Tatsiana Ignatovskaya - The Public Competition Enforcement Review by Stepanovski, Papakul & partners LLC

The Public Competition Enforcement Review Fifth Edition

Law Business Research

The Public Competition Enforcement Review

Reproduced with permission from Law Business Research Ltd. This article was first published in The Public Competition Enforcement Review, 5th edition (published in May 2013). For further information please email Adam.Sargent@lbresearch.com

The Public Competition Enforcement Review Fifth Edition

Law Business Research Ltd

The Law Reviews The Mergers and Acquisitions Review The Restructuring Review The Private Competition Enforcement Review The Dispute Resolution Review The Employment Law Review The Public Competition Enforcement Review The Banking Regulation Review The International Arbitration Review The Merger Control Review The Technology, Media and Telecommunications Review The Inward Investment and International Taxation Review The Corporate Governance Review The Corporate Immigration Review The International Investigations Review The Projects and Construction Review The International Capital Markets Review

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Publisher Gideon Roberton business development managerS Adam Sargent, Nick Barette marketing managerS Katherine Jablonowska, Thomas Lee, James Spearing publishing assistant Lucy Brewer PRODUCTION COORDINATOR Lydia Gerges HEAD OF EDITORIAL PRODUCTION Adam Myers PRODUCTION editor Anna Andreoli subeditor Davet Hyland editor-in-chief Callum Campbell managing director Richard Davey Published in the United Kingdom by Law Business Research Ltd, London 87 Lancaster Road, London, W11 1QQ, UK ÂŠ 2013 Law Business Research Ltd www.TheLawReviews.co.uk No photocopying: copyright licences do not apply. The information provided in this publication is general and may not apply in a specific situation. Legal advice should always be sought before taking any legal action based on the information provided. The publishers accept no responsibility for any acts or omissions contained herein. Although the information provided is accurate as of April 2013, be advised that this is a developing area. Enquiries concerning reproduction should be sent to Law Business Research, at the address above. Enquiries concerning editorial content should be directed to the Publisher â&#x20AC;&#x201C; gideon.roberton@lbresearch.com ISBN 978-1-907606-64-9 Printed in Great Britain by Encompass Print Solutions, Derbyshire Tel: 0844 2480 112

acknowledgements

The publisher acknowledges and thanks the following law firms for their learned assistance throughout the preparation of this book: AnJie Law Firm Arnold & Porter (UK) LLP Ashurst LLP Baker & MCkenzie BAYKANIDEA LAW OFFICES Bulboaca & Asociatii SCA CAMPOS MELLO ADVOGADOS CLEARY GOTTLIEB STEEN & HAMILTON LLP D’Empaire Reyna Abogados DLA PIPER DRYLLERAKIS & ASSOCIATES Froriep Renggli Hannes Snellman Attorneys Ltd KHAITAN & CO L Papaphilippou & Co LLC LEE AND LI, ATTORNEYS-AT-LAW LLOREDA CAMACHO & CO MARVAL, O’FARRELL & MAIRAL

Acknowledgements

NISHIMURA & ASAHI NOERR Paul, Weiss, Rifkind, Wharton & Garrison LLP R&P Legal Rajah & Tann LLP Sidley Austin LLP Stek Stepanovski, Papakul & partners Stibbe Uría Menéndez – Proença de Carvalho WEBB HENDERSON Wilhelm & Associés

contents

Foreword

��vii Lynda Martin Alegi

Chapter 1 PUBLIC V. PRIVATE ENFORCEMENT �� 1 Ken Daly and Barney Connell Chapter 2

