COMMON COMPETITION POLICY– a necessary condition for the effective
functioning on the Single Economic Space
Nurlan AldabergenovMember of the College – Minister for competition and antitrust regulation of
the Eurasian Economic Commission
Vienna, 2012
From 1 January 2012
2
Single economic space (SES)
Integration and macroeconomic policyEconomics and financial policyIndustry and agricultural sector
TradeTechnical regulationCustoms cooperation
Energy and infrastructure
Competition and antirust regulation
Trade turnover of the Republic of Belarus, Republic of Kazakhstan and the Russian Federation
3
29
40
(41%)
Russia’s trade turnover with Belarus and Kazakhstan
4
(33%)
30,7Bi
llion
of U
SD
2010 2011
Belarus's trade turnover with Russia and Kazakhstan
5
Billi
on o
f USD (46%)
2010 2011
Kazakhstan’ trade turnover with Belarus and Russia
6
(24%)
Bil
lio
n o
f U
SD
5,9
7,5
2010 2011
7
Main ways of the single competition policy development within the SES
Antitrust regulation
Price regulation, including control over introduction and prolongation
of the governmental
price regulation
Public (municipal) procurement
8
Primary goals of the antitrust regulation
4
Harmonization of competition laws in Belarus, Kazakhstan and Russia
The law on counteraction to
monopolistic activity and competition
development is in Parliament of the
Republic of Belarus
Federal Law on protection of
competition of the Russian
Federation is at the federal level
The law on competition of the Republic of Kazakhstan is in Mazhilis of the
Republic of Kazakhstan’s
Parliament
The current status of the draft laws on making amendments and additions to:
Kazakhstan, Belarus and Russia bring the legislation into accordance with principles and rules of competition established by sections II and III of the Agreement
9
Difference in administrative penalties for violation of competition rules
– Fines for undertakings
Belarus Kazakhstan Russia
• Cartels Up to 10% of revenue from sale of the commodity in the market where the offense was committed, but not less than 400 basic amounts (145 600 Russian rubles)
Up to 10% of revenue received from carrying out the monopolistic activity, and seizure of monopolistic income
Up to 15% % of revenue from sale of the commodity in the market where the offense was committed, or from 0,1 to 0,5 of the starting price of the subject of an auction, but not less than 100 000 rubles
• Unfair competition Up to 10% of revenue from sale of the commodity in the market where the offense was committed, but not less than 400 basic amounts (145 600 Russian rubles)
From 1000 to 1500 monthly calculated amount (from 324 000 to 486 000 Russian rubles)
From 100 000 to 500 000 rubles
• Abuse of dominance
Up to 10% of revenue from sale of the commodity in the market where the offense was committed, but not less than 500 basic amounts (182 000 Russian rubles)
Up to 10% of revenue received from carrying out the monopolistic activity, and seizure of monopolistic income
Up to 15% % of revenue from sale of the commodity in the market where the offense was committed, but not more than 0,02 of the total revenue of the offender from sale of all commodities and not less than 100 000 rubles
10
Difference in antitrust legislation of the three Member States
Belarus Kazakhstan Russia
Control over state aid - + +
Special prohibition of vertical agreements
- - +
Number of types of unfair competition specialized in relevant law
11 12 6
11
Use of best international practices
Introduction of preventive measures and adequate penalties for antitrust law violations:
WARNING NOTICEDISQUALIFICATION
1. The analysis of licensing system and legislation of member-states of the Customs union and SES on establishment of unreasonable barriers in mutual trade and development of offers on their harmonization.For example: differences in licensing
2. Direction of proposals on changes into the legislation in the field of competition policy in terms of harmonization of the legislation of each of the States in accordance with the Agreement on common principles and rules of competition to the Eurasian economic commission and the Government.
Elimination of barriers in mutual trade
13
The Republic of Belarus Legal services Retail sale of tobacco products
The Republic of Belarus Legal services Retail sale of tobacco products
The Republic of Kazakhstan Purchase of electric energy for power supplyActivities in the field or architecture, constriction and urban development
The Republic of Kazakhstan Purchase of electric energy for power supplyActivities in the field or architecture, constriction and urban development
The Russian Federations Private detective activityThe activities of join stock investment funds
The Russian Federations Private detective activityThe activities of join stock investment funds
Regulatory acts on execution of control over the common rules of competition:Criteria of assigning markets to cross-border ones
Methodology on competition assessment
Methodology on evaluation of excessively high (low) prices
Methodology on calculation of fines and procedure of penalizing
Procedures of consideration of applications (claims) on violation of competition rules
Procedures on carrying investigations of competition rules violations
Procedures on consideration of competition rules violations
Rules on cooperation between the EEC and relevant authorized bodies of the Member-States
14
Price regulation
15
1. Decrease of tariffs level for natural monopolists’ services
2. Transparency of natural monopolists' activities
3. Ensuring equal possibilities in procurement for all potential suppliers
Result of convergence of methods of setting tariffs for natural monopolies
16
Public procurement
18
Model Law on Competition (signing term – July 2013)
Main terms
Prohibition of anticompetitive
acts and activities of governmental
authorities
Prohibition of anticompetitive agreements and
concerted actions
Prohibition of unfair competition
Prohibition of abuse of
dominance
Control over economic
concentration
Functions and powers of
competition authorities
Control over provision of state
(municipal) aid
Competition in public (municipal)
procurement
State monopoly Governmental price regulation
Penalties for violation of competition legislation
Activities on discussion of draft of the Model law on competition
International scientific-practical conferences and round tables in Belarus, Kazakhstan and Russia with participation of deputies, power authorities, business community and public organizations. Belarus – Minsk and BrestKazakhstan – Astana and AlmatyRussia – Novosibirsk and Kazan
Inter-parliamentary assembly of the Eurasian economic community (preliminary discussions of issues on harmonization of legislation at meeting of MPA Bureau of EurAsEC on November 22)
Antimonopoly authorities of the states with a rich experience(Japan, Great Britain, Republic of Austria, South Korea etc.) Examination of issues on adoptions of the Competitive Code of the Single Economic Space
19
The Court of the EurAsEC
Considers cases on compliance of the Customs Union (the CU) bodies’ acts with international treaties, comprising treaty framework of the CU;
Considers cases on challenge of decisions, acts, omissions of the CU bodies;
Interprets international treaties, comprising treaty framework of the CU, acts, adopted by the CU bodies;
Considers disputes between the EEC and the Member States, and between the Member States concerning fulfillment of obligations undertaken within the CU.
