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Russia's Federal Anti-Trust Service (FAS) has drafted a new competition bill
In an interview for Ekho Moskvy radio Tuesday, Alexei Sushkevich, head of the FAS analytical department, explained that the idea behind the bill was to adapt the practice of competition protection to the rapidly changing conditions on the Russian market. According to him, the law currently in effect offers no instruments for combating oligopoly, price hikes, discriminatory terms for goods supply, etc. This is why the decision has been made to bring up to date the very notion of market monopoly, acknowledging that oligopoly benefits narrow group interests, which may be quite different from the interests of society at large. Under the bill, companies dominating the Russian market shall come under close anti-trust control. "If you dominate the market, you have no right to unjustifiably raise prices, to discriminate against the consumer, and to unjustifiably slash production if there is solvent demand for a merchandise," Mr. Sushkevich said. At present, regarded as market-dominating are companies whose market share exceeds 65 percent. The competition law bans such companies from establishing monopoly prices, slashing output, or varying the price of their products depending on the customer. The new competition bill proposes classifying as market-dominating each of three companies together controlling over 50 percent of the market or each of five companies whose combined share is 70 percent, Mr. Sushkevich said. On the other hand, the bill envisages significant simplification of anti-trust control over economic concentration, he added. Thus, for instance, the Federal Anti-Trust Service is planning to give up "indiscriminate control" of deals involving the sale of shares. Nowadays, the purchase of any stake above the 20% threshold shall be authorized by an anti-trust body. The FAS believes that only major acquisitions need authorization-a controlling interest or a 75%-plus stake. According to Mr. Sushkevich, the bill also expands somewhat the FAS' area of control. In today's Russia, there is a need for anti-trust control over the distribution of rights to use scanty natural resources, primarily various types of lands and subsoil reserves. If concentrated in the hands of a few, the rights to use land and to recover natural reserves will adversely affect commodity markets, the FAS official warned. So far, however, Russia has instruments to deal with that concentration, he acknowledged.
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