Departmental Appeal of FAS Russia Decisions: A Comprehensive Legal Guide

 

February 27, 2022

BRACE Law Firm ©

 

Parties may appeal acts issued by antimonopoly authorities through both judicial and out-of-court procedures, specifically by filing a complaint via the FAS Russia departmental appeal process. Federal Law No. 135-FZ dated July 26, 2006, On Protection of Competition (the "Law No. 135-FZ", the "Law on Protection of Competition") governs the procedure for filing and considering such complaints. Part 4 of Article 23 of the Law No. 135-FZ establishes the powers of the collegial body of the Federal Antimonopoly Service (the "Collegial Body", the "FAS Collegial Body") to review the acts of antimonopoly authorities.

Interested parties may use the out-of-court (administrative) appeal procedure regarding decisions and (or) orders of FAS Russia territorial departments issued in cases involving violations of antimonopoly legislation.

Departmental appeals involve several significant features that influence the outcome of a challenge. When choosing the departmental appeal as a method of protection, one must keep in mind that filing a complaint with the FAS Collegial Body does not exclude the applicant's right to a judicial appeal of the antimonopoly authority's acts. [1] In this regard, the applicant may choose the administrative and judicial methods of protecting their rights simultaneously or select only one. Compliance with a preliminary claim procedure is not required to petition the court. [2] Furthermore, an administrative appeal does not stay the statutory deadlines for judicial appeals.

What is a Departmental Appeal?

Within the framework of a departmental appeal, FAS Russia reviews the decisions and (or) orders of FAS Russia territorial departments if such decisions and (or) orders violate the uniformity of the application of antimonopoly legislation by territorial antimonopoly authorities. The right of an applicant to file complaints against the acts of territorial antimonopoly authorities with the FAS Collegial Body constitutes a departmental appeal.

This means that review is possible only if the act of the territorial antimonopoly authority violates the uniformity of the application of antimonopoly legislation. If, during a departmental appeal, FAS reviews a territorial body's decision without stating the motives regarding the violation of uniformity in the application of antimonopoly legislation, an arbitration court may vacate the corresponding departmental appeal decision. [3]

Which Acts of Antimonopoly Authorities May Be Appealed via Departmental Appeal?

Persons who participated in a case involving a violation of antimonopoly legislation may submit a complaint to the FAS Russia central apparatus against a decision and (or) order of a territorial antimonopoly authority that violates the uniformity of the application of antimonopoly norms within one month from the date the decision was adopted or the order was issued.

Part 6 of Article 23 of the Law on Protection of Competition defines the scope of acts subject to challenge via departmental appeal. Limiting the possibility of appeal to only decisions and orders means that other acts of the antimonopoly authority are not subject to appeal through this procedure.

Decisions to terminate the consideration of cases involving violations of antimonopoly legislation may also be appealed. [4] However, decisions refusing to initiate a case regarding a violation of antimonopoly legislation are not subject to challenge in this manner. [5]

A territorial antimonopoly authority's decision to refuse to initiate a case is rightfully excluded from the category of decisions subject to administrative appeal, as current legislation does not grant the Service the power to re-evaluate the evidence upon which such a decision was based. Thus, only decisions and orders of territorial antimonopoly authorities issued following a consideration of the case on its merits may be challenged administratively. The FAS Collegial Body cannot review decisions and orders adopted by territorial departments of FAS Russia under the procedure of Articles 18.1 and 33 of the Law No. 135-FZ, or in cases involving violations of advertising legislation, Federal Law No. 44-FZ dated April 5, 2013, On the Contract System in the Sphere of Procurement of Goods, Works, and Services for Ensuring State and Municipal Needs, and Federal Law No. 223-FZ dated July 18, 2011, On Procurement of Goods, Works, and Services by Separate Types of Legal Entities. [6]

Additionally, legislation provides for the appeal to the FAS Collegial Body of only those decisions and orders issued by territorial antimonopoly authorities. Decisions and orders of the FAS Russia central apparatus, as well as the collegial bodies of the FAS Russia central apparatus, cannot be appealed through this procedure.

The FAS Collegial Body

The Procedure for the Work of the Collegial Bodies of the Federal Antimonopoly Service regulates the activity of the collegial body.[7]. While the specified Procedure does not define the actual process for forming the collegial body, the Head of FAS Russia approves the composition of the body.

