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ANTIMONOPOLY LAW VIOLATION WARNING MECHANISMS IN CIS STATES

ANTIMONOPOLY LAW VIOLATION WARNING MECHANISMS IN CIS STATES. Ruslan Ibragimov, Non-profit partnership “Promotion of Competition Development in CIS Countries”. International seminar Republic of Kazakhstan , Almaty October 10 , 201 1. 1. Warning mechanisms : the concept.

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ANTIMONOPOLY LAW VIOLATION WARNING MECHANISMS IN CIS STATES

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  1. ANTIMONOPOLY LAW VIOLATION WARNING MECHANISMS IN CIS STATES Ruslan Ibragimov, Non-profit partnership “Promotion of Competition Development in CIS Countries” International seminar Republic of Kazakhstan, Almaty October 10, 2011 1

  2. Warning mechanisms: the concept PREVENTION AND ELIMINATION OF MONOPOLIST ACTIVITIY AND UNFAIR COMPETITION IS ONE OF THE GOALS OF ANTIMONOPOLY LEGISLATION IN MOST OF THE CIS STATES In order to achieve this goal, state authorities use different mechanisms(recommendations, admonitions, warnings and other)* without initiating proceedings against business entities (state authorities, officers), bearing less financial and administration costs • ______________________________________ • * Following is not considered as warning mechanisms: • Orders issued in the course of approval of M&A transactions • Imperative rules of conduct(e.g., rules of access to infrastructure) 2

  3. Warning mechanisms:comparison table 3

  4. Warningmechanisms: Republic of Belarus WARNING LETTERS (Directions on application of measures aimed at curing breaches of the antimonopoly legislation, approved by Order No. 60 of the Ministry of Economy of the Republic of Belarus of 17.04.06) CONTAIN: • Violation facts • Possible consequences • Term to provide information on measures taken in order to cure the breach CAN BE SENT TO: • Any business entity • State authorities • Officers NON-OBSERVANCE RESULTS IN: • Initiation of proceedings and applying sanctions • If the requested information is not provided, a fine may be levied (USD 100-500) EXECUTED BY: • Department for the Price Policy of the Ministry of Economy of the Republic of Belarus 4

  5. Warning mechanisms: Republic of Kazakhstan ORDER ON CONCLUDING AGREEMENTS WITH CONSUMERS (The Law of the Republic of Kazakhstan “On Natural Monopolies and Regulated Markets) ORDER ON REORGANIZATION OF THE ENTITY AND (OR) ASSIGNMENT OF ASSETS (Law of the Republic of Kazakhstan “On Natural Monopolies and Regulated Markets) CONTAIN: • Violation facts • Actions required CAN BE SENT TO: Natural monopoly holders NON-OBSERVANCE RESULTS IN: Court enforcement of required actions EXECUTED BY: Agency of the Republic of Kazakhstan on regulation of natural monopolies 5 5

  6. Warning mechanisms:Ukraine RECOMMENDATIONS (The Law of Ukraine «On Protection of Economical Competition») CONTAIN: • Evidences of violation • Measures for elimination of grounds, conditions and (or) consequences of these evidences CAN BE SENT TO: • Any business entity / association of entities • State authorities • Local government authorities NON-OBSERVANCE RESULTS IN: Initiation of proceedings and applying sanctions to the business entity (including fines as a percentage of sales) EXECUTED BY: Antimonopoly Committee of Ukraine FOR REFERENCE: 121 RECOMMENDATIONS WERE SENT BY ACU IN 2010 * *http://www.amc.gov.ua/amc/control/uk/publish/article?art_id=194113&cat_id=194112 6 6

  7. Warning mechanisms: Russian Federation APPLIED AT THE WHOLESALE ELECTRIC POWER (CAPACITY) WITHIN THE FRAMEWORK OF NP MARKET COUNCIL OPERATION SUPERVISORY BOARD DISPUTES COMMITTEE (Chairman – A.N. Golomolzin) DISCIPLINARY COMMITTEE • Disciplinary Committeeis entitled to issue a recommendation (warning) to a business entity on prohibition of violation and on elimination of causes contributing to the violation as well as send the suggestion for elimination of causes and conditions contributing to the violation • Disputes Committeeis entitled to propose the entity to cure the committed breach with account of recommendations of the Disputes Committee • Supervisory Boardis entitled for sending the official warning to the business entity, in regard to the need to eliminate the barriers preventing other entities from accessing the wholesale power market NP Market Council applies the following sanctions: • Fine (calculated in fixed amount and paid according to the procedure contemplated by the Grid Connection Contract) • Removal of the business entity from wholesale market entities list and divesting it of its right to participate in electric power and capacity trading • Transferring the case to Federal Antimonopoly Service of Russia for taking the decision on initiation of proceedings on breaching the antimonopoly legislation 7 7

  8. Warning mechanisms: Russian Federation WITHIN THE FRAMEWORK OF THE 3RD ANTIMONOPOLY AMENDMENTS PACKAGE THE POSSIBILITY TO INTRODUCE NEW WARNING INSTITUTION IS CONSIDERED ADMONITION • Only in writing • Approved by the Chief or Deputy Chief of the Federal Antimonopoly Service of Russia • Cause for sending the admonition – public statement of entity’s officer on planned behavior at the commodity market • Contains conclusions on presence of grounds for sending the warning and reference to provisions of the antimonopoly legislation that might be violated by the entity • Non-observance of the admonition does not result in any sanctions 8 8 8

  9. Warning mechanisms: Russian Federation WITHIN THE FRAMEWORK OF THE 3RD ANTIMONOPOLY AMENDMENTS PACKAGE THE POSSIBILITY TO INTRODUCE NEW WARNING INSTITUTION IS CONSIDERED WARNING • Only in writing • Applied as mandatory stepprior to initiation of proceedings against dominating entities • Can be applied in the following cases: pushing terms of the agreement which are disadvantageous for the contractor or does not relate to the subject matter of the agreement, and (or) refusal, which is not substantiated neither from economical nor from technological point of view or avoidance from concluding agreement with specific buyers • Includes conclusions on the presence of grounds for sending the warning, reference to the provisions of the antimonopoly law that were violated as well as the list of actions aimed at curing the violation, elimination of grounds and conditions resulting in the violation, elimination of consequences of this violation as well as the reasonable period for implementation thereof 9 9 9 9

  10. Warning mechanisms:application goals • Reduction of time from the moment of discovery of the breach to the moment of curing the breach and restoration of competitive conditions (from 6-12 months to 1-2 months )* • Reduction of load on antimonopoly and judicial authorities • Reduction of costs both of the state budget and business entities’ budgets for participation in administrative and judicial proceedings APPLYING ANTIMONOPOLY LAW VIOLATION WARNING MECHANISMS CREATES ADDITIONAL FACTORS FOR COMPETITION DEVELOPMENT ______________________________________ * Based on application practice in Russia; not taking into account the stage of case hearing 10 10

  11. THANK YOU FOR YOUR ATTENTION! 11

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