Antitrust compliance

Currently, responsibility for violating the requirements of antitrust laws is becoming tougher. In addition to administrative liability, criminal liability measures have been introduced for violating Russian competition law.

Antitrust compliance

Antimonopoly compliance is a set of legal and organizational measures aimed at complying with the requirements of antimonopoly legislation and preventing its violation.

Unfortunately, currently there is a tendency to toughen the responsibility for violation of antimonopoly legislation. In addition to administrative liability in relation to a number of actions prohibited by Federal Law No. 135-FZ of July 26, 2006 “On Protection of Competition” (hereinafter – the “Law on Protection of Competition”), criminal liability measures have been introduced. At the same time, the introduction of antimonopoly compliance will reduce the risks of bringing to civil, administrative and criminal liability.

According to Article 9.1 of the Law on Protection of Competition, in order to comply with antimonopoly legislation and prevent its violation, an economic entity has the right to organize a “system of internal compliance with the requirements of antimonopoly legislation”. This system, despite the fact that the legislator does not use this term, is antimonopoly compliance.

To organize antimonopoly compliance, an economic entity adopts an internal act (internal acts) and (or) applies other internal acts, including another person from among persons belonging to the same group of persons with this economic entity, if such internal acts apply to this economic entity. These internal acts must contain:

  1. requirements for the procedure for assessing the risks of violating antimonopoly legislation;
  2. measures aimed at reducing the risk of violation of antitrust legislation by an economic entity;
  3. measures aimed at exercising control over the functioning of the internal system of ensuring compliance with the requirements of antimonopoly legislation by an economic entity;
  4. the procedure for familiarizing employees of an economic entity with an internal act (internal acts);
  5. information about the official responsible for the functioning of the antitrust compliance.

These requirements are not exhaustive and may include additional information at the discretion of the business entity.

Information on the adoption (application) of the internal act on antitrust compliance is posted by the company on its website in the Internet in Russian. At the same time, an economic entity has the right to send an internal act or draft act to the FAS Russia to establish their compliance with the requirements of antimonopoly legislation. In this case, the FAS Russia within 30 days is obliged to consider the submitted documents and give an opinion on their compliance or non-compliance with the requirements of the antimonopoly legislation.

This procedure was introduced relatively recently by Federal Law No. 33-FZ dated 01.03.2020 “On Amendments to the Federal Law “On Protection of Competition”. However, in connection with the rather active implementation of new legal norms in the field of antimonopoly legislation, the emergence of clarifications of their application, as well as the formation of diversified law enforcement practice for large and medium-sized businesses, it is becoming more and more difficult to comply with all legal norms and rules.

At the same time, very tough sanctions are envisaged for violation of the legislation on the protection of competition. For example, the most frequently committed and major offenses are cartel agreements, for which both administrative and criminal measures are currently applied.

Thus, the Code of Administrative Offenses of the Russian Federation contains Article 14.32, which provides for liability for the commission of offenses that restrict competition (conclusion of agreements). The minimum penalty provides for the imposition of an administrative fine on officials from 40,000 to 50,000 rubles or disqualification for a period of 1 to 3 years; for legal entities – from 3/100 to 15/100 of the amount of the offender’s proceeds from the sale of goods (work, services) on the market of which an administrative offense was committed, or the amount of the offender’s expenses on the procurement of goods (work, services) on the market of which the administrative offense was committed an administrative offense, but not less than 100,000 rubles.

Also, for restricting competition by concluding a competition-limiting agreement (cartel) between competing economic entities, Art. 178 of the Criminal Code of the Russian Federation provides for criminal liability in the form of a fine in the amount of 300,000 to 500,000 rubles or in the amount of the convict’s salary or other income for a period of 1 to 2 years, or forced labor for up to 3 years with deprivation of the right to hold certain positions or engage in certain activities for up to 1 year or without it, or imprisonment for up to 3 years, with or without the deprivation of the right to hold certain positions or engage in certain activities for up to 1 year.

In addition to these measures of responsibility, administrative liability is also provided for unfair competition, for which Art. 14.33 Administrative Code of the Russian Federation provides for a fine for officials in the amount of 12,000 to 20,000 rubles; for legal entities – from 100,000 to 500,000 rubles.

Also, the current antitrust legislation provides for special requirements for persons holding a dominant position in the market. The minimum sanctions for abuse of a dominant position include the imposition of a fine on officials in the amount of 15,000 to 20,000 rubles; for legal entities – from 300,000 to 1,000,000 rubles.

Thus, sanctions for offenses related to non-compliance with the requirements of antimonopoly legislation are quite strict and their application can adversely affect the economic activity of almost any business. In case of non-compliance with antitrust laws, companies face the fact of bringing them to justice. This significantly reduces the chances of exemption or mitigation of the imposed sanctions, significantly increases the cost of legal assistance, and also prevents the risks of possible paralysis of economic activity due to the significant amount of fines imposed or the disqualification of key company officials.

