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.