The structure of the FAS Collegial Body includes:

1. The Chairman of the Collegial Body, who is the Head of FAS Russia or one of their deputies. The Chairman manages the work of the collegial body, presides over its meetings, ensures conditions for a full and comprehensive consideration of the issues raised, distributes duties among the members of the collegial body, and appoints the secretary of the collegial body.
2. Members of the Collegial Body. The numerical composition of the FAS Collegial Body is not fixed. However, the FAS Collegial Body is competent to adopt decisions if at least half of its members are present. The collegial body adopts decisions by a majority vote of the members present at the meeting. In the event of a tie, the Chairman's vote is casting.
3. The Secretary of the Collegial Body.
4. Additional Members of the Collegial Body, who are appointed to replace core members in the event of their absence.

The quorum of the collegial body is determined based on the number of core members. Consequently, the composition of the collegial body is competent if half of the core members are present, without taking additional members into account.[8].

Complaints may be considered by the FAS Appeals Board or the FAS Presidium.[9]. However, regulatory acts do not contain clear criteria for distinguishing the consideration of complaints between these FAS Russia divisions.

The Appeals Board may consider the necessity of transferring a specific complaint to the FAS Presidium. The Chairman of the FAS Presidium makes the final decision on considering a complaint at the FAS Presidium in accordance with Clause 8 of the Procedure for the Work of Collegial Bodies of the Federal Antimonopoly Service, approved by FAS Russia Order No. 422/16 dated April 7, 2016.

The Law does not prevent persons participating in a case from petitioning for the complaint to be considered directly by the FAS Presidium. Such a petition may be included in the text of the complaint itself or drafted as a separate document. A petition to have the FAS Presidium considers the complaint may be filed at any stage of the complaint's consideration up until the moment the FAS Russia Appeals Board issues a decision.

Grounds for Reviewing Acts of FAS Territorial Authorities

The Law No. 135-FZ provides a fairly general formulation defining the grounds for reviewing decisions and orders of territorial antimonopoly authorities via departmental appeal, namely: violation of uniformity in the application of antimonopoly legislation norms by antimonopoly authorities.

To determine what constitutes a violation of uniformity in the application of antimonopoly legislation, one must refer to acts containing legal application practice, specifically:

• Clarifications of the FAS Russia Presidium;
• Clarifications of FAS Russia;
• Reviews of the practice of applying antimonopoly legislation by FAS Russia collegial bodies, approved by the FAS Russia Presidium. [10]
• Decisions in specific cases, including those issued by the FAS Collegial Body.
• Judicial practice on specific issues.

If the conclusions of an antimonopoly authority in a decision and (or) order contradict the clarifications of FAS Russia and (or) the FAS Russia Presidium, the decision may be recognized as violating the uniformity of the application of antimonopoly legislation. [11]

A violation of uniformity in practice may concern both substantive and procedural issues.[12]. For example, in a specific case, it was established that the subject of review for territorial body decisions defined by Article 23 of the Law on Protection of Competition — compliance with the uniformity of antimonopoly law application — does not exempt FAS Russia from the duty to check the antimonopoly authority's decision for compliance with mandatory procedural requirements established by current legislation. [13]

As the arbitration court indicated, a territorial FAS decision appealed by the applicants to FAS Russia was not signed by the commission chairman. This constitutes an absolute ground for declaring it illegal and excludes the legitimacy of the respondent's conclusion that the decision does not violate the uniformity of antimonopoly law application, since the decision-making procedure established by antimonopoly legislation obviously falls within the scope of issues to be verified when considering a complaint against a territorial antimonopoly authority's decision.

The collegial body has the right not to consider an incoming complaint if it lacks an indication of a violation of uniform application in the territorial body's consideration of cases.

Violation of Uniformity in the Application of Antitrust Legislation

Since justifying a violation of uniformity requires citing relevant examples of established practice, the most significant evidence of a violation is a reference to the reviews of antimonopoly law application practice by FAS Russia collegial bodies, which are approved by the FAS Presidium and released periodically. These reviews contain an analysis of the practice applied, regarding both procedural points and substantive application of the law.

