Russian Antimonopoly Law: Legal Protection Against Market Entry and Exit Barriers

 

February 28, 2025

BRACE Law Firm ©

 

Monopolistic companies, retail chains, and simply large companies can exert a significant influence on the economic activities of other market participants. At the same time, they often begin to abuse their market power for the sake of their own commercial interests, which negatively affects competition. To suppress unfair behavior, the legislation provides for a number of antimonopoly prohibitions, including a prohibition on creating obstacles for access to a commodity market or exit from it for other economic entities.

In this article, based on examples from practice, we will consider which companies are obliged to comply with this prohibition, how to identify a violation, as well as methods of protection against actions that restrict competition.

Which Norms of Law Establish the Prohibition on Market Access?

The antimonopoly prohibition on creating obstacles to access to a commodity market or exit from a commodity market for other economic entities (the "Prohibition") is established in several norms of Russian legislation:

• in Articles 10 and 11 of Federal Law No. 135-FZ dated July 26, 2006, On Protection of Competition (the "Law on Protection of Competition", the "135-FZ");
• in Article 13 of Federal Law No. 381-FZ dated December 28, 2009, On the Fundamentals of State Regulation of Trading Activities in the Russian Federation (the "Law on Trade", the "381-FZ").

Note that the legal construction of the prohibition in these norms is identical; however, the scope of its application and the categories of economic entities to which it applies differ. Below we will consider the procedure for applying this prohibition.

Prohibition on Creating Obstacles for Market Access by Entities Occupying a Dominant Position

In accordance with Part 1 of Article 10 of the Law on Protection of Competition, actions (inaction) of an economic entity occupying a dominant position are prohibited, if the result of which are or may be the prevention, restriction, or elimination of competition and (or) infringement of the interests of other economic entities in the sphere of entrepreneurial activity or an indefinite circle of consumers, including by creating obstacles to access to the commodity market or exit from the commodity market for other economic entities.

Thus, the prohibition established in Article 10 of the Law on Protection of Competition applies to economic entities occupying a dominant position in the commodity market.

However, the dominant position of an economic entity itself is not an object of prohibition. According to the Clarifications of the Presidium of FAS Russia dated June 7, 2017 No. 8 On the Application of the Provisions of Article 10 of the Law on Protection of Competition, for the actions of an economic entity to be recognized as a violation of the specified prohibition, the following set of interrelated signs must be present:

1. Dominant position of the economic entity. According to Part 1 of Article 5 of the Law on Protection of Competition, the position of an economic entity (group of persons), or several economic entities (groups of persons) on the market of a certain product is recognized as dominant, giving such an economic entity (group of persons) the opportunity to influence the general conditions of circulation of the product on the relevant commodity market and (or) eliminate other economic entities from this commodity market, and (or) impede access to this commodity market for other economic entities. As a general rule, the position of an economic entity whose share in the market of a certain product exceeds 50% is recognized as dominant. В In cases where the share of an economic entity in the product market is less than 50%, the presence of a dominant position is subject to proof by the antimonopoly authority using special criteria. More details on the recognition of a dominant position can be read in our special article.[1]
2. Commission of an action (inaction) by an economic entity to create obstacles to access to the commodity market or exit from the commodity market for other economic entities. As researchers on this topic indicate,[2] the creation of obstacles to access to the commodity market is mainly due to "non-admission" to the market of new participants, both sellers and buyers. Such actions also include the elimination of an economic entity from the market or creating obstacles to the sale of goods, works, and services.
3. The occurrence or possibility of occurrence of negative consequences in the form of prevention, restriction, elimination of competition and (or) infringement of the interests of other economic entities in the sphere of entrepreneurial activity, or an indefinite circle of consumers.
4. The presence of an objective relationship between the dominant position, the commission of the act and its negative consequences or the possibility of such consequences occurring.

Let us illustrate this with an example from judicial practice. Thus, in Case No. A40-252024/2022, the antimonopoly authority established that a joint-stock company, occupying a dominant position in the linoleum sales market, included in the commercial concession agreements with its distributors prohibitions on the sale of linoleum from other manufacturers. In the actions of this joint-stock company, a violation of Clause 9 of Part 1 of Article 10 of the Law on Protection of Competition was recognized, expressed in creating obstacles to market access for competitors. The antimonopoly authority issued an order to eliminate the violation, and also brought the joint-stock company to administrative liability under Part 2 of Article 14.31 of the CAO RF with the imposition of a fine in the amount of 286,857,227.57 rubles. It was not possible to challenge the acts of FAS Russia in court.[3]

Prohibition on Restricting Competition Agreements Creating Obstacles to Market Entry or Exit

According to Part 4 of Article 11 of the Law on Protection of Competition, agreements between economic entities are prohibited if it is established that such agreements lead or may lead to the restriction of competition.

