OREANDA-NEWS. November 10, 2008. Due to numerous enquiries to the Federal Antimonopoly Service (FAS Russia) and publications on the procedures of offering state and municipal property to small businesses, non-governmental organizations and creative associations, the Federal Antimonopoly Service informs:

Under the Federal Law "On Protection of Competition", state and municipal property, including the property under economic control rights or operative management, is assigned for ownership and (or) usage:

- on the basis of competitive bidding (tenders or auctions) for the right to enter into such contracts;

- without competitive bidding in the cases specified in Article 17.1 of the Federal Law "On Protection of Competition", or if state and municipal property is offered according to the procedures specified in Chapter 5 of the Federal Law "On Protection of Competition".

The institute of state and municipal aid was introduced to the Federal Law "On Protection of Competition" in 2006 to secure legitimate grounds for offering benefits by the authorities, including property transfer, to individual economic entities. Transferring property without competitive bidding in the form of state aid is possible, in particular, for such purposes as developing culture and preserving cultural heritage; supporting small businesses involved in priority activities; and providing social services to the population.

Thus, the Federal Law "On Protection of Competition" does not prevent contracts without competitive bidding (tenders or auctions) with prior approval by FAS Russia, including the contracts with small businesses, non-governmental organizations of disabled persons, artists or other creative associations for the purposes specified in Article 19 of the Federal Law "On Protection of Competition".

At the same time, after the Federal Law "On Protection of Competition" came into force, any offering of state or municipal property, including lease, without consent of the antimonopoly authority, except the cases specified in Part 1 Article 20 of the Federal Law "On Protection of Competition", or without competitive bidding (tenders, auctions) violates the procedures for offering state and municipal aid under Article 20 of the Federal Law "On Protection of Competition". Such acts of the authorities for offering state or municipal property can be recognized invalid, аnd the property can be returned.

Article 17.1 of the Federal Law "On Protection of Competition" did not introduce a new order for transferring state or municipal property, it simply regulates details of the procedure.

To support small and medium businesses under Part 4 Article 18 of the Federal Law "On Developing Small and Medium Entrepreneurship in the Russian Federation" (further on referred to as - No.209-FZ Federal Law), the federal executive bodies of the constituent territories of the Russian Federation and self-government bodies can approve the lists of state or municipal property, free from the third party rights (except the property rights of the small and medium business), which can be used only for assigning for economic control rights and (or) use on the long-term basis to small and medium enterprises and organizations that form the support infrastructure for small and medium businesses.

As for competitive bidding for the contracts on state or municipal property, included in the above lists, FAS Russia does not consider that the cases when only small and medium businesses, covered by No.209-FZ Federal Law, are allowed to compete, contravene the antimonopoly legislation, including Part 2 Article 17 of the Federal Law "On Protection of Competition".

The procedure does not equate big business with small business and non-governmental organizations.

Article 17.1 of the Federal Law "On Protection of Competition" is introduced as part of the National Anti-Corruption Plan, approved by No. Pr-1568 Order of the President of the Russian Federation on 31st July 2008, and aimed at improving state administration in the social and economic sphere. The legislative norm should institute unified regulations, unified use of state or municipal property and transferring the rights for such property, as well as priority use of the auction bidding for managing state or municipal property.

Therefore, the provisions of the Federal Law "On Protection of Competition" in general and Article 17.1 in particular do not prevent state or municipal support of small and medium business, non-governmental organizations and creative associations.