OREANDA-NEWS. May 26, 2014. The Federal Antimonopoly Service organized the “Competition Enforcement in the Agriculture Sector” International Workshop at FAS Centre for Education and Methodics in Kazan.

On the first day of the workshop representatives of the competition authorities from Russia, Belarus, Kazakhstan, Kyrgyzstan, Bulgaria, Serbia, Japan, Indonesia and Ecuador discussed methodological approaches to market analysis; on the second day - government control over agrofood markets.

In follow-up of the agenda of the first day of the workshop, on 16th May a representative of Stavropol regional FAS Office, Irina Akinina, discussed OFAS efforts towards supporting competitive conditions on agricultural markets, giving a detailed account of the methods used to define product and geographic market boundaries.

The main method applied by Stavropol OFAS to determine market boundaries is buyer surveys. The professional level of market analysis is demonstrated by unsuccessful attempts of economic entities to challenge the findings in 7 judicial proceedings.

The third day of the workshop focused on the role of professional associations in regulating the market of agricultural products, and support to competitive conditions on an adjacent market of mineral fertilizers.

According to the Head of FAS Department for Control over Chemical Industry and Agro-Industrial Complex, Anna Mirochinenko, associations and unions the unite producers and processers of agricultural products actively cooperate with the Antimonopoly Service and other government bodies for the purposes of developing production, enhancing product competitive ability and protecting the interests of their members in the Russian Federation and outside it.

Activities carried out by associations, however, are also carefully watched by FAS Russia. Practice shows that associations can be platforms for concluding anti-competitive agreements between their members, and for unlawfully exercising government functions, particularly, control and supervision.

Marcellina Nuring Ardyarini stated that “in Indonesia professional associations also play a significant role”. Coordination of activities of economic entities is considered a violation: it can result in creating cartels.

Indonesia is one of the main players in the agricultural sector, but it sill faces several issues: lack of capital, skills and technologies; a low level of prices for raw commodities; high entry barriers; market power misbalance between agricultural producers and processers, and demand – supply disequilibrium for some goods of first priority.

Cartels are one of the reasons of the demand – prices gap on the domestic market. For instance, Indonesia competition authority is investigating some cases upon signs of a cartel for import of soy, beef and garlic.

Kazakhstan is experiencing a number of problems on the sugar market. According to the principal expert of the Department for Analysis of Transport, Communications and Agro-Industry Complex, the Agency of the Republic of Kazakhstan for Competition Protection, Rauan Tlegenov, “TsASK” LLC is the only sugar producer with six branches in the southern part of the country.

Every year Kazakhstan consumes around 450,000 tons of white sugar. Although “TsASK” LLC has capacity and possibilities for producing the required quantity of sugar and provide supplies to the domestic market, in 2013 the output was only 307,444 tons of sugar. It is explained by the fact that 90% of the production is based on imported raw sugar. Consequently, the competition authority forwarded its proposals to the Ministry of Agriculture for developing domestic market of sugar beet as a raw material for producing sugar. These proposals are already included in “Agrobusiness-2020” State Programme.

The government bodies authorized to regulate agriculture also commit violations of the antimonopoly law in the sector. For instance, a representative of Serbia Commission for Competition Protection – a principal advisor of Unfair Competition Department, Suncica Dordevic, gave an example that the Ministry of Agriculture, Forestry and Water Management had created preferential conditions for a company at an open auction for selecting a fuel supplier (D2 diesel and Euro diesel) for agricultural producers.

According to the requirements, bidders had to have at least 200 fuelling stations in the Republic of Serbia. Only one company – “NIS” met such requirements. “NIS” is also the only domestic producer of D2 diesel.

A representative of Bulgaria competition authority, Alexandra Kinaeva, focused on the problems associated with regulating relations between suppliers of agricultural products and trading networks.

Taking into account the market power possessed by trading networks and European experience of regulating such relations, in Bulgaria the competition authority attempted to change the antimonopoly law by introducing the norms reflecting a special position of trading networks on the market. However, such changes have not been adopted. A special-purpose law is being drafted to regulate such relations. As pointed out by Anna Mirochinenko, Bulgaria competition authority is on the same road as Russia and is experiencing the same difficulties that FAS faced in drafting the Law on Trade.

Concluding the workshop, the Head of FAS Centre of Education and Methodics, Lenar Shafigullin, and the Head of FAS Department for Control over Chemical Industry and Agro-Industrial Complex, Anna Mirochinenko, awarded certificates to all participants. In return, representatives of competition authorities from the CIS and the far abroad gave them a warm thank you for organization of the international event on exchanging experiences in antimonopoly enforcement in agro-industrial complex.