Let us clarify that an agreement is understood as an arrangement in writing contained in a document or several documents, as well as an arrangement in oral form (Clause 18 of Article 4 of 135-FZ). Thus, an agreement in the sense of antimonopoly legislation can be recognized as an arrangement in any form, including oral. The conclusion of an anti-competitive agreement can be evidenced not only by written documents but also by other information contained in the documents of economic entities, as well as the actual behavior of economic entities.

The law classifies such agreements as, among others, agreements on creating obstacles for other economic entities to access to the commodity market or exit from the commodity market (Clause 3 of Part 4 of Article 11 of the Law on Protection of Competition).

To establish the fact of a violation of concluding an anti-competitive agreement that violates the antimonopoly prohibition under consideration, the antimonopoly authority must prove a set of circumstances:

• the fact of the achievement (conclusion) by economic entities of an agreement creating obstacles to access to the market for other economic entities;
• the occurrence or possibility of occurrence of negative consequences in the form of restricted competition;
• a causal relationship between the conclusion of the agreement and the negative consequences.

Let us illustrate this with the example of Case No. A40-234236/2020. [4] In this case, during an off-site inspection, the antimonopoly authority identified long-term agreements concluded between the Company and four cable plants containing obligations of the plants to purchase a guaranteed volume of optical fiber from the Company. The antimonopoly authority decided that an agreement guaranteeing the purchase of a significant volume of goods during a long-term period exclusively for one manufacturer is a barrier to entry into the market for other economic entities. In the actions of the persons who concluded this agreement, a violation of Clause 3 of Part 4 of Article 11 of the Law on Competition was recognized. Attempts to challenge the decision and order of FAS Russia on the grounds that the cable is used for connecting socially significant objects and, therefore, must be made from fiber produced in the territory of the Russian Federation, were not successful.

As anti-competitive agreements creating barriers for entering the market, antimonopoly authorities also recognized agreements on the inclusion of additional objects in previously concluded contracts, not previously provided for by competitive procedures;[5] on extending the duration of contracts in the absence of legal grounds and without conducting competitive procedures.[6]

Prohibition on Creating Obstacles for Access to the Commodity Market of Food Products

According to Part 1 of Article 13 of the Law on Trade, economic entities engaged in trading activities for the sale of food products through the organization of a retail chain, and economic entities engaged in supplies of food products to retail chains, are prohibited from creating obstacles for access to the commodity market or exit from the commodity market for other economic entities.

Thus, the prohibition established in the Law on Trade applies to a special category of subjects – Retail Chains, which are understood as a set of two or more trade objects that belong on a legal basis to an economic entity or several economic entities belonging to one group of persons, or a set of two or more trade objects that are used under a single commercial designation or other means of individualization (Clause 8 of Article 2 of the Law on Trade), as well as economic entities engaged in the supply of food products to such retail chains.

The introduction of such a prohibition into a special law, in the opinion of a number of researchers on this topic, [7] was due to the fact that none of the retail chains occupies the share necessary for its recognition as a subject occupying a dominant position. At the same time, federal retail chains have the opportunity to exert a significant influence on the state of the competitive environment and possess a certain market power.

As circumstances creating obstacles to market access, antimonopoly authorities regarded the unreasonable rejection of a commercial proposal, evasion of concluding a contract, failure to provide information about the conditions for selecting counterparties and about the essential conditions of supply contracts.

Let us illustrate this with an example from judicial practice. Thus, in Case No. A65-37234/2019, [8] for two years, the Company unreasonably rejected the commercial proposals of the Dairy Plant to include its products in the assortment matrix of the retail chain, referring to too high prices and packaging that did not correspond to consumer demand. At the same time, the Company accepted similar commercial proposals from other economic entities supplying similar food products. During the consideration of the case by the antimonopoly authority, it was established that the prices for most of the products of the Dairy Plant were lower than the prices of other suppliers for similar products. The Company's argument that bright packaging increases customer demand was recognized as speculative and not confirmed by research. The UFAS recognized the creation of obstacles to access to the commodity market of dairy products in the Company's actions. It was not possible to challenge the UFAS decision in court.

