OREANDA-NEWS. September 05, 2013. In the course of an on-site inspection of “Soyuzmoloko” – the National Union of Milk Producers, the Federal Antimonopoly Service (FAS Russia) established that some actions of the Union may contain signs of coordinating economic activities of economic entities.

In February 2010, FAS analyzed a draft agreement on the general principles of cooperation between milk producers and processers under the framework of the National Union of Milk Producers (“Soyuzmoloko”) aimed at stabilizing and developing the national milk sector. FAS arrived to the opinion that the “vertical agreement” would not restrict competition but at the same time warned market participants not to conclude agreements that might result in fixing or maintaining prices for raw milk.

In the course of the scheduled inspection, however, FAS discovered that “Soyuzmoloko” had sent letters to executives and the heads of authorities in some provinces with recommended average monthly base indicative prices for raw milk in 2011 and 2012. Moreover, in one of the letters “Soyuzmoloko” asked the heads of the regions to disseminate information about the expected price range for raw milk in 2011 amongst milk producers and processers “so they could be guided by it establishing economic relations”; in another letter the Union made a statement on expediency of monitoring pricing on the milk market in view of the recommended limits to the average monthly base indicative prices. As FAS found, in some provinces regional authorities supplied this information to the executives of agricultural and milk-processing companies.

Disseminating such information by the Union amongst economic entities that are not its members and making a proposal to “be guided” by the prices within the recommended limits have signs of coordinating economic activities of economic entities, which is prohibited by the law on competition. It is also unacceptable to exercise such actions through the government bodies.

“The National Union of Milk Producers can be classified as an economic entity and Article 16 of the Federal Law “On Protection of Competition” prohibits agreements between economic entities and the authorities of the constituent territories of the Russian Federation as well as concerted actions if they lead or can lead to preventing, restricting, eliminating competition, particularly, increasing, decreasing, maintaining prices”, commented the Head of FAS Department for Control over Chemical Industry and Agro-Industrial Complex, Anna Mirochinenko. “Otherwise the authorities will also be held liable”.

FAS issued explanations with regard to the situation, which unions and association should take into consideration in their operations to avoid violations.