President of Russia Vladimir Putin: Let’s discuss the Service’s work in general. But before we start, you are probably aware of the meetings I have been having with business community representatives. They constantly raise the issue of excessive administrative pressure, and among other things, they propose giving business immunity in some cases from inspections by your Service.
I’m sure you are aware of my reaction. I have always been in favour of reducing administrative barriers. At the same time, however, I think that the state’s watchdog role, especially in market-related matters such as anti-monopoly monitoring, should take place on a regular basis and correspond to the level of our markets’ development and the level of our economic development, and should be in the interests of all economic actors. This, after all, is why we establish such services in the first place.
I would like to hear your views and proposals; perhaps you can reach some kind of compromise solution with the business community. Of course, we will also discuss the results of your work overall.
Head of the Federal Anti-Monopoly Service Igor Artemyev: Mr President, businesspeople usually express concern over the large number of inspections we make when we simply have no choice but to help our colleagues combat uncontrolled and unjustified increases in food prices, as was the case when the ruble devalued.
We took action then because we really had to stop this wave. It was a case of some businesses, the minority no doubt, but they were raising prices for goods without any justifiable grounds such as the exchange rate between the ruble and the dollar say, or between the ruble and any other global currency. The law states that if complaints come in, we have to check out the situation. Small and medium-sized businesses were involved in some cases, big businesses in others. There were various cases, but it is true that we did carry out many inspections in this area.
As far as our routine, everyday work is concerned, yes, we do carry out checks involving small businesses, but here, we need to look at the circumstances. Most of these cases happen when you have a natural monopoly in a small village. A water-pump station say, that’s a natural monopoly, or an electricity grid that will not connect a local business such as a little shop or grocery to the electricity supply, or asks for an absurdly high sum for the privilege. We step in to check in such cases.
What is very important though, is that, following your anti-crisis instructions, we received a clear indication that we should give small businesses immunity from our inspections and simply exempt them from our oversight. A draft law to this effect has been drawn up.
The draft law’s provisions would exempt small and medium-sized businesses with annual revenue of less than 400 million rubles, with the exception of holdings and natural monopolies, from all of our inspections and from any accusations of abuse of dominant position on the market. We would simply leave these businesses alone. In this sense, I think this draft law will be positive for us too.
We will take the same approach with retail businesses. After all, it is the big retail chains that we need to check, not the little local shops. Therefore, small shops that earn less than 400 million rubles will also be exempted from our inspections. We fully support this measure. The Government has even named me to be its official representative in the State Duma while this draft law is under examination.
This will free us up from small tasks too and enable us to concentrate our not-so-large resources on the large companies, to which the bulk of regulation should apply in any case.
Vladimir Putin: Good. What other matters would you like to discuss?
Igor Artemyev: Mr President, I want to note that the Service is marking its 25th anniversary this year. Many new services were established in the 1990s, mostly regulators, but what is interesting is that anti-monopoly traditions actually go back a long way in Russia. I prepared some information on the subject and would like to show it you now. Here, for example, during the reign of Nicholas I, in 1845, merchants colluded with each other during tenders to supply state needs, and this was what we refer to as a ‘cartel agreement’. This exact term was perhaps not used back then, but the fact of collusion was there, and offenders in cases such as this were punished with 4–8 months in prison or a large fine. This law was enforced too. I do not know why the common view has it that the history of anti-monopoly regulation begins in 1890, when the Americans passed the Sherman Act. As it turns out, our forebears were just as concerned about such things and started addressing the issue even a little earlier.
As far as our results go, we are using the current Key Performance Indicators (KPI) to evaluate our work over these 25 years. The Government, acting on your instruction, put quite some thought into how best to assess our performance. After all, the number of inspections or the amount of fines collected is not the best measure. Court decisions provide an external and independent measure. Today, the courts overturn slightly more than 16 percent of our decisions when they are challenged. This is a normal situation and it shows that not everything is decided from the outset, and though some businesspeople like to talk about the weight of the administrative resources in the authorities’ hands, the fact that businesses can prove they were in the right shows that no resource is as all-powerful as people might claim. This is the main measure for assessing how effectively we are carrying out our duties.
On the global scale, we are in 17th place out of 140 countries for the third year in a row. All countries have recognised our new, modern anti-monopoly law. Out of the 140 countries involved, we have been included in the group of ten countries that sets the global anti-monopoly agenda, and our representative was appointed deputy chairman of the working group on international cartels. This reflects the attitude towards Russia in this area.
This autumn, we will celebrate our 25th anniversary, and perhaps it would be possible to meet with you then, Mr President, to review the results and set new goals. We would be very grateful to you.
Vladimir Putin: Good.
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