That is why it is necessary to build a system of preventive measures aimed at complying with the requirements of antimonopoly legislation and preventing its violation, as well as developing a risk management system for bringing to responsibility for violation of antimonopoly requirements, which includes antimonopoly compliance.

It is important to note that antitrust compliance should be aimed primarily at building a system of preventive measures aimed at compliance with antimonopoly legislation and preventing its violation. At the same time, minimizing the risks of violation of the law and bringing to responsibility for violation of the norms of antimonopoly legislation on the protection of competition is a natural result of compliance with the legislation on protection of competition.

In 2021, the FAS Russia gave clarifications dated 02.07.2021 No. 20 “On the system of internal compliance with the requirements of antimonopoly legislation”, approved by the resolution of the FAS Russia dated July 2, 2021 No. 4, according to which the concept of “antimonopoly compliance risks” is introduced (risks of violation of antimonopoly legislation associated with the implementation of an economic entity of its activities).

The clarifications note that the terms “compliance risk”, “risk identification”, “compliance risk assessment”, “source of risk” are used in the meanings contained in the National Standard of the Russian Federation GOST R 51897-2011 / ISO Guide 73: 2009 “Risk management. Terms and Definitions”. However, this standard does not contain definitions of compliance risks, but defines the basic terms in the field of risk management and informs that the application of risk management has an applied focus. Therefore, it is advisable when preparing and revising regulatory documents and standards that include aspects of risk management, not to establish terms and their definitions that supplement the terminological vocabulary of the document being developed, but to provide a reference to this standard.

The standard establishes that risk is “a consequence of the influence of uncertainty on the achievement of goals, as well as the likelihood of harm to the life or health of citizens, property of individuals or legal entities, state or municipal property, the environment, life or health of animals and plants, taking into account the severity of this harm". Risk management is the coordinated action of directing and managing an organization in the area of risk. Risk identification is “the process of identifying, listing and describing elements of risk”. Risk assessment is “a process involving risk identification, risk analysis and comparative risk assessment”.

The risk assessment identifies areas of application such as:

1. External environment (the conditions in which the organization operates and achieves its goals), which includes:

  1. the external environment related to the cultural, social, political, legislative, regulatory, economic, natural or competitive environment at the international, national, regional or local level;
  2. key criteria and trends that may affect the achievement of the organization's stated objectives;
  3. the relationship with external stakeholders, their perception of risk and the relevance to the organization of these stakeholders.

2. The internal environment in which the organization operates and achieves its objectives (internal scope) may include:

  1. governance, organizational structure, responsibilities and accountability;
  2. policy, goals and objectives, as well as a strategy to achieve them;
  3. the organization’s capabilities in terms of resources and knowledge (e.g. capital, time, people, processes, systems and technology);
  4. information systems, information flows and decision-making processes (formal and informal);
  5. the relationship with internal stakeholders, their perception of risk and the relevance to the organization of these stakeholders;
  6. culture of the organization;
  7. standards, guidelines and operating models adopted by the organization;
  8. the form and scope of the contractual relationship.

If the regulatory documentation or standard uses the terms related to risk management established by this standard, then a mandatory requirement is to bring these terms without changes. These terms and their definition, on the one hand, provide some clarifications regarding compliance, on the other hand, are very general and vague, and therefore it is still difficult to talk about law enforcement practice and the effectiveness of their application.

As stated in the explanations of the FAS Russia, the organization of antimonopoly compliance is the right of an economic entity, the decision on its organization is taken by an economic entity exclusively voluntarily and remains entirely at its discretion.

When organizing antimonopoly compliance, a business entity is recommended to be guided by the following principles:

  1. the interest of the management of the business entity in the efficiency of the functioning of the antimonopoly compliance, as well as the involvement of the employees of the business entity in the implementation of the provisions of the internal act on the antimonopoly compliance;
  2. regularity of assessing the risks of violating antimonopoly legislation;
  3. the continuity of the antimonopoly compliance operation, as well as continuous improvement and enhancement of the effectiveness of the antimonopoly compliance.

At the same time, an appeal to the FAS Russia is exclusively voluntary and is aimed at obtaining a motivated position of the FAS Russia on the compliance of the provisions of the internal act of an economic entity on antimonopoly compliance with the requirements of antimonopoly legislation.

An internal antitrust compliance system may be contained in one or several internal antitrust compliance acts. An internal act (internal acts) on antimonopoly compliance submitted to the FAS Russia or its draft (their drafts) must contain:

  1. requirements for the procedure for assessing the risks of violating antimonopoly legislation;
  2. measures aimed at reducing the risk of violation of antimonopoly legislation by an economic entity;
  3. measures aimed at exercising control over the functioning of the internal system of ensuring compliance with the requirements of antimonopoly legislation by an economic entity;
  4. the procedure for familiarizing employees of an economic entity with an internal act (internal acts);
  5. information on the official responsible for the functioning of the internal compliance assurance system with the requirements of antimonopoly legislation.