Consider some examples:

• The lack of authority of a territorial body to consider a case involving a violation of antimonopoly legislation committed on the territory of several constituent entities of the Russian Federation is a ground for vacating the acts issued in the case. [14] Judicial practice supports the conclusions of the collegial body. [15]
• An antimonopoly authority is not permitted to initiate and consider a case regarding a violation of antimonopoly legislation for signs of violations that require the mandatory issuance of a warning without first issuing such a warning.[16]. The failure of an antimonopoly authority to issue a warning when a person's actions show signs of violations defined in Article 39.1 of the Law on Protection of Competition renders the case consideration procedure and the resulting decision illegal.
• If the conclusions of an antimonopoly authority in a decision and (or) order contradict the clarifications of FAS Russia and (or) the FAS Russia Presidium, the decision may be recognized as violating the uniformity of the application of antimonopoly legislation. [17]
• An incomplete investigation by a territorial body of the circumstances of a case and the evidence indicating signs of a violation of antimonopoly legislation may serve as a ground for vacating the adopted decision. [18]
• Actions by an economic entity holding a dominant position that create obstacles to the entrepreneurial activities of other economic entities in a related product market—where the dominant economic entity also operates and gains advantages as a result of such actions—may be recognized as an abuse of a dominant position. [19]
• The fact that competitors have set identical prices for a product (work, service) cannot, in itself and without an analysis of other circumstances, prove the existence of an anticompetitive agreement. [20]
• A conflict of interest between a customer and a supplier during single-source procurement, combined with other evidence, may indicate the conclusion of an anticompetitive agreement between them. [21]
• Drafting auction documentation with the goal of ensuring victory for only one person who began work before the contract was concluded based on the auction results restricts access for other economic entities to perform such work and may indicate an anticompetitive agreement between the customer and the contractor in violation of Clause 4 of Article 16 of the Law on Protection of Competition. [22]

Complaint Consideration Procedure

The deadline for filing a complaint is one month from the date the territorial FAS decision and (or) order being appealed was issued. A missed deadline for filing a complaint may be restored if valid reasons exist. [23]

It should be noted that the aforementioned clarifications regarding the possibility of restoring a deadline will significantly change the practice of deadline restoration, as the antimonopoly authority's position was previously based on the absence of legal grounds for restoring a filing deadline to the collegial body. [24]

Any person participating in the consideration of a case involving a violation of antimonopoly legislation in a territorial FAS office may file a complaint via the departmental appeal process. At the same time, the practice of FAS Russia collegial bodies recognizes the right to file a complaint for a person who applied to the territorial antimonopoly authority regarding a violation but was unlawfully excluded from participating in the case. [25]

In one case, the FAS Collegial Body concluded that the failure to involve the person who filed the application—which served as the basis for initiating the case — as a complainant contradicts Articles 42 and 44 of the Law on Protection of Competition, violates that person's rights and interests, and leads to a violation of uniformity in the application of antimonopoly legislation. Accordingly, in this position, the failure to involve the applicant in the case could not prevent them from appealing the decision adopted in the case via the appeals process. [26]

Persons entitled to participate in the meeting of the collegial body include:

• Persons who participated in the case involving a violation of antimonopoly legislation;
• Representatives of the territorial FAS office;
• Various specialists may be involved to provide opinions and consultations.

However, the Law No. 135-FZ contains no direct indication of the possibility of expert participation.

The Complaint Consideration Procedure Involves Studying and Investigating Case Materials and Discussing Issues Subject to the Complaint

The results of discussions on issues considered by the collegial body are recorded in a minutes (the "Protocol"), and in the case of a review of a decision and (or) order of a territorial antimonopoly authority — in a decision of the FAS Collegial Body, both of which are signed by the chairman of the collegial body. [27]

When reviewing an antimonopoly authority's decision and (or) order, the FAS Collegial Body may take into account independent opinions on issues related to the subject of consideration.

To ensure a comprehensive consideration of complaints, FAS Russia Collegial Bodies may study independent opinions on matters related to the case. The purpose of such opinions is, in particular, to provide the collegial body with additional information on approaches applicable to the case, the practice of antimonopoly authorities and judicial practice, doctrinal developments, and international enforcement practice.

During the consideration of complaints, independent experts may express a position on whether the uniformity of antimonopoly law application was observed or violated in the consideration of a specific case.

The opinion of independent experts is reflected in the decisions of the FAS Russia Presidium or Appeals Board regarding the review of a territorial antimonopoly authority's decision and (or) order. Together with this, expert opinions are not binding on the FAS Collegial Body.

