FEDERAL ANTIMONOPOLY SERVICE International Competition Network 6 th Annual Conference Moscow 2007 Application Experience of International Competition Network Findings regarding Fighting against Cartels Andrey TSYGANOV Deputy Head of Federal Antimonopoly Service

2 Federal Law № 135-FZ of “Оn Protection of Competition”; Federal Law № 45-FZ of “On Introducing Amendments into Code of the Russian Federation on Administrative Violations ” New Legislation has approached to legislation of countries with developed competition law system

3 Fighting against cartels New in legislation Definition of agreements and concerted practices as specific types of violation of the antimonopoly legislation; Specifying of forms of agreements and concerted practices which cause concern with antimonopoly legislation; Legislative definition of agreements that infringe per se ; Formalization of rules of reason relating to some categories of agreements and concerted practices;

4 Fighting against cartels (2) New in legislation Differentiation of approaches to horizontal and vertical agreements; Establishing of possibility to use group exception and its usage procedure; Stiffening of the sanctions (establishing of the penalties, calculating in percents of gross company-violator’ proceeds); Introduction provisions on leniency programs into legislation

5 Agreements could be recognized valid if they: do not impose limitations to third persons or participants of these actions, which are not extremely necessary to obtain aims of these actions; do not create for individuals possibility not to allow or to abolish competition at the appropriate market; have or can have as a result promotion the improvement of production, realization of commodities or stimulation of technical, economic progress or increase of competitiveness of commodities; have or can have as a result obtaining by consumers benefits (advantages) appropriate to the benefits (advantages) obtained by the persons from actions limiting competition

6 General (group) exceptions regarding agreements and concerted practices in concern with its validity are defined by the Government of the Russian Federation.

7 Substantial toughening of responsibility for anticompetitive agreements For officials - penalty in the amount of 170 – 200 minimal monthly wages or disqualification for three years For legal persons - penalty from 0.01 till 0.15 of the amount of violator’ proceeds of the sales of goods (works, services) at the market where the violation occurred

8 Maximum size of penalties: 4 % of gross violator’ proceeds – for cartel agreements; 2 % of gross violator’ proceeds – for abuse of dominance

9 Cancellation of punishment for companies, which voluntarily stopped its participation in agreements limiting competition and cooperate with antimonopoly body in investigations of these infringements Account of mitigating circumstances while define the amount of penalty The leniency program

10 Enforcement practice of the Law “On Competition Protection” in respect with fighting against cartels In 2006 FAS Russia instituted 48 proceedings, in 16 cases instructions to stop violation of the antimonopoly legislation were issued FAS Russia is elaborating: - Principles of application for turnover penalties - Leniency program for persons cooperating with antimonopoly bodies while reveal cartels

11 Thank you for your attention!