentage of staff working on mergers Not available*
Percentage of staff working on anticartel
Not available*
Percentage of staff working ondominancerelated issues
Not available*
Percentage of staff working on otherareas
Not available*
Sectoral priorities in 2015
Commodity markets; cartels; oil; telecoms; mail services; railways;airport services; automobile aftersale services; medicine; housing; defence.
Sectoral priorities for 2016
Pharmaceutical and commodities markets; informationaltechnologies; rail transportation; gas industry; tariff regulation;intellectual property
Performance assessment
Yes. Annual review by the Accounts Chamber of the RussianFederation. Reviews conducted by the OECD and Russian government.
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* Staff are tasked by sector rather than by the type of matter.
Mergers
No. of mergers filed 1,958
No. of mergers that led to indepthreview
185
No. of filed mergers challenged 119
No. of challenged mergers blocked 53
No. of challenged mergers resolved withremedies
66
No. of challenged mergers abandonedby parties
Not available
Percentage of filed mergers that led toindepth review
9%
Percentage of filed mergers challenged 6.1%
Percentage of challenged mergersblocked
44.5%
Percentage of challenged mergersresolved with remedies
56%
Percentage of challenged mergersNot available
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abandoned by parties
Average length of an indepth mergerreview
Did not respond
Anti-cartel
No. of leniency applications
Firstin 35
Total 46
No. of dawn raids 12
No. of cartel decisions 300
No. of cartel decisions concluded withfines
300
Total cartel fines in 2015 €21.1 million
Average fine per cartel €1.7 million
Average length of cartel investigation 1 year
Fines collected by The FAS
Fines go to Federal budget
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Abuse of dominance
Highest no. of abuse of dominancecases under way in 2015
Not available
No. of abuse of dominanceinvestigations launched in 2015
3,059
No. rolled over 2,798
No. of files closed in 2015 2,542
Average length of investigation Did not respond
Sum total of abuse of dominance fines
€52.8 million before court decisions; €26.5 million after court decisions
No. of abuse cases settled withbehavioural conditions
1,913
Longestrunning investigation None
Explanation for its duration None
Total fines
Total fines
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€98.4 million before court decisions; €69.1 million after court decisions
Imposed for
Cartels 30%
Abuse of dominance 38%
Other 32%
Criminal enforcement
Criminal enforcement track Yes
Offences punishable by imprisonment
Anticompetitive agreements; repeated abuse of dominance; fixingmonopolistically low or high prices; refusing to contract; restricting market entry
Individual sentences imposed Yes
Longest prison sentence 3 years 8 months
2015 prison time 3 years 8 months
Organisational change
Structural change
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The Federal Antimonopoly Service established a collegial body of 12members, whose membership was approved by the federalgovernment.
Leadership change
Sergey Puzyrevsky, Vitaly Korolev and Alexander Redko were allappointed as deputy heads of the FAS.
New powers or responsibilities
Tariff decisions about natural monopolies and other regulatedentities are now made by majority vote of the collegial body,following the abolishment of the Federal Tariff Service.
Budget change
The authority’s budget increased 49% from 2014.
Advocacy
Percentage of budget dedicated toadvocacy
None
Standalone advocacy office
Yes. The Public Relations andDepartment for Economic Cooperation.
Appearances before congress/parliament10
• 20 February 2015 – meeting in the State Duma of the Russian
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Federation.
• 26 February 2015 – report on the meeting with the Russiangovernment (topic of report – promotion of competition in thetelecommunications sector).
• 2 September 2015 – report on the meeting with the Russiangovernment (topic of the report – state of competition in the RussianFederation).
• 29 October – meeting with the Russian government (topic of themeeting – competition in the health sector).
• 23 January 2015 – working meeting with the prime minister, DmitryMedvedev (topic of the meeting – price situation).
• 13 March 2015 – joint meeting with FAS Russia and the noncommercial partnership “Contribution to Development ofCompetition” (topic of the meeting – antitrust compliance, theprocedure of pretrial review of decisions of territorial authorities inantitrust cases, the development of codes of good practice of thepharmaceutical market, the application of antitrust laws in the field ofdefence procurement, etc).
• 19 March 2015 – congress of the Russian Union of Industrialistsand Entrepreneurs as part of Russian Business Week (report onpolicy of liberalisation measures implemented by the FAS Russia inrelation to the business and plans for the near future).
• 3 April 2015 – scientific practical conference of the FAS Russia andthe Kutafin Moscow State Law University (topic – development ofthe antimonopoly legislation in the light of the adoption of the fourthantimonopoly package; report on changes in Russian antimonopolylegislation).
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• 28 May 2015 – roundtable “Competition enforcement in today’seconomy” in the framework of the V International Legal Forum in StPetersburg.
• 8 June 2015 – working meeting with Russian President VladimirPutin (topic of the meeting – activities of the FAS).
• 22 September 2015 – the 43rd session of the Interstate Council forAntimonopoly Policy (participants – representatives of thecompetition authorities of Armenia, Belarus, Kazakhstan,Kyrgyzstan, Moldova, Russia, Tajikistan, as well as the EurasianEconomic Commission and the noncommercial partnership“Competition Support in the CIS countries).
