Since 14 July a moratorium has been introduced on the application of a number of antitrust prohibitions and other measures have come into force that are aimed at supporting business under conditions where sanctions are in force

Pepeliaev Group advises that amendments have been made to the legislation that impose a moratorium on the application of a number of antitrust prohibitions when procurement is carried out from a single supplier, change the threshold values for transactions to be agreed with the antitrust authority, improve the procedure for preferences and support to be provided to outdoor advertising operators.

The Russian President has signed Federal Law No. 286-FZ dated 14 July 2022 “On amending the Federal Law “On advertising” and the Federal Law “On amending individual items of Russian legislation” (the “Law”) [1] developed in order to eliminate the consequences of restrictive measures of hostile foreign states with respect to the Russian Federation.

The drafting of the Law was grounded in the need to implement a set of social and economic measures aimed, among other things, at developing import substitution and supporting domestic manufacturers.

The Law came into force on 14 July 2022, on the day when it was officially published.

Let us consider the new developments adopted.

1. A moratorium has been imposed on the application of a number of antitrust prohibitions

It is worth noting that Federal Law No. 135-FZ “On protecting competition” dated 26 July 2006 (the “Law on Protecting Competition”) provides for a prohibition on documents and acts (omissions), agreements or agreed actions of federal executive bodies, state bodies of the Russian constituent entities, local government bodies and other bodies or organisations performing the functions of the specified bodies or organisations that participate in the supply of state or municipal services as well as state non-budgetary funds and the Russian Central Bank, that limit competition (articles 15 and 16).

Article 17 of the Law on protecting competition establishes antitrust requirements for tenders, requests for quotations for goods and requests for proposals.

Article 15(1) and article 15(2) of Federal Law No. 46-FZ[2] establishes that in the period until 31 December 2022 inclusive, the documents of the Russian Government and of the supreme executive state body of a constituent entity of the Russian Federation, in addition to the cases set out in article 93(1) of the Law on the Contractual System [3], may establish other cases when goods, work and services are procured for state and/or municipal needs from a sole supplier (contractor, service provide), and may determine the procedure for procurement to be carried out in such cases.

However, no provision has been made with respect to the criteria for drawing up a list of cases when purchases are made from a sole supplier (contractor, service provider).

With a view to ruling out legal uncertainty as to whether the antitrust authority needs to or may take response measures when the above documents are adopted as well as with respect to the relationships that form when procurement is carried out from the sole supplier (contractor, service provider), a moratorium has been introduced on the application of antitrust prohibitions in the cases at hand.

2. The threshold value has been increased for transactions to be agreed

It is worth noting that before the Law came into force the prior consent of the antitrust authority was required with respect to the consummation of the transactions specified in article 28(1) of the Law on Protecting Competition if:

• the aggregate value of assets in accordance with the latest balance sheets of the person acquiring shares (membership interests), rights and/or property, and its group of persons, and the person that is an economic concentration entity and its group of persons, exceeds RUB 7 billion, and the value of assets in accordance with the latest balance sheet of the person that is the economic concentration entity and its group of persons exceeds RUB 800 million; or

• the aggregate proceeds of the specified persons from the sale of goods for the last calendar year exceeds RUB 10 billion, and the value of the assets of the person that is the economic concentration entity and its group of persons exceeds RUB 800 million.

Therefore, article 28 of the Law on Protecting Competition provides for two conditions when transactions need to be agreed in advance by the antitrust authority, and in addition to one of the above conditions, the value of assets should always be taken into account of the person that is the economic concentration entity and of its group of persons (the amount of such value should exceed RUB 800 million).

At the same time, in 2022 the new Law excludes the requirement that a prior consent should be obtained from the antitrust authority with respect to transactions when shares, membership interests in property and rights are acquired to commercial organisations whose aggregate value of assets is from RUB 800 million to RUB 2 billion. In such case the authority should be notified not later than 30 days from the date when such transactions are consummated.

When the antitrust authority receives a notification of the conclusion of the above transactions the antitrust authority will be entitled to issue an instruction to perform actions to ensure competition.

It should be pointed out that persons whose aggregate value of assets is from RUB 800 million to RUB 2 billion and that intend to consummate the transactions specified in article 28(1) of the Law on Protecting Competition retain the right to file a petition to consummate such transactions with the prior consent of the antitrust authority.

3. Measures of support have been introduced for the outdoor advertising operators

At present, outdoor advertising operators are incurring substantial losses relating to advertisers refusing on a large scale to place advertisements on advertising structures while continuing to pay for the installation and operation of such structures under agreements concluded with the regional and local authorities.

Owing to the above circumstances Federal Law No. 46-FZ was supplemented by article 21.3, which provides for an adjustment of the procedure for concluding, performing and paying under agreements for the installation and operation of advertising structures in 2022-2023.

Thus, a reduction is provided for in the amount of payments under the relevant agreements for a period of not more than one year and a one-year extension is provided for with respect to the validity period of agreements and permissions for the installation and operation of advertising structures without tenders being held (by concluding a supplemental agreement).

At the same time, regional and local bodies have become able to determine the cases when the parties involved in the sector are granted a deferral of the next payment for using state land plots for the installation and operation of advertising structures.

4. The procedure has been improved for agreeing preferences to support SMEs

It is worth noting that, in accordance with the provisions that were in force before the Law took effect, state bodies and local bodies were obliged to file an application to the antitrust authority for it to agree the grant of a state (municipal) preference (article 19 of the Law on Protecting Competition).

According to the Law that has been adopted, state bodies and local bodies are released from this obligation until the end of 2022 if the preferences are granted for the purposes of providing social maintenance to the population, supporting SMEs and ensuring the defence capacity and security of the state.

In addition, it is established that the state and local bodies will be obliged to notify the antitrust authority of the grant of such preferences not later than after 30 days from the date when a decision is made to grant a state or municipal preference.

What to think about and what to do

Owing to the Law coming into force, we recommend notifying the persons responsible for holding and participating in procurement procedures that a moratorium has been introduced on the application of a number of antitrust prohibitions on performing procurement from a sole supplier.

Companies, when carrying out their professional activity, should take into account the new statutory provisions regarding the procedure for concluding transactions that must be agreed by the antitrust authority in advance as well as the specifics of the performance of agreements for the installation and operation of advertising structures in 2022-2023.

Help from your adviser

Pepeliaev Group's lawyers have considerable experience of providing legal support to clients with regard to antitrust regulation and the legislation on the contractual system as well as legislation on advertising.

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.

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[1] http://publication.pravo.gov.ru/Document/View/0001202207140079

[2] Federal Law No. 46-FZ “On amending individual items of Russian legislation” dated 8 March 2022.

[3] Federal Law No. 44-FZ “On the contractual system in the area of the procurement of goods, work or services to secure state and municipal needs” dated 5 April 2013.