The Fifth Package of Amendments to Antitrust Legislation has been signed

Pepeliaev Group advises that, on 10 July 2023, the Russian President signed Federal Law No. 301-FZ “On amending the Federal Law “On Protecting Competition”[1] (the “Law”), which is a part[2] of the ‘fifth package of antitrust amendments’.

Please be reminded that the Law was drafted by the Russian Federal Antimonopoly Service (“FAS Russia”) for the purposes of enhancing antitrust regulation in the conditions where the digital economy is developing and digital platforms are actively growing which started to exercise greater influence on the real economy sector, which, in turn, resulted in increased risks for competition.

Therefore, the Law is aimed at regulating digital markets to prevent and preclude them from being monopolised, as well as to strengthen control, including over the activities of digital giants.

The Law will come into force on 1 September 2023.

We suggest considering the key new developments.

1. The notion of a network effect has been determined

Please note that, in comparison with the initial version of the draft law, in the final version of the Law the notion of a network effect has been amended and supplemented with the concept of ‘digital platform’.

Therefore, a network effect is now understood to be a feature of the commodity market(s) in which the consumer value of a program (set of programs) for computers in information and telecommunications networks, including the Internet, procuring that transactions are made between sellers and buyers of certain goods (a digital platform) varies depending on the change in the number of such sellers and buyers.

The Law, in comparison with the initial version of the draft law, clarifies that the new regulation will affect commodity markets where transactions are made using digital platforms, in connection with which the antimonopoly authority is required to establish the presence of digital effects and assess the ability of an economic entity owning a digital platform and procuring through its use that transactions are made between other persons acting as sellers and buyers of certain goods, to have a decisive influence on the general conditions for the circulation of goods in such a commodity market in which transactions are carried out through the use of a digital platform.

2. Prevention of monopolistic activity of digital platforms

The Law on Protecting Competition[3] has been supplemented with new article 10.1, which provides for a prohibition on monopolistic activities by persons who own a digital platform and through its use procure that transactions are made between other persons acting as sellers and buyers of certain goods, subject to a combination of the following conditions:

• the digital effect gives a business entity the opportunity to exert a decisive influence on the general conditions of the circulation of goods in the commodity market in which transactions are carried out through a digital platform[4] (to eliminate other business entities from this commodity market, or make it difficult for them to access this commodity market);

• the share of transactions made between sellers and buyers by accessing the digital platform accounts for more than 35% of the total volume (in monetary terms) of transactions made on the relevant commodity market;

• the revenue of such business entities exceeds RUB 2 billion for the last calendar year.

At the same time, the final version of the Law provides that a business entity has a right to provide evidence that its actions (omissions) can be recognised as permissible in accordance with the requirements of article 13(1) of the Law on Protecting Competition (article 10.1(2)).

3. Establishing a “threshold” criterion when controlling economic concentration

According to the current wording of the Law on the Protection of Competition, the balance sheet value of assets and/or revenues of a group of persons are the condition for the requirement to obtain the antimonopoly authority's approval for an M&A transaction.

At the same time, taking into account the current economic realities, traditional criteria based on the amount of revenue of participants in transactions or actions of economic concentration and the value of their assets may not reflect the real impact on the economic terms of a transaction made within the framework of economic concentration.

Therefore, the Law has established that transactions of economic concentration with a price exceeding RUB 7 billion are subject to approval by the antimonopoly authority.

4. Expert review

It is proposed to expand the institution of an expert review and to introduce options for appointing and conducting an expert review during:

• an examination of applications for consent to the performance of a transaction (to another activity subject to state control);

• an examination of a case regarding a breach of antitrust legislation (“ATL”);

• supervision of the performance of instructions issued further to the examination of applications whereby approval is sought for economic concentration transactions.

An expert review can be appointed both further to the application of the person who filed it or parties to a case on violation of ATL, and at the initiative of the antimonopoly authority.

Excluded from the final version of the Law were provisions that regulate the procedure for approving the expert's candidacy, and persons filing applications and persons participating in a case on a violation of ATL were granted with the right to propose candidates for experts and representatives of expert institutions, and a range of issues which require an expert opinion. Also they received a right to file an application to remove an expert if they have doubts as to his/her impartiality.