As a general rule, the submission of new evidence during the consideration of a complaint by the collegial body is not provided for. [28]

At the same time, if any evidence was submitted to the materials of the antimonopoly case but was not investigated and evaluated by the commission of the territorial antimonopoly authority, this does not prevent persons participating in the case from citing such evidence when filing a complaint with the FAS Collegial Body.

The collegial body adopts a decision on the complaint within two months from the date of its receipt. This period may be extended if a need arises for an additional investigation of documents (information) necessary to consider the complaint, but for no more than one month.

Based on the results of the complaint consideration, the collegial body may:

1. Leave the complaint unsatisfied;
2. Vacate the decision and (or) order of the territorial antimonopoly authority;
3. Amend the decision and (or) order of the territorial antimonopoly authority;
4. Remand the case for new consideration. [29]

Although the Law No. 135-FZ does not explicitly state the power of the FAS Collegial Body to remand a case for new consideration, this possibility is based on legal norms.

The Law on Protection of Competition grants the collegial body the right to vacate a decision and (or) order of a territorial antimonopoly authority. Based on the practice of collegial bodies, the ground for such a vacatur may be a conclusion on the necessity of continuing the case consideration due to, for example: unlawful termination of proceedings, incorrect qualification of the respondent's (respondents') acts, or an incomplete investigation by the territorial FAS office of the circumstances and evidence. [30]

Moreover, Part 10 of Article 23 of the Law on Protection of Competition does not state that vacating a territorial antimonopoly authority's decision exclusively entails the adoption of a final decision by the collegial body, nor does it prohibit remanding the case for new consideration to the territorial FAS Russia office. Other norms of the Law on Protection of Competition also contain no such prohibition.

Any other interpretation of the Law on Protection of Competition would unreasonably complicate the protection of the legal interests of persons filing complaints and the maintenance of legality and uniform practice, which would essentially render the institution of intra-departmental appeal meaningless for interested parties.

Legislation does not provide for the possibility of staying the execution of a territorial antimonopoly authority's order during its appeal to the FAS Collegial Body, including upon a petition by the complainant.

However, in the event of a judicial appeal in accordance with Part 2 of Article 52 of the Law on Protection of Competition, if an application to challenge an order is accepted for proceedings by an arbitration court, the execution of the antimonopoly authority's order is stayed until the date the arbitration court's decision enters into legal force.

In accordance with Part 1.1 of Article 52 of the Law No. 135-FZ, if a decision and (or) order of an antimonopoly authority are appealed to the collegial body of the federal antimonopoly authority, the acts adopted in the violation case may be challenged in an arbitration court within one month from the moment the FAS Collegial Body's decision enters into force.

The Law on Protection of Competition does not contain a specific indication of the date a collegial body's decision enters into force. It is possible to apply by analogy the clarification contained in Clause 10.1 of the Resolution of the Plenary Session of the Supreme Arbitration Court of the Russian Federation No. 30 dated June 30, 2008, On Certain Issues Arising in Connection with the Application of Antimonopoly Legislation by Arbitration Courts, according to which such a moment is the preparation of the decision in its full volume.

Accordingly, the FAS Collegial Body's decision on a complaint enters into force from the moment it is prepared in full, and the one-month period for challenging the acts adopted in the antimonopoly violation case in an arbitration court begins to run from that moment.

Appealing the decisions and (or) orders of territorial antimonopoly authorities to FAS Russia collegial bodies is becoming an increasingly popular tool for protecting the legal interests of participants in antimonopoly proceedings. This is unsurprising, as if a decision or order violates uniformity in the application of competition legislation, an appeal becomes a more prompt and economical method of legal protection.