ARGENTINA �� 16 Miguel del Pino and Santiago del Rio

Chapter 3

AUSTRALIA �� 30 Andrew Christopher and Jennifer Hambleton

Chapter 4

BELARUS �� 43 Tatiana Ignatovskaya

Chapter 5

BELGIUM �� 52 Hendrik Viaene and Delphine Gillet

Chapter 6

BRAZIL �� 66 André Marques Gilberto, Álvaro Bayeux and Victoria Corradini

Chapter 7

CHINA �� 77 Michael Gu and Zhan Hao

Chapter 8

COLOMBIA �� 92 Enrique Álvarez and Tomás Calderón-Mejía

Chapter 9

CYPRUS �� 104 Stephanos Mavrokefalos

iii

Contents

Chapter 10

EUROPEAN UNION �� 112 Tim Frazer, Susan Hinchliffe, Mark Gardner and Thomas McNeil

Chapter 11

FINLAND �� 126 Tapani Manninen, Anna-Liisa Saukkonen and Katja Jaakkola

Chapter 12

FRANCE �� 137 Pascal Wilhelm, Anne-Sophie Delhaise and Juliette Géneau de Lamarlière

Chapter 13

GERMANY �� 148 Silke Heinz and Anna Rolova

Chapter 14

GREECE �� 164 Emmanuel Dryllerakis

Chapter 15

INDIA �� 177 Manas Kumar Chaudhuri and Avaantika Kakkar

Chapter 16

ITALY �� 193 Enrico Fabrizi and Valeria Veneziano

Chapter 17

JAPAN �� 206 Kozo Kawai, Futaba Hirano and Nobuhiro Tanaka

Chapter 18

NETHERLANDS �� 221 Ruben Elkerbout

Chapter 19

PORTUGAL �� 232 Joaquim Caimoto Duarte and Tânia Luísa Faria

Chapter 20

ROMANIA �� 242 Valentin Berea, Alexandru Mocănescu and Ioana Naroşi

Chapter 21

RUSSIA �� 250 Stefan W Weber and Tatiana A Galakhova

Contents

Chapter 22

SINGAPORE �� 262 Kala Anandarajah

Chapter 23

SPAIN �� 283 Juan Jiménez-Laiglesia, Alfonso Ois, Jorge Masía, Samuel Rivero and Joaquín Hervada

Chapter 24

SWITZERLAND �� 294 Alessandro Celli, Boris Wenger and Alwin Keller

Chapter 25

TAIWAN �� 304 Stephen Wu, Rebecca Hsiao and Wei-Han Wu

Chapter 26

TURKEY �� 324 Serbülent Baykan and Onur Sinan Vatansever

Chapter 27

UNITED KINGDOM �� 331 Duncan Liddell and Zoe Hare

Chapter 28

UNITED STATES �� 348 Aidan Synnott and Andrew C Finch

Chapter 29

VENEZUELA �� 366 José H Frías

Appendix 1

ABOUT THE AUTHORS �� 375

Appendix 2

Contributing Law Firms’ contact details �� 395

foreword

It is immediately apparent from the reports in The Public Competition Enforcement Review that competition enforcement remains vigorous across the world. An overwhelming majority of authorities continue to prioritise anti-cartel enforcement and 2012 witnessed, in the United States and the EU, some of the highest cartel fines ever to be imposed in respect of individual cartels. Authorities in newer competition law regimes such as India, China and Taiwan followed suit. There was a common focus on illegal conduct within the context of trade associations and bid rigging. The Business and Industry Advisory Committee – representing business within the framework of the OECD – and its Competition Committee regard the pursuit and elimination of ‘hardcore’ cartel conduct as a priority. Businesses suffer when markets are not working effectively and are victims of cartel behaviour as much as consumers and society as a whole. But caution must always be exercised to ensure that justifiable, even pro-competitive, conduct is not inadvertently swept up into an offending category. The reports for Australia, India and the United Kingdom describe developments that serve as a reminder that many commercial activities – including information exchange, price parallelism and certain trade association activities – need to be analysed in context (and not simply presumed to be anti-competitive). International cooperation and the convergence of laws and procedures are important objectives for many of the authorities covered in this book. There is a good reason for this. Not only did the infringing companies in many of the cartels uncovered have their headquarters outside the country imposing the penalties but, more generally, globalisation – particularly the transformation of regional markets into worldwide markets – has increased the propensity for conduct and transactions to be scrutinised by numerous competition authorities in parallel. Convergence of laws and procedures holds many attractions for competition authorities and business alike. But convergence is a complex matter. The keynote article in The Public Competition Enforcement Review, ‘Public v. Private Enforcement: Rethinking the Thirst for Competition Litigation’, is a strong reminder that a thoughtful approach to convergence is always needed. There may