In another Case No. A74-12347/2018, [9] the antimonopoly service qualified the unilateral establishment by a retail chain of unfavorable conditions for the sale of goods in its chain as actions to create obstacles to market access. The economic entity, being in a dependent position, unconditionally accepted the chain's conditions under threat of losing a significant distribution channel for its products. The UFAS recognized these actions as a violation of Clause 2 of Part 1 of Article 13 of the Law on Trade, and brought the Company to administrative liability with the imposition of an administrative fine in the amount of 2,000,000 rubles.

How to Defend Against Creation of Market Access Obstacles?

1. Application to the antimonopoly authority to suppress illegal actions (inaction).

In case of identification of barriers to entry into the market or exit from it, an interested person has the right to apply to the antimonopoly authority with an application about the presence in the actions of the economic entity of signs of violation of antimonopoly legislation. The application to FAS Russia must contain the following information:

• information about the applicant (last name, first name, patronymic and residential address for an individual, name and location for a legal entity);
• information about the person against whom the application is filed;
• description of the violation of antimonopoly legislation;
• the essence of the requirements with which the applicant is applying.

Documents evidencing the signs of violation of antimonopoly legislation are attached to the application. In case of impossibility to provide documents, the reason for the impossibility of their provision is indicated, as well as the expected person or authority from whom the documents can be obtained.

In the presence of signs of a violation of the prohibition, the antimonopoly authority initiates a case of violation of antimonopoly legislation (Part 1 of Article 39 of the Law on Protection of Competition). If a violation of the prohibition is confirmed during the consideration of the case, the commission of the antimonopoly authority will issue a relevant decision and an order to eliminate the violation. The order is subject to mandatory execution.

Thus, in Case No. A40-70134/2020-147-508, Company S. applied to FAS Russia with an application about the presence in the actions of Company Kh. of signs of violation of antimonopoly legislation, expressed in creating obstacles to market access. Based on the results of consideration of the specified application, the antimonopoly authority established that Company Kh. provides its website to ensure information interaction of applicants, employers, and recruitment agencies. At the same time, the rules of the website established a prohibition for users to use third-party software for automated personnel selection, and for violation of this requirement, users were blocked. The antimonopoly authority decided that these actions limited access to this service market for third-party software. An order was issued to consider the application of Company S., which distributes such software, for its registration in the interface of the website on non-discriminatory conditions.[10]

Note that the Law on Protection of Competition does not contain indications that an application to the antimonopoly authority is a mandatory condition before filing documents in court. At the same time, we recommend initially using the administrative method of protecting your rights, since a positive decision will facilitate the process of proof and ensure the support of the antimonopoly authority in court.

2. Bringing to administrative liability.

If during the consideration of the case on violation of antimonopoly legislation the UFAS identifies circumstances evidencing the presence of an administrative offense, the antimonopoly authority also initiates an administrative offense case (Part 5 of Article 39 of the Law on Protection of Competition).

Liability for creating obstacles to market access by a person occupying a dominant position is provided for by Part 2 of Article 14.31 of the CAO RF and entails the imposition of an administrative fine on officials from 20,000 to 50,000 rubles or disqualification for a period of up to 3 years. For legal entities, turnover fines are provided for from the amount of proceeds from the sale of a product, work, service (the "Proceeds") or from the amount of expenses for the purchase of a product, works or services (the "Expenses"):

• in the range from 1/100 to 15/100 of the amount of Proceeds or the amount of Expenses, but not more than 1/50 of the aggregate amount of Proceeds from the sale of all GWS and not less than 100,000 rubles;
• in the range from 3/1000 to 3/100 of the amount of Proceeds or the amount of Expenses, but not more than 1/50 of the aggregate amount of Proceeds from the sale of all GWS and not less than 100,000 rubles – if the amount of Proceeds or the amount of Expenses of the offender exceeds 75% of the size of all aggregate Proceeds or the violation occurred in the market of a product sold at regulated prices.

When assigning punishment, a number of features are taken into account:

• In addition to those established by the general part of the CAO RF, aggravating circumstances are taken into account: – commission of a continuing administrative offense with a duration of more than 1 year, causing damage in an amount of more than 1,000,000 rubles or extracting income as a result of the offense in an amount of more than 5,000,000 rubles; – repeated commission of an administrative offense provided for by Part 7 of Article 19.8 of this Code "Failure to submit or untimely submission to the antimonopoly authority upon their request of information (data) necessary for calculating the amount of an administrative fine".
• In the absence of mitigating and aggravating circumstances, the fine is imposed in the amount of the sum of the minimum amount and 1/2 of the difference between the maximum and minimum amount of the fine.
• Replacement of a fine with a warning and an unjustified reduction of the fine is not allowed.

