The Russian Federal Antitrust Service has prepared a draft law aimed at changing the current mechanism of reconsidering instructions that have been issued
Pepeliaev Group advises that on 18 October 2023 the draft law “On amending the Federal Law “On protecting competition”https://regulation.gov.ru/Regulation/Npa/PublicView?npaID=142810
was published for public discussion on the federal portal of drafts of legal and regulatory instruments.
The Draft Law has been developed for the purposes of extending the grounds for reconsidering the contents or procedure for implementing instructions issued by the antitrust authority, in connection with a significant change of conditions for commodities to circulate on the commodity market. The amendments have been prepared further to an orderOrder No. 11401-P9-ММ of the Russian Prime Minister M.V. Mishustin dated 7 October 2023.
of the Russian Prime Minister M.V. Mishustin.
It is expected that the amendments that have been adopted will come into force starting from the day when they are officially published.
Let us look at the planned new developments.
1. Amending the mechanism for instructions to be reconsidered within the framework of state control over economic concentration.
Please be reminded that article 33(11) of the Law on Protecting CompetitionFederal Law No. 135-FZ “On protecting competition” dated 26 July 2006.
provides for a possibility to reconsider the contents or the procedure of performing an instruction issued based on the results of the antitrust authority’s consideration of a motion to provide consent for a transaction, or any other action subject to state control further to a petitionA petition to have an instruction reconsidered should be examined by the antitrust authority within one month from the date when it was received.
of the person to whom the instruction was issued, as well as at the antitrust authority’s own initiative if material circumstances arose after the instruction was issued and make it impossible and/or unreasonable to perform the instruction in full or in part.
Such circumstances include: a change of product boundaries or geographical boundaries of the commodity market, the composition of sellers or buyers, or a loss of a dominant position by a business entity.
Please note that a significant amount of instructions of the Russian Federal Antitrust Service, which are still in force, provide for formulae for the calculation of the maximum level of a price on the domestic market, including based on price indicators on foreign markets. In addition, in the current political and economic conditions the need for change arises with regard to the approach to the pricing process established in such instructions.
At the same time, the list of grounds for instructions issued by the antitrust authority to be reconsidered within the framework of state control over economic concentration is exhaustive and contains no provisions allowing instructions to be amended taking into account a change of the condition and structure of markets.
The Draft Law provides for article 33(11) of the Law on Protecting Competition to be amended; specifically, it proposes to establish a new ground for the reconsideration of the contents of or the procedure for performing instructions: “non-compliance of the price formation guidelines specified in the instruction with the general conditions of the circulation of a commodity on the commodity market”.
It is also proposed to establish a possibility to extend the period for the antitrust authority to examine a petition for the reconsideration of an instruction up to two months in connection with the need to examine it additionally and to obtain additional information in order to decide whether to reconsider the instruction.
Comment
We believe that the above amendments are logical and justified, taking into account the predominantly long-term effect of the antitrust authority's instructions issued within the framework of control over economic concentration, as well as the dynamically changing market in the conditions of external sanctions pressure.
It is also worth noting that according to the current version of article 33(11) of the Law on Protecting Competition, instructions are reconsidered based on the principle of "non reformatio in pejus” (it is inadmissible to worsen the party's position which existed before the revision). At the same time, the version of the above article proposed by the Draft Law does not contain this provision and provides only that the changing of an instruction when it is reconsidered must correspond to a change in the conditions of a commodity's circulation that occurred on the commodity market.
Comment
We believe that a literal interpretation of the new developments to this extent may mean that based on the results of the reconsideration of an instruction, changes or additions made to the instruction will be able to establish tougher or more extensive requirements in comparison with those existing in the initial version of the instruction. In our opinion, clarifications in this regard should be reflected in regulations of the antitrust authority.
2. Enshrining the procedure for reconsidering an instruction concerning the case on violation of antitrust legislation.
The Draft Law also proposes to add new article 513 to the Law on Protecting Competition. This article provides for the procedure for reconsidering an instruction concerning a case on a violation of antitrust legislation in connection with a material change of the conditions for a commodity to circulate on the commodity market.
According to the Draft Law, an instruction concerning a case on a violation of antitrust legislation can be reconsidered at the initiative of the commission that issued such instruction and further to a petition of the person participating in the case. At the same time the change in the instruction must correspond to a change in the conditions for a commodity to circulate that originated on the commodity market. In turn, the grounds to reconsider such instructions are similar to those stipulated for instructions under article 33(11) of the Law on Protecting Competition.
It is proposed that a petition for the antitrust authority to reconsider an instruction concerning a case on a violation of antitrust legislation will be filed with the antitrust authority whose commission issued the instruction, by parties participating in the case, within three months from the date when they became aware or should have become aware of a material change of the conditions for a commodity to circulate on the commodity market[5].
At the same time, the above deadline is not a maximum and can be reinstated by the antitrust authority further to a motion of the person who filed the petition, provided that the motion was filed within six months from the date when grounds for the instruction to be reconsidered were identified, and the antitrust authority recognises the reasons for missing the deadline as valid.
It is proposed that the antitrust authority should return the petition to the applicant within ten days from the date when such petition was received, if the authority establishes that:
-
requirements in terms of form and contents of the petition were not complied with;
-
the petition was filed when the established deadline had expired and no motion for its reinstatement was filed or such motion seeking to reinstate the missed deadline was dismissed.
Under the general rule, the petition will by examined by the commission which issued the instruction, within a month from the date when the petition was received by the antitrust authority. The antitrust authority can extend the deadline for examining a petition by not more than two months owing to the need to examine it additionally, as well as to obtain additional information in order to decide whether to reconsider the instruction.
Based on the results of the examination of the petition the commission will decide either:
-
to uphold the petition and to reconsider the instruction (in such case the commission issues a ruling to reconsider the instruction, and copies of such ruling are sent to parties participating in the case within three days from the date when the ruling was issued); or
-
to dismiss the petition (the commission shall send such decision to the applicant within three days from the date the decision was adopted).
Comment
We believe that this new development is also quite reasonably grounded, but there is no provision that it is not permissible to worsen the position of a party which existed before such instruction was reconsidered, and this absence gives rise to certain concerns. In the light of the above, we believe that it is reasonable to specify in the new provision that the person to whom the instruction was issued has the opportunity to participate in the reconsideration procedure in order to prevent an unjustified deterioration of its position.
What to think about and what to do
We believe that the adoption of the Draft Law will facilitate the antitrust authority’s prompt response to changes in market conditions by expanding the list of grounds for reconsidering instructions issued by the antitrust authority.
We recommend becoming familiarised with the Draft Law and following up on its progress, then, if it is adopted, to take it into account when conducting professional activity.
Help from your adviser
Pepeliaev Group's lawyers have considerable experience of providing legal support to clients with regard to antitrust regulation. They constantly monitor amendments in the antitrust legislation and are ready to promptly advise on all legal aspects arising in connection with the new provisions being adopted, including by providing legal support when the antitrust authority’s instructions are being reconsidered.Translated by the Translation Department of Pepeliaev Group.