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COMMON COMPETITION POLICY – a necessary condition for the effective functioning on the Single Economic Space Nurlan Aldabergenov Member of the College.

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Presentation on theme: "COMMON COMPETITION POLICY – a necessary condition for the effective functioning on the Single Economic Space Nurlan Aldabergenov Member of the College."— Presentation transcript:

1 COMMON COMPETITION POLICY – a necessary condition for the effective functioning on the Single Economic Space Nurlan Aldabergenov Member of the College – Minister for competition and antitrust regulation of the Eurasian Economic Commission Vienna, 2012

2 From 1 January 2012 2 Single economic space (SES) Integration and macroeconomic policy Economics and financial policy Industry and agricultural sector Trade Technical regulation Customs cooperation Energy and infrastructure Competition and antirust regulation

3 Trade turnover of the Republic of Belarus, Republic of Kazakhstan and the Russian Federation 3 29 40 (41%)

4 Russias trade turnover with Belarus and Kazakhstan 4 (33%) 30,7 Billion of USD 2010 2011

5 Belarus's trade turnover with Russia and Kazakhstan 5 Billion of USD (46%) 2010 2011

6 Kazakhstan trade turnover with Belarus and Russia 6 (24%) Billion of USD 5,9 7,5 20102011

7 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 8 Primary goals of the antitrust regulation Harmonization of competition laws in Russia, Belarus and Kazakhstan; Determination of legal acts of the Member States subject to convergence, sequence of measures and terms of harmonization according to the common competition rules of the EES Adoption of legal acts that empower the Eurasian Economic Commission to suppress violations of competition rules in cross-border markets at the supranational level Development of the Model Law on Competition Discussing the issue of adoption of the Competition (Antitrust) Code of the EES

9 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 Kazakhstans 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

10 Difference in administrative penalties for violation of competition rules –Fines for undertakings BelarusKazakhstanRussia 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

11 Difference in antitrust legislation of the three Member States BelarusKazakhstanRussia Control over state aid -++ Special prohibition of vertical agreements --+ Number of types of unfair competition specialized in relevant law 11126 11

12 Use of best international practices Introduction of preventive measures and adequate penalties for antitrust law violations: WARNING NOTICE DISQUALIFICATION

13 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 supply Activities in the field or architecture, constriction and urban development The Republic of Kazakhstan Purchase of electric energy for power supply Activities in the field or architecture, constriction and urban development The Russian Federations Private detective activity The activities of join stock investment funds The Russian Federations Private detective activity The activities of join stock investment funds

14 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

15 Price regulation 15 Limitation of costs to be included in the tariff;Limitation of articles of expenditure within the limits of technical and technological rules;Setting a list of costs that shall not be included in the tariff;Agreed approach towards determination of efficiency for natural monopolists and assessment of amortization;Tender procurement of goods, works and natural monopolists services;Transparency of tariffs setting. Control over introduction and terms of governmental price regulation (socially important goods) Setting of tariffs and access to natural monopolists services Target Harmonization of methods of setting tariffs for natural monopolists

16 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

17 Public procurement Target: Ensure possibility for all entrepreneurs to participate in tenders in Belarus, Kazakhstan and Russia Further convergence of public procurement legislation of Belarus, Kazakhstan and Russia; Possibility of trans-border use of electronic digital signature;Transfer of all procurements to electronic platforms.

18 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

19 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 Brest Kazakhstan – Astana and Almaty Russia – 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

20 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

21 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

22 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

23 Cost of electricity for the popular in the border regions of Kazakhstan and Russia 2,67 Astrakhan 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 2,38 2,85 Altai Republic 1,73 1,43 1,81 1,09 West – Kazakhstan region Atyrau region Aktobe region Kostanay region North - Kazakhstan region Akmola region Karaganda region Pavlodar region East - Kazakhstan region Russia Kazakhstan

24 24 Prices on oil products in Kazakhstan, Russia and Belarus KazakhstanRussiaBelarus Petrol АИ-92 Price per 1 liter 22,5 rubles27,4 rubles25,4 rubles Excise duty per 1 ton 66 $225 $142 $ Diesel fuel Price per 1 liter 19,1 rubles28,2 rubles27,8 rubles Excise duty per 1 ton 8 $116 $91 $

25 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 Aeroflot Transaero S7 Airlines Utair Russia airways Air Astana Skat Airways Belavia Main directions on the Single Economic Space territory Saint Petersburg Yekaterinburg Novosibirsk

26 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 producers (trademark holders) 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

27 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% Perfumes from 20 to 60%

28 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 policys 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.


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