Let us illustrate this with the example of Case No. A40-58747/2022. The Company carried out activities as a regional operator for solid municipal waste (the "SMW"). By virtue of the delegated powers, the regional operator was obliged to conduct auctions to form prices for services for the collection and transportation of waste and to conclude contracts with SMW operators. The antimonopoly authority revealed that the auctions did not take place and the regional operator concluded a contract with a single supplier on terms that differed from the auction documentation. In the actions of the Company, an abuse of a dominant position was recognized, expressed in creating obstacles to market access for economic entities carrying out their activities in the field of SMW transportation. By a decree of the antimonopoly authority, the Company was brought to administrative liability under Part 2 of Article 14.31 of the CAO RF with the appointment of a fine in the amount of 10,121,465.51 rubles.[11]

The Company tried to challenge the amount of the fine in court, referring to the commission of an administrative offense for the first time. The courts indicated that this does not affect the degree of guilt of the offender and the degree of public danger, and is not named in the law as a mitigating circumstance. The decree of the antimonopoly authority on bringing to administrative liability was left in force.

Liability for concluding an anti-competitive agreement is provided for by Part 4 of Article 14.32 of the CAO RF and entails the imposition of an administrative fine on officials in the amount of 15,000 to 40,000 rubles. For legal entities, as in the case of persons occupying a dominant position, turnover fines are provided:

• in the range from 1/100 to 5/100 of the amount of Proceeds or the amount of Expenses, but not less than 100,000 rubles;
• in the range from 2/1000 to 2/100 of the amount of Proceeds or the amount of Expenses, but not more than 1/50 of the aggregate amount of Proceeds from the sale of all GWS and not less than 50,000 rubles – if the amount of Proceeds or the amount of Expenses of the offender exceeds 75% of the size of all aggregate Proceeds or the violation occurred in the market of goods sold at prices regulated in prices.

Thus, in Case No. A60-27425/2019, the antimonopoly authority established that the Institution, being an economic entity with a significant share in the market for immunoglobulin against tick-borne encephalitis in the territory of the RF, sells this medicinal product predominantly to one Company with the provision of discounts in the amount of 30%. The UFAS recognized in the actions of the Institution and the Company a violation of Clause 3 of Part 4 of Article 11 of the Law on Protection of Competition, expressed in concluding an anti-competitive agreement that led to the Company obtaining advantages when participating in procurement procedures and creating obstacles to market access for competing economic entities. By a decree of the antimonopoly authority, the Institution was brought to administrative liability under Part 4 of Article 14.32 of the CAO RF in the form of the imposition of a turnover fine in the amount of 4,852,936.99 rubles.[12]

The Institution challenged the decree in court, referring to the fact that the provision of a discount to the Company was related to the volume of previous supplies, which is incomparable with the volumes of other economic entities, and does not evidence the creation of obstacles for other competitors to enter the market. The courts refused to cancel the decree on bringing to administrative liability, since similar conditions on the provision of discounts were absent in contracts with other counterparties. However, the amount of the fine was reduced to 2,426,468 rubles taking into account the property status of the Institution.

Liability for violation of prohibitions when carrying out trading activities is provided for by Part 2 of Article 14.40 of the CAO RF and entails the imposition of an administrative fine on officials in the amount of 20,000 to 40,000 rubles, on legal entities – from 2,000,000 to 5,000,000 rubles.

Thus, in Case No. A74-12347/2018, the antimonopoly authority, as part of the monitoring, revealed that on the official website of the retail chain, information about the conditions for selecting counterparties for concluding a contract for the supply of food products is not in the public domain. To gain access to the information, it was required to send a request and receive a password for viewing the corresponding page. By the decision of the UFAS, the Company was recognized as having violated Article 13 of the Law on Trade, and an order was issued to eliminate the violations. Also, the Company was brought to administrative liability under Part 2 of Article 14.40 of the CAO RF with the imposition of a fine of 2,000,000 rubles. The Company tried to challenge the decree in court, referring to the elimination of the violation before being brought to administrative liability, as well as the need to protect information from unauthorized access. The courts indicated that the specified information must be available to any economic entities at any time without restrictions. Non-fulfillment by the Company of the specified obligation creates obstacles for access to the commodity market. The Company's complaint was left without satisfaction.[13]

3. Civil Law Methods of Protection when Creating Obstacles to Market Access.

In accordance with Part 3 of Article 37 of the Law on Protection of Competition, persons whose rights and interests are violated as a result of a violation of antimonopoly legislation are entitled to apply to the court in the prescribed manner with claims, including claims for compensation for damages.