Thus, antimonopoly compliance (compliance) is a relatively new concept for the Russian legal system, which has recently been legislatively consolidated.

At the same time, one cannot fail to note the formation of judicial practice, according to which the internal documents of the company, introduced in the framework of antimonopoly compliance, are assessed. Thus, in relation to one of the large Russian companies, the control body identified procurement actions that lead to restriction of competition. The Supreme Court of the Russian Federation noted that on the fact of the revealed violation, the control body reasonably issued an order, according to which the economic entity is obliged to take measures to eliminate the circumstances that led to the possibility of committing an offense, including making changes to the Unified procurement standard and other local regulatory acts governing the consideration complaints (appeals) of procurement participants and other entities. In the process of considering the case, the business entity confirmed that the specified regulations are part of the antimonopoly compliance. However, the court noted that: “the circumstances of the dispute under consideration in the present case indicate that the approach applied in the development of the regulations to the procedure for considering complaints of participants in procurement procedures is more conducive to the commission of antimonopoly violations in the activities of the company’s bodies than to their prevention. To date, there is no generally accepted standard for organizing a system of internal compliance with the requirements of antimonopoly legislation, as well as uniform requirements for the internal procedure for considering complaints and appeals during procurement procedures. It is reasonable to expect that the basis of such an order should be the principles of legality, independence, transparency, equality of participants, competition, impartiality, discretion”.

At the same time, in order to implement the National Plan for the Development of Competition in the Russian Federation for 2018-2020, methodological recommendations have been developed for the creation and organization by the federal executive authorities of a system of internal compliance with the requirements of antimonopoly legislation.

According to the methodological recommendations approved by the order of the Government of Russia dated October 18, 2018 No. 2258-r, in order to organize antimonopoly compliance, the federal executive body must adopt an act containing:

  1. information about the authorized subdivision (official) responsible for the functioning of the antimonopoly compliance in the federal executive authority, and about the collegial body that assesses the effectiveness of its functioning;
  2. the procedure for identifying and assessing the risks of violation of the antimonopoly legislation in the implementation of the federal executive branch of its activities;
  3. the procedure for familiarizing employees of federal executive bodies with the act on the organization of antimonopoly compliance;
  4. measures aimed at exercising control over the functioning of antimonopoly compliance by the federal executive body;
  5. key indicators and the procedure for assessing the effectiveness of the functioning of antimonopoly compliance in federal executive authorities.

It is established that the antimonopoly compliance act must be posted on the official website of the federal executive body on the Internet. We believe that with certain features, these provisions can be applied by analogy to other business entities.

Despite the active introduction of the rules governing antimonopoly compliance into Russian legislation, at present it cannot be argued that the issues of legal regulation of antimonopoly compliance are sufficiently developed. In fact, a large number of norms related to antimonopoly regulation are established directly by the issuance of local legal acts by economic entities.

At the same time, in connection with the active work of the FAS Russia aimed at identifying violators, very high sanctions for violations, the practice of conducting work in terms of antimonopoly compliance, despite voluntariness for most companies, is relevant and necessary, especially for companies that are active participants in public procurement as well as companies with a dominant market position.

At the stage of implementation of antitrust compliance, the legal component is extremely important. Such a risk assessment should be carried out taking into account a comprehensive check of the specifics of doing business and related parties in the market, analysis of judicial practice and legal grounds to minimize possible liability for violation of competition laws.

Legal services

  1. Legal analysis of the practice of interaction of the company with employees, counterparties, state and municipal authorities in terms of compliance with Russian antimonopoly legislation
  2. Legal examination of the organization's internal documents, contracts, commercial and other policies for compliance with antimonopoly legislation
  3. Legal monitoring of market behavior of interconnected companies (group of companies) Analysis and development of recommendations in order to comply with the requirements of antimonopoly legislation when conducting and participating in government and corporate procurement, as well as other auctions
  4. Legal assessment of the risks of violation of antimonopoly legislation, prosecution for violation of competition protection legislation and development of recommendations for the management of these risks and their minimization
  5. Providing recommendations on building a system of antimonopoly compliance measures aimed at compliance with antimonopoly legislation and preventing its violation
  6. Development of local acts and internal policies necessary for the implementation of the antimonopoly compliance system and representation of interests when they are approved by the FAS Russia

Related services

How do we work?

01.
You send us a request to
e-mail info@brace-lf.com 
or call on +7 (499) 755-56-50
02.
Preliminary analysis and
initial consultation
03.
Conclusion of legal services agreement
04.
Project work
05.
On each stage we inform you about results
06.
We provide the result and prepared documents
E-mail
info@brace-lf.com

Send us a request with a detailed description of the issue.

Our phone
+ 7 (499) 755-56-50

Contact us by phone.

Clients and partners