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Foreword be a logic to aligning a new regime with the most established regimes but in practice that may not be the most appropriate approach to every aspect of the law and policy. To ensure that the law and related procedures develop optimally, authorities must take stock of what is working (and what is not working), reflecting on achievements but also re-examining fundamentals. This Review makes a useful contribution to the process of reflection with its timely and authoritative comments on the past year’s developments and trends. Ex post evaluations (where an authority evaluates whether its intervention was appropriate and achieved its objectives) are also essential. These studies are becoming more common, particularly in the merger control sphere. They can be used in wellestablished regimes, but also by those countries that have newly amended their rules. The reports for Brazil, China and India describe major progress in respect of merger control activity. Evaluations can ensure that improvements are made in the early years to keep the merger control regime on track. A key work stream for the OECD is looking at how ex post evaluations are conducted, what methodologies function best in practice and how the process can be improved. Like the competition authorities, international competition organisations such as the OECD and ICN can usefully carry out evaluations of their own measures and recommendations. The OECD is setting a good example by evaluating its own merger recommendations from 2005. The country reports also describe a substantial amount of enforcement activity taking place in relation to abuse of dominance. The wide variety of cases being brought by different competition authorities suggests that this area is perhaps the least convergent in terms of substantive competition law. This has been the case for so long that it is not surprising but nor is it without risk. The chapter for Argentina expresses concern that dominance cases may be targeted to achieve price control objectives. In Australia, misuse of market power is identified as a key priority. The US authorities are moving away from a policy that ‘favoured extreme caution’ in this area and are debating the scope of appropriate enforcement against unfair methods of competition. This Review encapsulates the fierce debates under way. International organisations should continue to help build consensus on the key elements of an abuse of dominance case. In 2012 the OECD produced a useful report on excessive pricing discussing how to ensure that intervention is principled and evidence-based. It is also apparent that competition authorities are continuing to address industry sectors with growing global importance, including media and communications, the high-tech sector, the digital economy and financial services. The issues are complex and the global implications of intervention can be immediate. The OECD has developed roundtable reports on all these sectors where business input is a key contribution to the debate given the fast-evolving technological environment. Overall, the level and nature of enforcement described in the country reports demonstrates that competition authorities across the world have succeeded in ‘holding the line’ when budgets and even the role of competition law itself has been under fire. The chapters in this publication prove that the competition authorities did not let the rules slip in the face of economic difficulties. However, ongoing reflection is needed now

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Foreword to ensure that there is a good understanding of how companies and governments respond to current economic challenges. Reflections in this post-crisis time will be essential for ensuring that business and regulators play their part in ensuring that the events leading to the global recession are not repeated. Surveying policies, objectives, enforcement and trends, The Public Competition Enforcement Review contributes to such reflections. Lynda Martin Alegi Competition chair of the Business and Industry Advisory Committee to the OECD (BIAC) Of counsel, Baker & McKenzie LLP London April 2013