The Law contains provisions governing the legal status of an expert, requirements for his/her qualifications, his/her liability and the legal significance of the expert’s opinion; it also sets out the rules for appointing an expert[5], for example:

• an expert may be a person who meets the qualification requirements that are determined by the federal antimonopoly authority, and this authority must ensure that a person involved as an expert has special knowledge on issues related to the application under consideration for consent to a transaction or a case of a violation of ATL;

• the expert must be independent in relation to the chairman and members of the commission for the consideration of the case on a violation of ATL, the persons involved in the case on a violation of ATL, and when the application for consent to the transaction is considered, in relation to the employees of the antimonopoly authority considering the relevant application, the parties to this transaction and the person that is the economic concentration entity, and nor should they be close blood relatives or in-laws of the specified persons.

According to the text of the Law, an expert with the permission of the antimonopoly authority has the right to become acquainted with the materials associated with the examination of the application for the consent to the transaction. Further, when a case on a violation of ATL is considered with the written permission of the commission examining a case on a violation of ATL, the expert has the right to become acquainted with the files of the case on a violation of ATL, including those constituting a trade secret, if the antimonopoly authority or commission examining a case regarding a violation of antimonopoly legislation is provided with a written undertaking regarding the non-disclosure of information that constitutes a secret protected by the law. Such materials are transferred to the expert under a transfer and acceptance certificate singed by an employee of the antimonopoly authority and by the expert.

In our opinion, the above provisions cannot ensure the full protection of commercially confidential information when an expert examination is performed. This circumstance is due to the fact that providing an expert with access to materials constituting commercially confidential information only with the permission of the antimonopoly authority contradicts article 13(2) of the Law on Commercially Confidential Information[6], according to which the antimonopoly authority has no right to disclose or transfer such information to other persons without the consent of the owner of the information that is commercially confidential.

It is worth noting that the initial version of the draft law provided that the antimonopoly authority would keep a register of experts who would be engaged to carry out an examination, but this provision was excluded from the final version.

5. Other significant changes

• An opinion on the circumstances of an application

The Law provides for a new institution - an “opinion on the circumstances of an application”. If, when examining an application, the antimonopoly authority reaches a preliminary conclusion that a transaction or another action requiring approval will or may result in a restriction of competition, the antimonopoly authority must send an opinion on the circumstances of the application to the applicant and other parties to the transaction before taking a decision.

An opinion on the circumstances of an application must be documented in writing and contain the following:

• factual and other circumstances established by FAS Russia based on the results of an examination of the application, including the results of an analysis of the state of competition, as well as a description of the evidence confirming the preliminary conclusions of the antimonopoly authority that the transaction or other action stated in the application will or may result in a restriction of competition[7];

• the proposed terms and conditions that FAS Russia may establish with respect to the applicant and other persons participating in the transaction or another action stated in the application in order to secure competition.

• Reduction of the scope of cartel immunities

Please be reminded that article 11 of the Law on Protecting Competition as amended prohibits agreements that restrict competition, including cartels in tenders. However, by virtue of part 7 of this article this prohibition does not extend to agreements between business entities within the same group of persons if one business entity is controlled by the other business entity within the same group of persons or if such business entities are controlled by the same person.

The Law contains provisions under which the activities of business entities to increase, reduce or maintain prices at tenders will not be subject to the provision on immunity which is based on the criterion of one person controlling another or a third party controlling two or more persons.

What to think about and what to do

We believe that the adoption of the Law in general is aimed at enhancing mechanisms aimed at protecting the rights and interests of good-faith market participants from possible manifestations of monopolistic activity on the part of digital giants.

In addition, the adoption of the Law is aimed at ensuring that measures of antimonopoly oversight over all market participants are more effective, for instance, during the antimonopoly authority’s oversight of economic concentration, and also when an expert review is appointed.

At the same time, the effectiveness of these new developments can be shown only by their further application by the antimonopoly authority in practice.

We recommend reading the Law and taking account of its provisions when carrying out your professional activity.

Help from your adviser

Pepeliaev Group's lawyers have considerable experience of providing legal support to clients with regard to antitrust regulation.

Our lawyers continually monitor changes in antitrust legislation and are ready to promptly advise on any legal aspects that arise in connection with the new provisions being adopted.

[1] Source

[2] The second draft law from the fifth antitrust package No. 160278-8 “On amending the Code of Administrative Offences of the Russian Federation” clarifies administrative liability for violations related to practices of monopolistic activity in digital commodity markets, and has been adopted by the State Duma in the first reading. More details about the draft law can be found in the aler.

[3] Federal Law No. 135-FZ “On Protecting Competition” dated 26 July 2006.

[4] There was no such clarification in the initial version of the draft law.

[5] Some of the above provisions were also partially (selectively) modified.

[6] Federal Law No. 98-FZ “On Commercially Confidential Information” dated 29 July 2004.

[7] In the initial version, these provisions were stated as follows: “…will or may result in a restriction on or the prevention or elimination of competition”