OREANDA-NEWS. November 15, 2013. Under the framework of developing cooperation between the Federal Antimonopoly Service (FAS Russia) and the Antimonopoly Authority of the Republic of Ecuador, FAS took part in a conference on the role of antimonopoly policy in economic crisis and recession, organized by Ecuadorians colleagues.

The conference took place in the University of Quito (the Republic of Ecuador). Participants and observers included not only professionals in antimonopoly enforcement and devising competition-development policy, but also a wide range of interested persons, including representatives of academic community, non-governmental organizations, etc. Vladimir Kachalin, an advisor to the Head of FAS, took part in the conference via telecommuting.

In his presentation, he stated that in terms of an impact upon the antimonopoly policy the period of crisis is characterized by an increased priority of short-term objectives of the policy of anti-crisis response to the detriment of more long-term goals of preserving and developing competitive environment on the market. It is manifested, in particular, in the state support to the sectors of financial-and-economic and social infrastructure. Under these conditions the government aid must be non- discriminatory and transparent, and meet only the support goals.

Vladimir Kachalin also pointed out that the period of crisis is characterized by a considerable increase of the number of economic concentrations – mergers and acquisitions, and their scale. In the period of recession such transactions often are aimed at preserving production capacities and assets in the industry, preventing bankruptcy of the companies experiencing the most difficulties and related transfer of assets from production. In the international practice such motivation for mergers and acquisitions is called “failing company defense”. It is frequently used in the situations when an antimonopoly body would not approve a merger without this argument. For instance, it was applied by the US antimonopoly bodies to authorize the acquisition of “McDonnell-Douglas”, which was on the verge of bankruptcy, by the aerospace giant - “Boeing”, as a result of which only one manufacturer of long-range aircrafts remains in the USA.

According to the report, other factors of adverse impact of the crisis upon the competitive environment include increased economic concentration, postponement of financial investment programmes and associated weakening of dynamic competition, increased risk of cartels and concerted actions, as well as maintaining monopolistically high prices against decreased production.

In conclusion, Vladimir Kachalin emphasized: “Under a possible conflict of priorities of the anti-crisis and antimonopoly policy an important objective of the antimonopoly body is to preserve competitive environment and minimizing damages that can be caused by anti-crisis measures. Maintaining competition is an important factor of economic recovery”.