Chapter 4

belarus Tatiana Ignatovskaya1

I overview i

Prioritisation and resource allocation of enforcement authorities

The long-awaited dynamic changes in the antitrust legislation did not take place in 2012, although there have been certain advances in the application of antitrust regulations. The main legal acts that regulate relationships concerning competition law in Belarus are Law No. 2034-XII, 10 December 1992 on Counteracting Monopolistic Activity and Development of Competition (‘the Law’) and Edict of the President of the Republic of Belarus No. 114, 27 February 2012 on Certain Measures for the Intensification of State Antimonopoly Regulation and Control (‘Edict No.114’) that amends administrative liability measures stipulated by the Code on Administrative Offences in respect of violation of antimonopoly legislation. Also, Presidential Edict No. 499 on Certain Measures in Respect of Antitrust Regulation Improvement and Development of Competition (‘Edict 499’), which changed the Law’s provisions in respect of corporate transactions and was adopted at the end of 2009. These two legal acts are considered as the mainframe regulation of antitrust relations in Belarus. Except for these two main legal documents in the sphere of antitrust law, a range of subordinate regulatory acts were adopted that determine certain procedures and methods in respect of antitrust matters. The Department of Price and Antimonopoly Policy at the Ministry of the Economy (‘DPAP’) is the state antitrust authority in Belarus, authorised to enforce state antitrust policy, as well as to control the activity of legal entities operating in the territory of Belarus, if this activity is connected with or in regard to antitrust matters. The DPAP is also vested with the power to investigate administrative offences in the sphere of antitrust law. The decisions of DPAP may be appealed against in the court.

Tatiana Ignatovskaya is a partner at Stepanovski, Papakul & partners.

Belarus The headquarters of DPAP, a national state authority, are located in Minsk. The DPAP is headed by the director, who has a right to assign deputy directors and other staff in the department. To decide the most important questions the DPAP’s director convenes a board, consisting of seven officials: the director, his deputies and other officials of the DPAP and the Ministry of the Economy. The board’s decisions are voted for by a simple majority and are formalised in protocols. If the board’s decisions require official formalisation, these decisions are legalised by the acts of the Ministry of the Economy. However, the acts of the Ministry of the Economy are mostly concerned with the procedural issues of antitrust matters. Currently the DPAP has no local subordinate branches and plans for establishing a network of branches are still being discussed. Their functions are under the control of the local executive authorities (i.e., divisions of Minsk City and regional executive committees, which are subordinate not only to the DPAP, but also to the regional governors (e.g., the mayor of Minsk)). This chain of command does not ensure the effective prevention of antitrust violations by public officials who provide certain entities with advantages, thus hindering fair competition. ii

Enforcement agenda

According to the official information of the DPAP during 2012, the DPAP and local antitrust authorities handled over 100 claims from individuals and companies regarding antitrust violations. Inspections of about 150 entities were conducted as well as monitoring at 190 goods markets both at national and local levels. As a result of inspections and monitoring, approximately 30 violations of antitrust legislation were identified, including instances of denial to conclude a contract, coercing of unprofitable contract terms, providing unwarranted advantages to certain subjects, unjustified denial by local authorities of the right to exercise certain commercial activity by companies, etc. ii

ANTITRUST REGULATION OF FOREIGN ENTITIES’ BUSINESS ACTIVITY

Antitrust regulation of foreign entities’ business activities on the Belarusian markets or abroad has some peculiarities in comparison with antitrust regulation of the national business. According to the Law, the activities of foreign legal entities will be regulated by Belarusian law only if: a a foreign legal entity carries out monopolistic activity; b this activity is carried out on the Belarusian market; c the monopolistic activity of such legal entity influence the legal rights of Belarusian legal entities or customers; and d the activity of the foreign legal entity is carried out in a foreign country and could lead to limitation of competition in Belarus or to any other unfavourable consequences. Nonetheless, it should be observed that application of the antitrust law in respect of a foreign entity (especially imposing sanctions) is possible only if there is an appropriate international agreement between Belarus and the country where the foreign entity is incorporated. After the creation of agreements on common economic space, in addition

