DECISION OF ECONOMIC COUNCIL OF COMMONWEALTH OF INDEPENDENT STATES

of June 19, 2009

About condition and tendencies of development of competition policy in the Russian Federation

The economic council of the Commonwealth of Independent States solved:

1. Note that the report "About condition and tendencies of development of competition policy in the Russian Federation" (is attached), prepared by Federal Antimonopoly Service of the Russian Federation and considered by the Commission on economic problems, reflects positive experience of the Russian Federation in the field of carrying out competition policy, enhancement of the antitrust law and control of its execution and it is represented useful to other State Parties of the CIS.

2. Direct the provided material to the governments of the State Parties of the CIS for informing the interested ministries and departments.

3. Charge to Executive committee of the CIS to place in a month the specified report on the website of Executive committee of the CIS on the Internet.

The report "About condition and tendencies of development of competition policy in the Russian Federation"

Introduction

The competition is the cornerstone of modern market economy of any state. The competition induces entrepreneurs to more effective actions in the market, forcing them to offer consumers more broad range of goods and services in lower prices and the best quality.

The policy in the field of the competition is the key factor determining as competitiveness and efficiency of the companies of national economy in general, and the level and quality of life of citizens.

Recognizing the special importance of protection of the competition at the present stage of development of economy of the Russian Federation, the Government of the Russian Federation took a number of steps directed to increase in efficiency of the competition policy realized by it in recent years.

Competition policy represents complex of the consecutive measures performed by the state, aimed at providing the conditions of the competition which are quickly reacting to changes of economic situation as in the country, and around the world.

The modern international economic relations are characterized by the increasing globalization which is shown in acceleration of integration processes, simultaneous growth of openness and interdependence of national economy, rapid development of information technologies, the international goods and financial markets.

It predetermines need of transition of the state for realization of the economic policy from application of measures of trade protection of domestic producers to application of effective measures of regulation of the competitive relations. If earlier activities of antimonopoly authorities were traditionally aimed at protection of the competition between residents within the national market, then now they even more often should face cases when competition conditions in the domestic markets are violated as a result of transactions of the foreign companies or multinational corporations made outside their jurisdiction.

Significantly the role of competition policy in regulation of economy in modern conditions of world financial and economic crisis when competition policy is considered as one of effective instruments of overcoming the crisis phenomena raises.

Also it should be noted that activities in the field of competition policy are the indivisible element of integration development of the State Parties of the CIS providing market nature of the reforms undertaken in these countries according to the principles of workable competition, promoting thereby development of trade and economic relations between the states.

The special importance of protection of the competition at the present stage of development of economy of the Russian Federation and need of further ensuring economic integration of the State Parties of the CIS cause the purposes, tasks and the main directions of the competition policy pursued in the Russian Federation, and also practical activities of Federal Antimonopoly Service of the Russian Federation (FAS Russia) which are reflected in this report.

Chapter 1. Institutional ensuring realization of competition policy in the Russian Federation

1.1. Features of competitive environment in the Russian economy

The competitive environment in the separate market represents set of the factors determining possibility of business entities in this market to find and use possibilities of profit earning.

The favorable competitive environment is highly appreciated by entrepreneurial community. According to the Russian entrepreneurs, "maintenance of favorable competitive environment" is task of the state, the second for the importance, in the economy yielding on the importance only of such fundamental obligation of the power as "forming of legislative conditions of activities of business, ensuring their unconditional and fair application" (1).

The overview of the macroeconomic indicators characterizing condition of competitive environment in the Russian economy and polls of entrepreneurs competitive situations in economy allow to draw conclusions on their estimates that participants of the markets in the Russian Federation really feel the competition. And competition assessment as significant factor for activities of the companies increases over time.

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(1) "Perception and assessment of activities of Federal Antimonopoly Service by expert community and the population of Russia", the analytical report by results of the research conducted by the All-Russian Public Opinion Research Center (ARPORC) of http://www.fas.gov.ru/competition/15168.shtml.

High degree of openness for commodity import and services led to forming of conditions in which with high probability there is competitive struggle of participants of the market, about what witnesses essential strengthening of the competition in the Russian market from the foreign companies in 2004-2007.

There is rapprochement of indicators of concentration of production in the Russian economy to comparable indicators of the developed foreign countries: in the high-concentrated industries during the considered period concentration decreases while in low-concentrated - grows.

