This document summarizes key provisions of Russia's new Federal Law No. 135-FZ on Protection of Competition passed in 2006. It overviews new definitions introduced, such as vertical agreements and collective dominance. It outlines criteria for determining dominant positions and monopoly prices. It describes expanded authority for the Federal Antimonopoly Service to regulate economic concentration and ensure non-discriminatory access. Procedures for merger control and state aid are also established.

1. FEDERAL ANTIMONOPOLY SERVICEFEDERAL ANTIMONOPOLY SERVICE
Moscow 2006
New Antimonopoly Law
of the Russian Federation

2. 2
Legal frameworks for competition
policy created by FAS Russia in 2006
Federal Law № 135-FZ “Оn Protection of Competition”;
Federal Law № 94-FZ “On Placement of Orders for Delivery of Goods,
Execution of Works and Provision of Services for Public and Municipal
Needs” ;
Federal Law № 38-FZ “On Advertising”;
Federal Law №36-FZ “On Peculiarities of Electric Energy Industry
Functioning in Transition Period”;
Land Code in the part of Articles 30.prim and 38.prim;
Water Code in the part of Articles 16 and 40;
Resolution of the Government of the Russian Federation № 75 “On the
Procedure of Conducting by a Subject of Local Governance of the
Open Tender for the Selection of the Managing Organization for Ruling
over Tenement-house”

3. 3
Key provisions of the Federal Law
№ 135-FZ of July 26, 2006
«Оn Protection of Competition»

4. 4
Exterritoriality of the application
(Article 3)
Agreements/contracts, achieved by
Russian or foreign individuals or
organizations outside of the Russian
Federation, those concerning assets,
stocks (shares) of Russian undertakings or
rights related to Russian undertakings in
case they effect competition in Russia are
the subjects of the Law.

5. 5
Commodity and commodity market
(Article 4)
Any objects of civil rights, works, services
including financial services, intended for market
turnover are included into definition
“Commodity”.
Geographic market also includes territories
outside of the Russian Federation
(global/regional markets).

6. 6
Dominant position (Article 5)
The market share for the definition of a dominant
position is reduced from 65 (previous Law) to 50
percents;
The definition “collective dominance” is introduced;
The dominance of a subject of natural monopolies is
presumed;
Dominance of a company possessing the market share
less than 35% might be established by Federal Laws;
Financial organizations.

7. 7
Vertical agreements (Article 4)
The definition “Vertical agreement” is
introduced;
Vertical agreements for contracts on commercial
concession as well as for agreements,
concluded by companies with the market share
up to 20%, are permitted;
Exemptions for vertical agreements are
introduced.

8. 8
Monopoly types of prices (Article 6
and 7)
The criteria for the existence of monopoly price are
fixed.
Two methods to prove the existence of monopoly
price are determined:
- analysis of prices on the comparable commodity
market;
- analysis of the justification of cost and profit for
production and realization of a commodity.

9. 9
Recognition of a group of persons
(Article 9)
Fixed list of reasons for including persons into
the same group.
Prohibitions fixed by the legislation for
companies are applicable for group of persons
as well.

10. 10
New provisions on the control over
anti-competitive agreements
(Articles 4 and 8)
Definitions “Agreements” and “Concerted practices” are
determined as specific types of anti-competitive behavior.
Rules of legality of concerted practices are introduced
Coordination of economic activity is defined as coordination of
business activity of undertakings by third party that is not
included into the same group of persons.

11. 11
Rules of non-discriminatory access
(Article 10)
The Government of the Russian Federation
is empowered to set rules of non-
discriminatory access to commodities,
works, services of the subjects of natural
monopolies.

12. 12
Conditions of legality (Article 13)
Common conditions of legality of actions,
agreements, transactions restricting
competition, are introduced. These
conditions are similar to EC conditions of
legality of agreements and concerted
practices restricting competition (Article 81,
point 3 of the Rome Treaty).