• 16 October 2015 – annual conference “Antimonopoly Regulation inRussia” (topics – reform of antimonopoly regulation, fifthantimonopoly package, reducing the cost of state companies, theparticipation of small and mediumsized businesses in procurement).
• 13 November 2015 – meeting with Frederic Jenny, the chairman ofthe OECD Competition Committee (topic – the new powers of theFAS Russia and the fourth antimonopoly package).
• 16 November 2015 – Igor Artemiev and Alexander Ivanov, theacting head of the Russian Federal Space Agency, signed anagreement in Moscow on information exchange.
• 30 November 2015 – forum “Open power against corruption” washeld at the House of the Government of the Moscow Region.
• 1 December 2015 – the first meeting of the Scientific Council of theRussian Academy of Sciences on the protection of competitionissues (topic – the powers and tasks of the Russian competitionauthority).
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Legal changes proposed/enacted
On 5 October 2015, Russian president Vladimir Putin signed apackage of amendments to the Russian antimonopoly legislation,aimed at cutting administrative barriers for business and decreasingthe government’s presence in the economy. The document takesinto account the recommendations of experts from the OECD.
The fourth antimonopoly package introduces a number of importantprovisions related to the prohibition of abuse of dominant positions,the prohibition of unfair competition, as well as expanding the use ofadmonitions and warnings and improving the antimonopolyproceedings.
For example, the law clarifies the criteria for the admissibility of“vertical” agreements, providing that such agreements areacceptable if the share of neither the seller nor the buyer does notexceed 20 per cent of the commodity market.
Currently, work is under way to grant small businesses immunityfrom antitrust investigations, as well as prevent the creation of stateunitary enterprises and municipal unitary enterprises in competitivemarkets.
Other results
There were 69,703 media publications about the FAS’s activity in2015.
Priority setting
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Setting goals and priorities
Priorities and objectives of the FAS are elaborated according to keyprogramme documents in the field of Russia’s economicdevelopment as a whole, as well as other system documents in thesphere of competition policy.
In 2012 a number of the strategic documents defining the activity ofthe FAS were developed and adopted. One of these documents isthe road map “Development of the Competition and Improvement ofthe Antimonopoly Policy”.
Shortterm tasks and their prioritisation are formed during weeklymeetings of the agency’s Presidium. The members of the board aremade up of the head of the FAS Russia, his deputies and some ofthe agency’s department heads.
FAS objectives are elaborated by taking into account best practicesfrom around the globe.
Allocation of resources
Resources are distributed between management of the central officeand the regional offices of the FAS Russia according to the prioritiesdetermined by state policy.
Long-term strategy and training
Evaluation methods
There is a uniform system of assessment of achievement of the mainindicators of the FAS’s performance carried out annually by theanalytical department of the FAS and by the presidium of the FAS.
On receiving the results of an assessment, if the planned values
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have not been achieved or there is a negative dynamic, an analysisis carried out of the reasons for such deviations for the purpose ofadopting administrative decisions.
The FAS presents an annual report on the authority’s achievementsto the government. Moreover, performance evaluation is carried outby the FAS board.
Meanwhile, a system of public assessment has been set up. TheFAS and its regional offices have expert and public advisory boardsthat unite both representatives of public organisations and ordinarycitizens. An independent organisation carries out an poll with citizenseach year, including telephone interviews, regarding their satisfactionwith the FAS’s performance (eg, professionalism of the antimonopolyauthority’s staff, efficiency and provision of information by the FAS).
Since 2011, the FAS’s performance has been assessed by theAssociation of Corporate Lawyers (ACL), where members of the ACLestimate the transparency of the FAS’s performance and allow for aconstructive open dialogue with the business community andprofessional legal community.
Ensuring stability
To ensure stability and institutional memory among junior personnel,the FAS undertakes several measures, including:
• workshops for employees accepted to the civil service for the firsttime – the purpose of this training is to familiarise employees with thestructure of the antimonopoly authority, the legal status of civilservants in general, the antimonopoly law and its application;
• mentoring programme – in the first two months of the probationperiod, a mentor is appointed to a new employee to share experience
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and knowledge necessary for work, and to help integrate him or herinto the team;
• rotation of federal civil servants – as part of the rotation scheme,eight managing employees for the Regional Offices of the FAS wereappointed in 2014; and
• organisation of training events – each year, the FAS approvesregional workshops and training events with an emphasis oneducational events to increase skills and professional knowledge ofthe FAS’s staff in the application of the legislation and interaction withthe judicial community.
Results
Key achievements
The establishment of new departments within the agency; adoption ofthe fourth antimonopoly package that took into account OECDrecommendations; development of international cooperation in lawenforcement, particularly among the BRIC competition authorities;hosting of the international event “Russian Competition Week” inSeptember 2015.
Appeals success
In 2015, the FAS Russia issued 7,446 decisions in cases of violationof the Law on Protection of Competition. Of these, 1,577 decisionswere appealed in court and 40 were cancelled by the court.
How do you rate yourself?
During this extended meeting of the of the FAS Russia held in
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September 2015, the following positive trends were noted:
better implementation of orders issued by the authority;
an expanded use of administrative liability againstanticompetitive conduct;
improvement in the quality of work detecting signs ofcompetition law violations; and
significant reduction of the number of examined economicconcentration transactions.