Anti-monopoly regulation

Scope of regulation

The anti-monopoly legislation regulates activity of business entities, including Russian and foreign commercial organisations, non-commercial organisations (if they perform entrepreneurial activity), and individual entrepreneurs. The purposes of anti-monopoly state control carried out by the Federal Anti-Monopoly Service of the RF, earlier referred to as the Ministry for Anti-monopoly Policy and Entrepreneurial Support of the RF, are:

• to prevent and suppress monopolistic activity and unfair competition, including the protection of competition from restrictions of state authorities
• to ensure a uniform economic environment, free circulation of goods, support of fair competition and free entrepreneurial activity.

There are two main fields regulated by anti-monopoly legislation:

• The RF commodity market
• The RF finance services market

Sphere of anti-monopoly regulation

The RF commodity market	The RF financial services market
Operations that may hinder competition on the RF commodity market, carried out by Russian and foreign legal entities, state authorities or natural persons including individual entrepreneurs	Operations that hinder competition on the market of finance services, namely on the market of: securities; bank services insurance
Operations (agreements) carried out (concluded) outside Russia that actually or possibly lead to restriction of competition on the commodity market in Russia	Operations (agreements) carried out (concluded) outside Russia that actually or possibly lead to restriction of competition on the finance service market
Agreements for use of exclusive rights to intellectual property aimed at restriction of competition (anti-monopoly legislation does not extend to other operations with objects of exclusive right)

Actions subject to regulatory control of the Federal Anti-Monopoly Service

The Federal Anti-Monopoly Service forms and keeps a register of economic entities with the share of certain commodities exceeding 35% — so called economic entities with dominating position, that is, enjoying the exclusive position of one or several economic entities in the market of certain commodities that empowers these entities to influence crucially the circulation of goods in a certain market or impede market access of other entities.

Besides, two kinds of state control over foundation, reorganization and liquidation commercial and non-commercial organisations depending on the aggregate assets of the parties to the transaction and other conditions are possible:

• obtaining of preliminary authorization from the Federal Anti-monopoly Service;
• post-transaction notification to the Federal Anti-monopoly Service.

Obtaining of preliminary authorization from the Federal Anti-monopoly Service

An applicant (an decision-maker) sends an application, signed and stamped, with registration and other required documents to the Federal Anti-monopoly Service for obtaining preliminary authorization in the following cases:

1. Acquisition by a person (or a group of persons) of more than 20% of the shares in a company. Acquisition of shares means not only a direct purchase of them but also the acquisition of the power to exercise, directly or indirectly, the voting rights conferred by the shares, including where that power exists pursuant to a business management agreement, an agreement for the joint conduct of activities or any other similar agreement. This provision does not apply to the formation of companies;

2. Acquisition by a person (or a group of persons) of more than 10% of the fixed or intangible assets of a company, as shown on the last balance sheet;

3. Acquisition by a person (or a group of persons) of decision-making power over the conduct of a company's business or performing functions of the company's executive body. The preliminary authorization is required in the cases mentioned above only if the aggregate balance sheet value of the assets of the parties to the transaction exceeds 200,000 minimum monthly wages; if any parties are listed in the register of economic entities; or if the acquiring party already controls the business of the entity in question;

4. Merger or acquisition of commercial organisations where the aggregate balance sheet value of the assets exceeds 200,000 minimum monthly wages;

5. Acquisition of rights for fulfilling the functions of executive body or decision-making in a finance organization; acquisition of more than 10% of the assets or more than 20% of shares (in the charter capital) of the finance organization; foundation of a finance organization or changes into the charter capital of a finance organization where the charter capital of such organization exceeds:

• 160 million RUR — for credit organisations;
• 10 million RUR — for insurance companies;
• 5 million RUR — for other finance organizations.

These requirements are observed in case of merger or acquisition of finance organisations where due to merger or acquisition a newly founded finance organisation or any of its participants correspond to the stipulated requirements.