13. 13
Conditions of legality (Article 13)
• Cover agreements, concerted practices,
transactions, abuse of dominant position
• Envisage fulfillment of the following conditions:
Undertakings do not have the opportunity to eliminate competition
completely;
Do not impose restrictions excessive for reaching the goals of
agreements, concerted practices, transactions, abuse of dominant
position on the participants;
Promote the improvement of production, realization of commodities
or stimulation of technical, economic progress or increase of
competitiveness on the world market;
Consumers obtain benefits (advantages) appropriate to the
benefits (advantages) obtained by the participants of agreements,
concerted practices, transactions.

14. 14
Prohibitions for acts and actions of public
authorities that restrict competition are
completely preserved.
Actions of public authorities
(Chapter 3)

15. 15
Antimonopoly requirements to
tenders (Chapter 4)
Prohibitions for anticompetitive actions when
holding all types of tenders are set.
Subjects of natural monopolies, public
authorities, public non-budget funds are
obliged to select financial organizations by
holding open tenders or open auctions

16. 16
Prohibition of state aid granting
(Chapter 5)
Common prohibition of the selected granting of
advantages to undertakings by public authorities is
introduced;
Types of permitted state aid are defined;
Procedure of permitted state aid granting is defined;
Consequences for the violation of the procedure of the
state aid granting as well as of prohibited state aid
granting are defined.

17. 17
Functions and responsibilities of the
antimonopoly authority (Chapter 6)
New function is determined – realization of the state
control over economic concentration in the sphere of use
of natural recourses;
Responsibility to place decisions concerning the interests
of undetermined circles on web-sites is fixed;
Responsibilities to issue decisions on undertaking of
actions aimed at the improvement of competition are
specified;
P.T.O.

18. 18
Functions and responsibilities of the antimonopoly authority
(continuation)
Responsibility to control the activity of tenders’
organizers under conditions of termination of state
regulation of prices (tariffs) for some commodities is
fixed;
Responsibility to present to the Government of the
Russian Federation and place on web-site the report
on competition in the Russian Federation is fixed.

19. 19
State control over economic
concentration (Chapter 7)
New criteria of merger control are introduced;
Rules of transition to the notification principle
of the state control over economic
concentration realized by a group of persons
are established;
The procedure of consideration of applications
and notifications by the antimonopoly
authorities is set directly into the law;

20. 20
Administrative burden on economic
entities is reduced :
Threshold values for notification of transactions are
increased till 3 billion rubles (88 million euro), for
applications on transactions – till 200 million rubles (5,9
million euro), till 150 million rubles (4,4 million euro) for
target company
Approval of every transaction on acquisition of stocks is
cancelled. Approval is compulsory only in case of
acquisition of share holdings: blocking (25%), controlling
(50%) and excluding the opportunity to block shareholder’s
decisions by third parties (75%);

21. 21
Proceeding rules (Chapter 9)
Proceeding rules are stated directly into the
Law;
Fulfillment of any Decision of the antimonopoly
authority is suspended in case of application to
court or court of arbitration;
Issues of joint competence with the Bank of
Russia and the Federal Service for Financial
Markets are determined.

22. 22
Compulsory division of economic
entity and withdrawal of revenue
(Articles 38 and 51)
Compulsory division can be realized only in pursuance
to the Decision of the Court which was taken on the
claim of the antimonopoly authority.
The revenue received from monopolistic activity or
unfair competition is the subject of transference to the
Federal Budget.

23. 23
Plan of law drafting activity for the
period of 2006 - 2007
Amendments to the Code of the Russian Federation on
administrative infringements:
- fines are calculated in percents of the turnover
- embryo of “leniency program”
- disqualification of managers
Amendments to the Article 178 of the Criminal Code of the
Russian Federation:
- some types of monopolistic activity are the subjects to
criminal prosecution
Thank you! Marcelo Gomes Freire