OREANDA-NEWS. September 16, 2014. Deputy Head of the Federal Antimonopoly Service (FAS Russia), Andrey Tsyganov, and Deputy Chairman of the Fair Trade Commission of the Republic of Korea (Korea FTC), Hackhyun Kim, discussed the issue at the 14th consultation meeting of the heads of antimonopoly authorities of Russia and Korea in Seoul (the Republic of Korea).

The parties discussed progressive development of bilateral cooperation of competition authorities of Russia and Korea, the main areas of efforts in competition policy and the prospects of further cooperation, particularly, under the framework of the International Working Group for studying the issues of competition in the pharmaceutical sector. Taking into account a growing role of mutually beneficial cooperation and increasing the role of competition policy, the parties decided to extend information exchange within the competence of competition authorities.

During the visit, Andrey Tsyganov addressed the 8th International Seoul Competition Forum organized by Korea FTC. Attendees included the heads of the leading competition authorities, experts on competition policy and enforcement from the Organization for Economic Cooperation and Development (OECD), UN Commission for Trade and Development (UNCTAD) and other international organizations, academia, legal practitioners, to exchange opinions on the most pressing issues of competition law and policy.

One of the sessions focused on the issues of state-run companies and competitive neutrality. Andrey Tsyganov informed participants about enforcement applied to state-run companies in Russia.

The share of state and municipal companies in Russian economy is quite considerable in comparison with OECD member-states. “Municipal and state unitary enterprises sometimes control up to 100% of the local market and simultaneously are engaged in free economic relations”, pointed out Andrey Tsyganov. “They operate on such competitive markets as road construction, medicine and pharmaceutical services, natural monopolies infrastructure, urban development and landscaping, as well as security, ceremonial, transport and educational services. It certainly hampers competition development and pushes способствует uncontrolled growth of administrative costs for business”.

In amendments to the Law “On Protection of Competition” approved by the Government of the Russian Federation on 4th September 2014, FAS proposes a mechanism that will prevent establishing state and municipal companies on competitive markets and help liquidate already existing ones. Their property can be transferred to state property, and then privatize or leased to small and medium business, and state assets that cannot be privatized can be given to private companies under concession.

FAS also insists that establishing state and municipal property as well as all economic entities with over 50% state share should be mandatory agreed with the antimonopoly authority. “Such control is some kind of a test for absence of competition restriction that will help support normal conditions for the work of small and medium companies at the local level”, emphasized Deputy Head of FAS.

The event took place under the frame of implementing the Memorandum on Cooperation between the Ministry on Russia’s Antimonopoly Policy and the Fair Trade Commission of the Republic of Korea (Korea FTC) signed on 7th December, 1999 in Seoul and the Memorandum on Cooperation in the field of competition policy between the Interstate Council on Antimonopoly Policy, Korea FTC, Latvia’s Competition Council and Romania’s Competition Council, signed on 17th September 2003 in St Petersburg.