Antimonopoly control over prices is made stricter in the conditions of COVID-19

Pepeliaev Group advises of measures taken in connection with prices growing for certain categories of goods

With the coronavirus infection spreading up, prices are growing for certain categories of goods including food products, medical masks and disinfectants.

In order to limit the unjustified growth of prices for goods of social importance, state authorities are taking additional measures, mostly connected with price monitoring.

On 26 March 2020 the Russian President signed Federal Law No. 67-FZ dated 26 March 2020 “On amending article 60 of Federal Law ‘On the circulation of medicines’ and article 38 of Federal Law ‘On the fundamentals of protecting the health of citizens of the Russian Federation’” which enables the Government to establish, for a period not exceeding 90 days, maximum permitted retail prices for medicines and medical devices which are not included in the list of vital medicines, but may become such in fact.

These measures may be implemented in conditions of an emergency situation, a threat of the spread of an infectious disease that is dangerous to the public (such as COVID-19 at present) or if the price for medicines and medical devices in constituent entities of Russia grows by thirty or more per cent within thirty days.

After many complaints about an unjustified growth of prices, the Russian Federal Antimonopoly Service has taken measures to monitor prices on a daily basis by recording prices in retail chains and also measures to check the availability of goods for sale in markets of food products and markets of medicines.

Firstly, an emergency operations centre has been created to control the situation in markets of food products, medicines and medical goods, including prices for medical masks and equipment used for the treatment of those affected by the coronavirus infection[1]. In order to identify elements of violations of antimonopoly legislation, a range of unscheduled inspections of manufacturers have been conducted in Moscow, Moscow Region, Novosibirsk, Chelyabinsk and St Petersburg. On the basis of the information collected, several antimonopoly cases concerning cartel agreements have been initiated[2].

Secondly, control has been tightened over prices for essential food products of social importance, the list of which is entrenched in Resolution No. 530 of the Russian Government dated 15 July 2010. Particular emphasis will be placed on bakery products, cereals, meat, eggs, butter and certain vegetables and fruit[3]. A ‘hot line’ of the Russian Federal Antimonopoly Service is being actively used in connection with the growth of prices for food products.

Expert opinion 

The steps being taken by the antimonopoly authority are necessary to ensure that prompt antimonopoly reaction follows any unjustified growth of prices or information received that a shortage of goods in high demand is being created intentionally. In view of the measures taken by state authorities, companies should control more carefully their pricing policies to stay in line with the Law on the protection of competition when they are doing business.

What to think about and what to do

• Follow up on the measures being taken by the government and the changing regulations to remain good faith participants of the market.
• Analyse the potential risks that may arise as the company implements its commercial (trading and sales) policy.
• Assess the commercial decisions of the company involving setting prices and volumes of purchases in terms of their being economically justified and compliant with antimonopoly legislation.
• Pay special attention to different forms of working with contracting parties which may give rise to a risk of antimonopoly violations.
• Analyse the risks of exchanging commercial information with contracting parties which may be interpreted as an element of an antimonopoly violation.
• Consider taking other measures aimed at reducing risks of antitrust violations.

Help from your adviser

Pepeliaev Group’s lawyers have significant experience of providing legal support to clients in the sphere of antimonopoly regulation including a preliminary legal assessment of antimonopoly risks for Russian and foreign companies. Our lawyers will be happy to provide any legal support you need, including in terms of:

• when companies perform internal antimonopoly audits or assess and analyse the existing and potential antimonopoly risks connected with the company's business activity
• assessing the compliance of commercial decisions that are taken, in order to prevent antimonopoly offences
• obtaining the Federal Antimonopoly Service's approval of joint-venture agreements (including those aimed at satisfying increased demand or connected with mitigating any consequences of COVID-19) with regard to them being admissible from the antimonopoly standpoint
• representing clients before the Russian Federal Antimonopoly Service and courts in cases on cartel agreements and the abuse of a dominant position through an unjustified increase of prices, reducing or discontinuing the production of goods and other violations
• developing other measures aimed at mitigating the risks of antitrust offences.