Most of entrepreneurs considers vector of changes which happened in competitive environment for 2007, positive (42% "+" and 22% "-") (2).

The competition is important factor of innovations. Empirical company activity researches, experiencing the competition (especially those which exist in the market for a long time), show that they actively invest in research and development and technologies. The competition (especially with suppliers from foreign countries) promotes increase in amounts of production and labor productivity.

At the same time there are also negative tendencies influencing competitive environment in Russia:

1) number of industries of the Russian economy are is excessive concentrated (for example, production of primary aluminum, synthetic rubber, separate types of products of ferrous metallurgy) in comparison with concentration level in comparable industries of other developed countries. In mining and metallurgy the overestimated profit margin level testimonial of lack of the competition is observed. In the markets of metallurgical industry entrepreneurs note considerable decrease in the competition;

2) despite quite high level of the competition to producers from foreign countries in the markets of mechanical engineering and light industry, the increasing number of heads of the companies consider that they are not under foreign competitive pressure that can demonstrate their replacement to non-competitive sectors in which there is no foreign offer. Number of the companies - from 10 to 20%, on different researches, - do not face the competition that demonstrates preserving in monopolism threat national economy even if the behavior of these companies is competitive now;

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(2) "Perception and assessment of activities of Federal Antimonopoly Service by expert community and the population of Russia", the analytical report by results of the research conducted by the All-Russian Public Opinion Research Center (ARPORC) of http://www.fas.gov.ru/competition/15168.shtml.

3) the number of the companies rural, forestry processing productions (except for pulp-and-paper production, publishing and printing activities), the companies for production of machines and the equipment is steadily reduced, i.e. opportunities for development of the competitive relations in these spheres over the years decrease;

4) consolidation of assets, including foreign, the large Russian companies that creates potential hazard of abuse of the market power from their party including in the cross-border markets.

The listed factors emphasize need of protection and development of the competition at the present stage of economy of the Russian Federation, and the Government of the Russian Federation takes a number of steps directed to increase in efficiency of the competition policy realized by it in recent years.

1.2. Purposes, tasks and principles of protection of the competition

Ensuring social and economic development of the country became main objective of competition policy at the present stage.

Strategic tasks of competition policy were formulated by the President of the Russian Federation in performance "About the strategy of development for Russia till 2020" (3) and include:

"development of new sectors of global competitiveness, first of all in high-tech industries";

"development of market institutes and competitive environment which will motivate the companies to reduce costs, to update products and to flexibly consider requests of consumers".

At the same time strategic tasks of competition policy require respect for certain principles in case of its carrying out.

Effective counteraction to anti-competitive actions. Especially it concerns suppression and non-admission of abuse of dominant position and collusion between business entities.

Counteraction to the specified phenomena has extremely important value for control of inflationary tendencies and ensuring high rates of innovative development of economy.

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(3) V. V. Putin's Performance at the enlarged meeting of the State Council "About the strategy of development for Russia till 2020" on February 8, 2008 http://www.kremlin.ru.

Assistance to decrease in barriers of entrance of business entities on the market.

Decrease in barriers of entrance on the market is the important element creating normal competitive conditions in the market, providing free movement of resources to the most effective sectors of economy. Availability of the potential competition is restraining factor for manifestations of monopolism from the business entities who are already acting in the market.

Ensuring anti-monopoly control of activities of subjects of natural monopolies and pro-competitive reforming of the relevant sectors of economy. For achievement of desirable effect of activities of subjects of natural monopolies strong competition policy as risks of violations from the companies remaining de facto monopolies and aiming to keep this provision and receipt of exclusive rent are high is necessary.

Ensuring function of control of economic concentration.

The state control of economic concentration is directed to the prevention of possibility of implementation of anti-competitive actions as a result of origin or strengthening of the market power at separate companies or groups of companies.

Ensuring effective control in the field of placement of state orders. This direction of activities is important element of development of the competition. If public procurements turn in guaranteed for certain sellers, then quality decreases, the prices are overstated, competitive development of economy stops, budgetary funds are inefficiently spent. In order that it did not occur, tough procedures of placement of the public contract and control of observance of these procedures are developed.

Ensuring non-admission of unfair competition and effective control of advertizing activities. Need of suppression from antimonopoly authorities of unfair competition, including unfair advertizing, is predetermined by possibility of obtaining by fraud in fact of consumers of unreasonable competitive advantages in comparison with fair business entities.

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