The Federal Anti-monopoly Service shall inform the applicant on its decision in writing within 30 days after receipt of the file. Where the necessity arises, this period can be extended for no more than 20 days.

Post-transaction notification to the Federal Anti-Monopoly Service

Post-transaction notification to the Federal Anti-monopoly Service is required in the following cases:

1. Acquisition by a person (or a group of persons) of more than 20% of the shares in a company; of more than 10% of the fixed or intangible assets of a company, as shown on the last balance sheet; of decision-making power over the conduct of a company's business or performing functions of the company?s executive body;

2. Election of individuals to executive bodies, board of directors of economic entities with the aggregate balance sheet value of the assets exceeding 100,000 minimum monthly wages or listed in the register of economic entities with the share on the specific commodity market exceeding 35%;

3. Foundation, merger or acquisition of non-commercial organizations or changes in their membership provided not less than two commercial organizations are members to such non-commercial organizations;

4. Foundation of commercial organizations provided the aggregate value of the assets of the founders, as shown in the last balance sheet, exceeds 200,000 minimum monthly wages;

5. Merger or acquisition of commercial organizations provided the aggregate balance sheet value of the assets exceeds 100,000 minimum monthly wages;

6. Acquisition of rights for fulfilling the functions of executive body or decision-making in a finance organization; acquisition of more than 10% of the assets or more than 20% of shares (in the charter capital) of the finance organization; foundation of a finance organization or changes into the charter capital of a finance organization where the charter capital of such organization does not exceed:

• 160 million RUR — for credit organisations;
• 10 million RUR — for insurance companies;
• 5 million RUR — for other finance organizations.

Founders (participants) of a commercial organization shall notify the Federal Anti-monopoly Service within 45 days after the state registration; finance organizations — within 30 days after the above mentioned transactions.

Infringement of anti-monopoly law

Infringement of anti-monopoly legislation entails civil, administrative and penal responsibility for officials of the federal, regional and municipal anti-monopoly executive authorities, commercial and non-commercial organizations and their chief executives as well as natural persons including individual entrepreneurs.

The Administrative Legal Offences Code stipulates that the federal anti-monopoly body and its local departments are entitled to investigate cases on administrative offences in the sphere of anti-monopoly law and impose administrative fines on the offenders.

Infringement	Fine amount (minimum monthly wages)
	For legal entities	For executives
Failure to submit applications, declarations or information provided by anti-monopoly legislation or submission of knowingly untrustworthy information	500 — 5,000	20 — 50
Failure to comply with a lawful instruction (order) of the anti-monopoly authority	2,000 — 5,000	40 — 50
Failure to eliminate causes and circumstances resulting in an administrative offence commitment		3 — 5
Over- or underpricing of goods, works and services which pricing is regulated by the state, other infringements of the established price order Advertisement law infringement	400 — 500	40 — 50

Civil law responsibility occurs in the following cases:

Infringement	Subject	Responsibility
Unlawful action (inaction), issue of a legal act infringing anti-monopoly law Improper fulfillment of obligations	State authorities or management body	Losses incurred to a natural person or a legal entity shall be reimbursed by federal, regional or municipal authorities
Failure to eliminate causes and circumstances resulting in an administrative offence commitment	Economic entity	Income gained as a result of antimonopoly infringement shall be collected to the federal budget with recourse to court upon the claim of the anti-monopoly authority

The Criminal Code provides for the following responsibility:

Infringement	Sanction
Setting of monopolistically high or low prices or competition restriction	Fine to the amount of 200-500 minimum monthly wages or to the amount of the offender's salary for a period of 2-5 months, custody for 4-6 months or imprisonment for up to 2 years
Where the above mentioned infringements are committed: more than once; by a group of entities by prior agreement; by an organized group	Fine to the amount of 500-700 minimum monthly wages or to the amount of the offender's salary for a period of 5-7 months or imprisonment for 2-5 years
Committed by violent or threatening means or with destruction or damage incurred to another's property or threat of destruction or damage upon the lack of signs of extortion	Imprisonment for 3-7 years with or without confiscation of property