20
Decision of the authorized body of a Member State
Court of a Member State
Decision of the EEC
The Court of the EurAsEC
Cooperation of the EEC with national competition authorities of Belarus, Kazakhstan and Russia on suppression of anticompetitive violations in cross-
border markets
21
ЕEC
Working group consisting of staff of the EEC, Ministry for Economics, Agency on Protection of Competition, Federal Antimonopoly Service – expert assistance to the national bodies and preparation
of documents for the Consulting Committee
Ministry for Economics of Belarus carries investigation
under laws of Belarus
Agency on Protection of Competition of Kazakhstan carries investigation under laws of Kazakhstan
Federal Antimonopoly
Service of Russia carries investigation under laws of Russia
Consulting Committee, consisting of representatives from Belarus, Kazakhstan and Russia – develops proposals for the EEC concerning the received documents
Recommendations on suppression of violations or binding for the Member States decisions on amending national legislation
Complaints from cross-border
markets
Complaints from cross-border
markets
Practical realization of goals on establishment of common competition policy
Working groups on development of offers:
•on providing of fair competition conditions in the market of oil products, including excise duties on oil products (for example: excise duties in Russia make about 220 US dollars for AI-92 gasoline per ton, in Kazakhstan about 70 US dollars per ton, and in Belarus about 140 US dollars per ton that creates unequal competition conditions between economic entities of three countries in the market of oil products)
•on competition development in the air transportation market
•on competition development at implementation of parallel importing of the goods containing objects of intellectual property
22
Cost of electricity for the popular in the border regions of Kazakhstan and Russia
2,67Astrakhan
region
Orenburg region
1,68
2,35
Kurgan region
2,54
Chelyabinsk region
1,77
Saratov region
Samara region
Tyumen region
2,04
2,28
1,8
1,39
Volgograd region
2,27
1,64
Omsk region
Altay
Novosibirsk region
2,25
2,25
2,38
2,85Altai Republic
1,73
1,431,81
1,09
West – Kazakhstan
region
Atyrau region
Aktobe region
Kostanayregion
North - Kazakhstan
region
Akmolaregion
Karagandaregion
Pavlodarregion
East - Kazakhstan
region
Russia
Kazakhstan
24
Prices on oil products in Kazakhstan, Russia and Belarus
Kazakhstan Russia BelarusPetrol АИ-92
Price per 1 liter
22,5 rubles 27,4 rubles 25,4 rubles
Excise duty per 1 ton
66 $ 225 $ 142 $Diesel fuel
Price per 1 liter
19,1 rubles 28,2 rubles 27,8 rubles
Excise duty per 1 ton
8 $ 116 $ 91 $
Competition development in the air transportation market between Belarus, Kazakhstan and Russia
Развитие конкуренции на рынке воздушных перевозок между Россией, Беларусью и Казахстаном
Kazakhstan
Russia
Belarus
Moscow
Аstana
Minsk
Almaty
AeroflotTransaeroS7 AirlinesUtairRussia airways
Air AstanaSkat Airways
Belavia
Main directions on the Single Economic Space territory
Saint Petersburg
Yekaterinburg
Novosibirsk
26
Parallel importing
Producer- trademark holder
Supply of goods independently or via
official distributor
Undertaking
BARRIER: in order to supply to the territories of Kazakstan, Belarus and Russia, the producer’s (trademark holder’s) approval is required
- medicines;- clothes;- homeware;- consumer electronics;- cars etc.
Steps to undertake: -To create a working group to develop proposals on elimination of barriers to commodity markets -To amend the Agreement on Common Principles of Regulation in the Sphere of Protection of Intellectual Property Rights
BENEFITS OF PARALLEL IMPORTING:commodities become cheaper
Sport goods -from 30 to 45
%
Difference between the official price and the price of parallel importers
Photo cameras –up
to 20%
Bicycles -up to 40%
Auto spare parts -
from 60 to 80%
Car seats -up to 50%
Perfumesfrom 20 to
60%
The interaction of the Eurasian Economic Commission with the Austrian Federal Competition Authority in the field of competition
policy
28
Exchange of experience in:
-Improvement of the competition policy’s legal framework;
-Implementation of practical measures on antitrust regulation and competitive environment development;
-Providing procedural assistance in conducting investigations related to violations of legislation in the field of competition policy;
-Development of scientific and methodological bases of research in the field of competition policy and legislation.