Dmitry Medvedev: Let’s start with protecting competition in our economy. I have just recently signed two laws. One makes amendments to Article 178 of the Criminal Code, in particular, toughening the penalties for anti-monopoly violations and for obstructing competition. The second makes amendments to the Law on Protection of Competition. The objective in both cases, of course, is to help develop competition in our country. I would like to hear now your detailed assessment of what this will mean for the economy, what advantages are to be gained, and what businesspeople should keep in mind before taking this or that step aimed at obstructing competition.
Igor Artemyev: Thank you very much for signing these laws. We sensed your support during the drafting of these important pieces of legislation, and the administration’s support to get them passed.
Dmitry Medvedev: Speaking on a serious note, they did indeed meet with some resistance. Opinions diverged, at any rate, so I was told.
Igor Artemyev: But the primary goal of these laws that have been dubbed the second anti-monopoly package is to protect free enterprise from action on the part of bureaucrats that violates competition laws. Two thirds of the law’s provisions have to do with acts that restrict competition and put added barriers in its way. The state, in this particular case, in your person, in the person of the Government and the country’s highest legislative bodies, is giving this matter serious attention. State officials will lose their posts and face large fines if they try to obstruct the free flow of goods in the country. Recently, we have revealed cases of action by local authorities in 18 different regions to restrict movement of goods around Russia. This amounts to nothing less than economic separatism. There are also cases where companies are receiving preferential treatment. One company, for some reason, gets a budget subsidy, while its competitors get nothing. One company gets a preferential rental rate, while its neighbour and competitor gets no preferential treatment and ends up facing a difficult situation. These kinds of cases not only distort competition, thus affecting prices, but also have an effect on the anti-corruption programme, which you have signed, and which places priority importance on anti-monopoly legislation and the public procurement laws. Of course these two laws and the new amendments will help to make our work more effective.
Dmitry Medvedev: As you know, these are tough times. But even before, there was a fair measure of reluctance to comply with our competition and anti-monopoly laws. They are not in our traditions. These laws command respect in other countries, but not here. Now the situation has become even more complicated because in a number of cases, even at federal level, direct budget support is going to companies that are major employers for entire towns or cornerstone enterprises for particular sectors. There are various reasons for why these companies are receiving budget money, but of course it all looks as though one company is getting a handout, while another gets nothing. This in itself is not a good thing. We are taking such steps only because we face a crisis situation. This kind of measure should be only temporary in nature. Ultimately, the economy needs to become self-regulating, and the state’s job should only be to draw up and oversee compliance with the rules.
We face many problems at the moment and your agency needs to address them actively, keeping in mind, of course, that we face a situation at the moment where in some circumstances we have to help businesses overcome various difficulties, but businesses too, for their part, need to realise that they must behave responsibly, including in the area of competition. This explains why Article 178 of the Criminal Code sets severe penalties – up to six years imprisonment – for committing crimes aimed at obstructing competition. This is a precedent in our country. We never had anything like this before. Now, the investigating and enforcement authorities need to learn how to use these provisions properly, so that they are not turned into a means of persecuting those who get in the way or settling scores. And at the same time, businesspeople will need to think twice before committing such serious violations of criminal law. I hope that you will work together with the other agencies and with the government on this matter.
Igor Artemyev: I want to make it clear that the particular penalties set out in Article 178 of the Criminal Code concern price fixing deals and cartels. Various countries, Canada, for example, classify such action under their anti-fraud provisions. What I mean is, for example, when company bosses get together for no real reason and conclude an anti-competition agreement, form a cartel and double or triple prices, leaving ordinary people with nowhere else to go to buy goods with which they cannot do without, be it petrol, especially with our latitudes and temperatures that fall below 30 degrees, or, for example, essential medicines. Some companies are making use of just such schemes. We see examples of this. But in the past, the most we could do was fine an official 50,000 rubles, which is simply laughable…
Dmitry Medvedev: …This is precisely the point.
Igor Artemyev: …But now things will be very different.
Dmitry Medvedev: The thing is, such cases are hard to prove. Our investigation system has a fairly clear idea of how to investigate, say, theft of budget funds. In such cases it’s clear what you are trying to prove, what you need to do, what steps the investigation should take, and the procedures to be followed. But cartel deals are much more subtle, and you need to prove that the cartel exists, that there was deliberate intent to conclude such an agreement. Overall, these new laws provide a tough but complex instrument, and we now need to learn how to use it. I hope, however, that it will ultimately help to bring order and that not only the economy as a whole will benefit, but so will the people who really do suffer the effects of monopoly deals and cartels, whether they concern petrol, medicines or anything else.
Igor Artemyev: This is all indeed the case, of course. The state has begun paying attention to this matter not just by amending its criminal law provisions but also by passing the amendments to competition and anti-monopoly laws, and the Code of Administrative Offences, and as a result, according to UN data, Russia is now one of seven countries undertaking the most rapid reform of their anti-monopoly legislation in the world. These reforms, harmonised on the basis of FAS best practice, have put us, Russia as a whole that is, not our agency, in thirtieth place overall in the world rating. This is recognition, not so much of the FAS, but above all of Russia’s efforts as a country that has made great strides in this area over the last 3–4 years. It is with pleasure that I recall, in this respect, that you were responsible for overseeing the FAS when you were first deputy prime minister, and supervised the passing of the first package of anti-monopoly legislation. I want to thank you for this. What is also very important to note in all of these ratings that I have mentioned is that Russia has now gained recognition from all the leading countries as a country with modern anti-monopoly laws, and this is why we have been included on the International Competition Network’s Standing Committee, which brings together more than 140 agencies from around the world, represented by their directors. We have become one of 12 permanent members. This event took place this year.
Dmitry Medvedev: That is good news. It is certainly a good thing that we have modern laws in place now and have made a real quality improvement over these last years, made progress. This is clear to see. As you rightly pointed out, we have a modern legal framework in place, and now we need to learn how to use it. Other countries have already built up decades of experience in applying anti-monopoly laws. Some countries have well-known laws on their books in this area. I will not list them now. But in these countries too, all of this did not simply happen overnight. It is only with time that they built up their experience and judicial practice. We simply need to put our various laws and procedures together and teach business and our citizens to respect them.
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