Under damages, by virtue of Article 15 of the Civil Code, are understood:

• expenses that the person whose right is violated has made or will have to make to restore the violated right, loss or damage of his property (Actual Damage);
• unreceived income that this person would have received under normal conditions of civil circulation if his right had not been violated (Lost Profits).

To recover damages, it will be necessary to prove in aggregate:

• a wrongful action (inaction) of the economic entity;
• the presence and size of the damages caused;
• a causal relationship between the wrongful actions (inaction) of the economic entity and the occurrence of damages.

Although disputes on the recovery of lost profits are traditionally considered difficult to prove, as the analysis of law enforcement practice shows, there are successful cases. Thus, in Case No. A19-1649/2019, the plaintiff concluded contracts for the supply of in-flight meals and drinks with airlines carrying out flight activities from the airport. For two years, in accordance with the concluded contract, the plaintiff received income from these services. In the third year, the Airport stopped allowing vehicles used for the delivery of in-flight meals to aircraft parking areas. As a result, the plaintiff was deprived of the opportunity to sell in-flight meals to airlines, and did not receive income that it could have received under normal conditions. The antimonopoly authority recognized in the actions of the Airport a violation of Clause 9 of Part 1 of Article 10 of the Law on Protection of Competition, and issued an order to stop the illegal actions.[14]

Subsequently, the plaintiff applied to the court with a requirement for compensation for lost profits in the amount of 11,482,475 rubles. The court excluded from the calculation of lost profits the costs for the depreciation of fixed assets in the amount of 150,000 rubles, and satisfied the claim in the remaining part.

Summing up the results, we note that the norms of antimonopoly legislation are not devoid of shortcomings, such as the lack of clear criteria that allow for distinguishing the creation of obstacles from other prohibitions. We also think it is appropriate to include the prohibition on creating obstacles to access to the market by retail chains in the Law on Protection of Competition, as well as the unification of liability measures applied to them.

At the same time, it is worth positively evaluating the establishment in Russian legislation of the prohibition on creating obstacles to access to the commodity market or exit from the commodity market as a measure aimed at preventing the restriction of competition. At the same time, the economic entity has a fairly wide arsenal of ways to protect against the abuses of "strong market players" and, with the involvement of competent specialists, has good chances of success.

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References

[1] See more details: https://brace-lf.com/informaciya/konkurentnoe/monopolisticheskaya-deyatel-nost-kak-zashchitit-sya-ot-monopolista.

[2] Competition Law: Textbook (under the general editorship of M.A. Egorova, A.Yu. Kineva) // "Yustitsinform", 2018.

[3] Ruling of the Supreme Court of the RF dated November 27, 2024 No. 305-ES24-17210 in Case No. A40-252024/2022.

[4] Ruling of the Supreme Court of the RF dated June 1, 2023 No. 305-ES22-3480 in Cases No. A40-234236/2020, A40-248016/2020, A40-244800/2020.

[5] Ruling of the Supreme Court of the RF dated May 11, 2022 No. 306-ES22-6016 in Case No. A65-20772/2020.

[6] Ruling of the Supreme Court of the RF dated August 6, 2021 No. 302-ES21-13508 in Case No. A33-14789/2020.

[7] Varlamova A.N. Competition Law and Sectoral Commodity Markets: the Food Products Market // Competition Law, 2019, No. 4.

[8] Resolution of the Arbitration Court of the Volga District dated March 5, 2021 No. F06-721/2021 in Case No. A65-37234/2019.

[9] Resolution of the Tenth Arbitration Appellate Court dated October 7, 2019 No. 10AP-17627/2019.

[10] Ruling of the Supreme Court of the RF dated April 18, 2022 No. 305-ES22-4140 in Case No. A40-70134/2020.

[11] Ruling of the Supreme Court of the RF dated May 24, 2023 No. 305-ES23-6681 in Case No. A40-58747/2022.

[12] Ruling of the Supreme Court of the RF dated January 20, 2021 No. 309-ES20-11566 in Case No. A60-27425/2019.

[13] Ruling of the Supreme Court of the RF dated July 5, 2019 No. 302-ES19-10259 in Case No. A74-12347/2018.

[14] Resolution of the Arbitration Court of the East Siberian District dated December 1, 2020 No. F02-5881/2020 in Case No. A19-1649/2019.