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References

1. Clause 49 of the Resolution of the Plenary Session of the Supreme Court of the Russian Federation No. 2 dated March 4, 2021, On Certain Issues Arising in Connection with the Application of Antimonopoly Legislation by Courts.
2. Ibid, Clause 45.
3. Resolution of the Arbitration Court of the East Siberian District No. F02-5887/2020 dated December 16, 2020.
4. Decision of the FAS Russia Appeals Board dated June 9, 2016, on the complaint against the decision to terminate consideration of case No. 02-9/10-2015.
5. Resolution of the Arbitration Court of the Moscow District No. F05-20269/2021 dated September 30, 2021, in case No. A40-255843/2020.
6. Report of FAS Russia with a manual on compliance with mandatory requirements, providing a clarification on which behavior is lawful (approved by FAS Russia). The text of the document is provided in accordance with the publication as of January 19, 2018.
7. FAS Russia Order No. 422/16 dated April 7, 2016, On the Procedure for the Work of Collegial Bodies of the Federal Antimonopoly Service.
8. Resolution of the Arbitration Court of the North-Western District No. F07-11796/2021 dated September 29, 2021, in case No. A56-60290/2020.
9. Clause 19 of the review of the practice of applying antimonopoly legislation by FAS Russia collegial bodies (for the period from January 5, 2016, to July 1, 2018) (approved by the minutes of the FAS Russia Presidium No. 10 dated October 3, 2018).
10. For example, see the review of the practice of applying antimonopoly legislation by FAS Russia collegial bodies (for the period from January 5, 2016, to July 1, 2018) (approved by the minutes of the FAS Russia Presidium No. 10 dated October 3, 2018).
11. Ibid, Clause 12.
12. Ibid, Clause 13.
13. Resolution of the Ninth Arbitration Appellate Court dated May 4, 2018, in case No. A40-124857/2017.
14. Clause 25 of the review of the practice of applying antimonopoly legislation by FAS Russia collegial bodies (for the period from July 1, 2018, to July 1, 2019) (approved by the minutes of the FAS Russia Presidium).
15. Resolution of the Presidium of the Intellectual Property Court No. S01-2089/2021 dated January 27, 2022, in case No. SIP-199/2021.
16. Letter of FAS Russia No. IA/74666/15 dated December 24, 2015, On the Application of the "Fourth Antimonopoly Package".
17. Clause 12 of the review of the practice of applying antimonopoly legislation by FAS Russia collegial bodies (for the period from January 5, 2016, to July 1, 2018) (approved by the minutes of the FAS Russia Presidium No. 10 dated October 3, 2018).
18. Decision of the Appeals Board dated March 21, 2018, on the complaint against the decision in case No. 07-16-115/2017.
19. Clause 1 of the review of the practice of applying antimonopoly legislation by FAS Russia collegial bodies (for the period from July 1, 2019, to July 1, 2020) (approved by the minutes of the FAS Russia Presidium No. 1 dated February 16, 2021).
20. Decision of the FAS Russia Appeals Board dated September 18, 2019, in case No. 04-16/2019.
21. Decision of the FAS Russia Appeals Board dated October 8, 2019, in case No. 04-34/1-2019.
22. Decision of the FAS Russia Appeals Board dated March 24, 2020, in case No. 02-10/87-18.
23. Clause 49 of the Resolution of the Plenary Session of the Supreme Court of the Russian Federation No. 2 dated March 4, 2021, On Certain Issues Arising in Connection with the Application of Antimonopoly Legislation by Courts.
24. Report of FAS Russia with a manual on compliance with mandatory requirements, providing a clarification on which behavior is lawful. The text of the document is provided in accordance with the publication as of January 19, 2018.
25. Decision of the FAS Russia Appeals Board dated June 9, 2016, on the complaint against the termination of consideration of case No. 02-9/10-2015.
26. Resolution of the Arbitration Court of the Moscow District dated April 27, 2017, in case No. A40-145056/2016.
27. Clause 13 of FAS Russia Order No. 422/16 dated April 7, 2016, On the Procedure for the Work of Collegial Bodies of the Federal Antimonopoly Service.
28. Report of FAS Russia with a manual on compliance with mandatory requirements, providing a clarification on which behavior is lawful.
29. Clause 3 of the recommendation of the Scientific and Methodological Council of Educational Organizations and Chairs of Competition Law and Antimonopoly Regulation of FAS Russia on the topic: "Current Issues of Law Enforcement Practice" following the expanded meeting of November 20, 2019, within the framework of the V International Scientific and Practical Conference "Antimonopoly Policy: Science, Practice, Education" (approved by the minutes of the expanded meeting of the Scientific and Methodological Council of Educational Organizations and Chairs of Competition Law and Antimonopoly Regulation of FAS Russia dated November 20, 2019).
30. Decision of the FAS Russia Appeals Board No. SP/73927/17 dated October 26, 2017, decision of the FAS Russia Presidium No. 17-15-1/6 dated November 17, 2017.