The Federal Law dated 3 July 2016 No. 264-FZ introduced amendments to the Federal Law 'On Protection of Competition' and Some Legislative Acts of the Russian Federation' (hereinafter - the 'Law') aimed at reducing the administrative burden in connection with antitrust compliance for small businesses in Russia.
The Law was developed to implement paragraph 25 of the Priority Action Plan towards Sustainable Economic Development and Social Stability in 2015 approved by the order of the Government of the Russian Federation No. 98-r dated 27 January 2015.
1. Amendments to the Federal Law 'On Protection of Competition'
The Law establishes the following exceptions when the position of an economic entity cannot be recognised as dominant:
- a legal entity, which founder
(participant) is one individual (including an individual registered
as an individual businessman) or a few individuals, if proceeds of
such entity from the sale of goods for the last calendar year does
not exceed 400 million roubles, except for:
- a legal entity that forms a group of entities with another business entity(s) on the grounds specified in Article 9.1 of the Federal Law 'On Protection of Competition' (with some exceptions), or a founder(s) of which is legal entity(s) with participation of the Russian Federation, constituent unit of the Russian Federation, municipal formation;
- a financial institution;
- a natural monopoly on the commodity market being in the state of natural monopoly;
- an individual businessman that does not form a group of persons with another business entity(s) on the grounds specified in Article 9.1 of the Federal Law 'On Protection of Competition', if the proceeds of such a businessman from the sale of goods for the last calendar year does not exceed 400 million roubles;
- an individual businessman that forms
a group of entities:
- with another business entity being a close relative thereof, or
- with a business entity(s), the sole participant of which or each of which is one or more entities beings close relatives thereof,
Exclusion of the above categories of small businesses from entities that can be considered as holding a dominant position means that the former can not be subject to, in particular, provisions of the Federal Law 'On Protection of Competition' regarding monopolistic high and monopolistic low prices and the prohibitions on certain actions (omission) which are deemed the abuse of a dominant position.
Moreover, Article 12 of the Federal Law 'On Protection of Competition' was supplemented with a provision that business entities, the dominant position of which cannot be recognised pursuant to the above exceptions, if their total proceeds from the sale of goods for the last calendar year does not exceed 400 million roubles, may enter into agreements that lead or may lead to the restriction of competition, in particular:
- on the imposition on a counterparty of the contract conditions unfavourable for such party or not related to the subject matter of the contract;
- an economically, technologically and otherwise unjustified establishment by a business entity of different prices (tariffs) for the same product;
- on the establishment by other business entities of barriers to entry into the commodity market or exit from the commodity market.
The Law also establishes that an unscheduled on-site audit of a small business based on reports and applications from individuals, legal entities, media reports or a violation of the antimonopoly legislation detected by the anti-monopoly authority may be carried out after consultation with the prosecuting authorities at the place of location of such entity according to the procedure established by the order of the General Prosecutor of the Russian Federation, except for:
- an unscheduled on-site audit of a natural monopoly, and
- an unscheduled on-site audit for compliance with the ban on cartel agreements.
In Article 28 of the Federal Law 'On Protection of Competition' that provides for the requirement to obtain the prior consent of the Federal Antitrust Service of the Russian Federation to carry out transactions with shares (interests), property of commercial organizations, rights with respect to commercial organizations, the total value of the assets according to the latest balance sheet of the entity that is the object of the relevant transaction and its group of entities was increased up to 400 million roubles.
2. Amendments to the Federal Law 'On the Fundamentals of State Regulation of Trade Activities in the Russian Federation'
It is provided that business entities engaged in trade, business entities involved in the delivery of food products, the proceeds of which (their groups of entities) from the sale of goods for the last calendar year does not exceed 400 million roubles, as well as business entities engaged in trade through retail chains, the total proceeds of which from the sale of goods within the same trade network for the last calendar year does not exceed 400 million roubles, shall be not subject to the following provisions of the Federal law 'On the Fundamentals of State Regulation of Trade Activities in the Russian Federation':
- anti-monopoly rules (Article 13);
- restrictions on the acquisition, lease by business entities engaged in retail trade of food products through retail chains of additional area of retail facilities (Article 14).
3. Amendments to the Code of the Russian Federation on Administrative Violations
It is established that the limitation period for bringing to administrative liability for administrative violations provided for in Article 14.55.2 of the Code (actions (omission) of the head contractor, contractor, which lead or may lead to unreasonably high prices of products under the state defence order, non-performance or improper performance of the government contract for the state defence order), begins to run from the date of entry into force of the decision of the commission of the federal executive authority that performs functions of state control (supervision) in the area of the state defence order, which establishes the fact of violation of the legislation in the area of the state defence order. The ground to initiate proceedings on such administrative violations will be the adoption by the commission of the federal executive authority that performs functions of state control (supervision) in the area of the state defence order, the decision, which establishes the fact of violation of the legislation in the area of the state defence order.
The amendments introduced by the Law became effective on 4 July 2016.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.