Elena Ilyukhina: New Amendments to Antimonopoly Legislation Create a Lot of Uncertainty for “Oilers”

“The amendments to antimonopoly legislation proposed by the Federal Antimonopoly Service (FAS) create uncertainty for oil companies, and breaking the rules that are unclearly defined may entail liability; companies basically become liable for actions that have not been taken and become “guilty without guilt”,” Elena Ilyukhina, Deputy General Director for Legal and Corporate Issues of Gazprom Neft stated at the conference devoted to issues of “Development of Competition and Removal of Administrative Barriers: Problems and Solutions”.

The Law on Protection of Competition adopted three years ago was positioned by FAS as an adoption of an "Antimonopoly Bible", which was supposed to set transparent "game rules”, thus enabling development of competition, Elena Ilyukhina said. In reality, what we gained was a stricter state control and monopolization of FAS function, she stated.

A year ago, the “second” antimonopoly package was adopted; the inserted amendments provided for criminal liability (article 178 of the Criminal Code of the Russian Federation) for actually not proved and possibly not committed actions. “Thus, the “second” and the “third” antimonopoly packages create and shall create more uncertainty, and the game rules still remain unclear for the business”, the representative of Gazprom Neft stated.

As an example of antimonopoly legislation development she mentioned the first US antitrust law, the Sherman Antitrust Act: “Those recalling the Sherman Antitrust Act as an example of antimonopoly legislation development forget to note that the first significant changes thereto were made only 24 years after its adoption; for the second time it was changed only after 20 years, and the third set of changes came after 22 years. Is it not too many packages we are creating?” - she concluded. “The third, the fourth antimonopoly package: How many more packages are we going to have?” - Elena Ilyukhina asked herself.

According to her, the so-called "historical cases” initiated by FAS against oil companies shall in ten years time hardly be remembered as key stages of Russia's antimonopoly policy development. It is most likely, Elena Ilyukhina says, that the years 2008 – 2010 will above all be recurred as a story of price control, and not a story of competition.

The business community and the state must have both a clear understanding and equal handling of what kind of actions shall be deemed unacceptable, she said. “In order to improve the antimonopoly legislation and set the game rules, we need an integrated set of measures".

The business community must be provided with an explanation of the norms set for “monopolistically high price” and “approved actions”. Besides, the procedure for establishing a dominating position and determining the market boundaries needs a special clarification. The antimonopoly law must define the boundaries of the “group of persons” concept as well as distinguish between such definitions as “parallel actions” and “cartel agreement”.

“Necessity of incorporating the principles of the so-called FAS Order No. 108 into the Law on Competition is the most important item of the business community program, which shall create more certainty for all the players at the market”, Elena Ilyukhina said. “This has to do with the fact that this order is the key regulatory document governing the procedure for performing analysis in commodity markets: It significantly broadens certain norms of the current legislation. Changes to the antimonopoly legislation must ensure transition from price control to structural changes in the economy”, she concluded.

To improve efficiency of the dialogue between FAS and the business community, Elena Ilyukhina suggests to capitalize on the grounds of the Council for Competitiveness and Entrepreneurship under the Government of the Russian Federation.