The Supreme Court has brought reasonableness into focus
The Russian Supreme Court’s Plenum has prepared a clarification on the most controversial issues of the application of anti-trust legislation by courts. On the one hand, the Court has ensured consistency with the approaches it developed previously: its Resolution No. 2 dated 4 March 2021 (the “New Resolution”) almost completely replaced Resolution No. 30 “On certain issues arising in connection with commercial courts applying antitrust legislation” dated 30 June 2008 of the Plenum of the Russian Supreme Commercial Court (the “SCC Plenum's Resolution”), except for the provisions regarding administrative liability, which remained unchanged. On the other, a striking feature of the clarifications was a signal of the need to follow the principle of reasonableness, which implies that business entities’ conduct should be assessed from the perspective of economic strategy and effectiveness.
The whole legal community has been waiting for quite some time for the Supreme Court’s Plenum to adopt the New Resolution. Over recent years, there have not only been many conflicts and issues which required resolution in the decisions of Russian courts and administrative authorities, but also established approaches to the legal evaluation of certain actions of business entities that needed to be formalised at the level of the Supreme Court.
By contrast with the SCC Plenum's Resolution, the provisions of the New Resolution mostly reflect the best practices and development trends in the decisions of courts and administrative authorities in contemporary conditions, thereby formalising the legal positions on all key institutions of antitrust regulation and on the procedural aspects of legislation concerning the specific aspects of how such cases are resolved and legislature’s certain acts are challenged.
Within the scope of the New Resolution, the grounds have been made more specific for applying the legal regime of a group of persons to business entities, including in the context of collective dominance. As compared with the SCC Plenum's Resolution, the New Resolution deals with a wider range of elements of antitrust violations, the examination of which has long been fraught with difficulties in evaluating the legality of certain commercial practices being used. The main focus is placed on the specific aspects of how cases involving abuse of a dominant position are resolved, as are identifying and proving various schemes of cartel agreements taking into account that they are widespread and pose an increasing threat for society.
The New Resolution analyses, among other things, special cases of anticompetitive behaviour, namely when unfavourable contract terms are imposed under which the purchase of a product is made dependent on the purchase of another product or service. In addition, it assesses the lawfulness of commercial terms being differentiated by different categories of consumers. The issue has been addressed of the admissibility of activities of purchasing alliances with respect to the coordination of discounts between consumers and suppliers.
Some of the positions that have been laid down are formulated cautiously. Moreover, controversial issues of how antitrust legislation should be applied and interpreted are not always answered clearly from the legal perspective.
As regards some of the elements of the offences, the Supreme Court’s Plenum rather confined itself to summarising the generally accepted principles. That the aspects related to the identification of the signs of some offences and the specific aspects of proving them have not been elaborated may not fully meet the demands of business regarding the additional guarantees in the case of unjustified accusations. Entrepreneurs still face relevant risks and are in a vulnerable position if an antitrust authority classifies their actions wrongly.
Questions remain unsolved concerning the delimitation of the elements of offences involving collective dominance and cartels, as do some other aspects related to the standards for proving certain actions of business entities. It appears that no unified positions have yet been developed on the above issues in practice, and, therefore, have not been reflected in the regulations issued by the Supreme Court’s Plenum.
That approaches are mitigated towards certain types of commercial practices which are controversial from the perspective of their implementation reflects positive trends. In establishing antitrust violations, courts and administrative bodies are increasingly moving away from the prevailing relevance of formal criteria and are starting to take into consideration the potential effect of business entities’ actions on the state of the competition on commodity markets.
The whole legal community has been waiting for quite some time for the Supreme Court’s Plenum to adopt the New Resolution. Over recent years, there have not only been many conflicts and issues which required resolution in the decisions of Russian courts and administrative authorities, but also established approaches to the legal evaluation of certain actions of business entities that needed to be formalised at the level of the Supreme Court.
By contrast with the SCC Plenum's Resolution, the provisions of the New Resolution mostly reflect the best practices and development trends in the decisions of courts and administrative authorities in contemporary conditions, thereby formalising the legal positions on all key institutions of antitrust regulation and on the procedural aspects of legislation concerning the specific aspects of how such cases are resolved and legislature’s certain acts are challenged.
Within the scope of the New Resolution, the grounds have been made more specific for applying the legal regime of a group of persons to business entities, including in the context of collective dominance. As compared with the SCC Plenum's Resolution, the New Resolution deals with a wider range of elements of antitrust violations, the examination of which has long been fraught with difficulties in evaluating the legality of certain commercial practices being used. The main focus is placed on the specific aspects of how cases involving abuse of a dominant position are resolved, as are identifying and proving various schemes of cartel agreements taking into account that they are widespread and pose an increasing threat for society.
The New Resolution analyses, among other things, special cases of anticompetitive behaviour, namely when unfavourable contract terms are imposed under which the purchase of a product is made dependent on the purchase of another product or service. In addition, it assesses the lawfulness of commercial terms being differentiated by different categories of consumers. The issue has been addressed of the admissibility of activities of purchasing alliances with respect to the coordination of discounts between consumers and suppliers.
The main part of the New Resolution consists of provisions related to specific aspects of the assessment of the circumstances at the stage when a case is initiated, resolutions of a collective body are challenged and the adequacy of the measures provided in the order is questioned.
Some of the positions that have been laid down are formulated cautiously. Moreover, controversial issues of how antitrust legislation should be applied and interpreted are not always answered clearly from the legal perspective.
As regards some of the elements of the offences, the Supreme Court’s Plenum rather confined itself to summarising the generally accepted principles. That the aspects related to the identification of the signs of some offences and the specific aspects of proving them have not been elaborated may not fully meet the demands of business regarding the additional guarantees in the case of unjustified accusations. Entrepreneurs still face relevant risks and are in a vulnerable position if an antitrust authority classifies their actions wrongly.
The New Resolution is also, however, relevant in that the whole document, by contrast with the SCC Plenum's Resolution, is imbued by the idea of the need for applying the principle of reasonableness, which implies an analysis of the behaviour of business entities in terms of their economic effectiveness. Confirmation that business can prove the justification and good faith nature of their actions creates positive preconditions for the courts, when they issue their judgments, to examine the facts of the case more closely, taking into account the actual factors affecting the economic policy of business entities. We believe such an approach will contribute to changing the direction of the legislature’s antitrust policy towards a more comprehensive application and examination of the economic evidence of the offences.
Questions remain unsolved concerning the delimitation of the elements of offences involving collective dominance and cartels, as do some other aspects related to the standards for proving certain actions of business entities. It appears that no unified positions have yet been developed on the above issues in practice, and, therefore, have not been reflected in the regulations issued by the Supreme Court’s Plenum.
That approaches are mitigated towards certain types of commercial practices which are controversial from the perspective of their implementation reflects positive trends. In establishing antitrust violations, courts and administrative bodies are increasingly moving away from the prevailing relevance of formal criteria and are starting to take into consideration the potential effect of business entities’ actions on the state of the competition on commodity markets.
Source: Competition and Law