Belarus to the CIS agreement on the Conduct of Harmonised Antitrust Policy of 25 January 2000 the following list of international treaties related to antimonopoly law came into force: a the Treaty on Common Principles and Rules of Competition, 9 December, 2010; b the Treaty on Common Principles and Rules of Regulation of Natural Monopolies’ Activities, 9 December, 2010; and c sectoral agreements that regulate access to the power industry and oil transportation natural monopolists’ services and competition rules in certain services (e.g., telecom services). III CARTELS The Law forbids and considers as an offence establishing or participating in any integration or conclusion of explicit or implied agreements, if these actions or agreements may result in the restriction of competition. A formal or written agreement among competitors is not necessary to constitute an offence – an informal agreement, even with minimal communication between competitors, may suffice. The Law provides a list of actions and agreements, both vertical and horizontal, that may constitute an antitrust offence. These actions and agreements relate to allocation of markets or supply sources on principle of territory, the assortment of products, volume of their sale or purchase or a circle of customers; excessive prices or price-related advantages, bid rigging, artificial limitation of goods’ production, establishing of control over the goods selling in the trade market and other consequences that may lead to competition limitation. Non-compete clauses that are frequently used in distribution agreements are also considered as a breach of antitrust law. The DPAP and the local antitrust authorities consider that the evidence of a negative effect on competition is not necessary if the object of an agreement is aimed to restrict the competition. This principle could be inferred from the Law. The above-mentioned parties’ arrangements require prior consideration and approval of the DPAP in order to avoid an application of measures of liability for the violation of antitrust law. Since Edict No.114 came into force and until the relevant changes are made to the Code on Administrative Offences, administrative liability for the conclusion and execution of agreements or performance of a coordinated activity (agreement to perform such kind of activity that restricts competition in the market) entails the imposition of a fine on the company’s official of 20 to 100 times the minimum wage, the imposition of a fine on the individual entrepreneur of 100 to 200 times the minimum wage, and the company is fined approximately 10 per cent of revenue received in the previous year from the goods’ distribution in the market affected by the company’s antimonopoly activity. Criminal liability for antitrust infringement is also provided, however, there is no court practice of bringing a criminal case for a breach of antitrust law in Belarus. One of the reasons is that the remnants of the Soviet Union – associations of legal entities and state concerns – that exist in Belarus are in essence violating antitrust legislation.

Belarus IV

MERGERS AND ACQUISITIONS

One of the most visible areas where Belarusian antitrust law seeks to maintain competitive markets remains the merger review process. Anti-competitive mergers and acquisitions are usually paid more attention both by legal entities and the state authorities than any other kind of antitrust law infringement. The transaction value of mergers and acquisitions transactions in Belarus in 2012 was over over 3,000 billion rubels, the largest of them was from from 286 billion rubels to 775 billion rubels. The Law provides the necessary control over mergers and acquisitions, if their effect may be to gain or to maintain a dominant position in the market. On the assumption of this provision the Law obliges the merger’s participants to obtain the DPAP’s preliminary permission to make a corporate deal. In 2012 the DPAP gave consent to 12 merger deals on the national level and 109 deals on the local level. The DPAP also approved the creation of seven associations, including three associations at the national level. This permission is to some extent the guarantee of the mergers’ and acquisitions’ validity and legality, and the absence of the DPAP’s permission may lead to the recognition of the mergers and acquisitions as ineffective under the DPAP’s claim. The Law determines three kinds of mergers: a a merger between direct competitors (horizontal mergers); b a merger of firms that operate at different levels in the supply chain; and c a merger of firms that operate in different industries entirely. The Law relates not only to domestic mergers and acquisitions, but also to cross-border corporate deals. Because horizontal mergers may influence competitive matters more than other mergers, it is with these types of mergers that Belarusian antitrust law is most concerned. However, not every transaction is considered horizontal. There are some points that serve as criteria to determine if the deal needs to be approved, related to: a the acquisition of more than 25 per cent of other legal entity’s stocks or shares, as well as executing other transactions, which, consequently, gives the purchaser an opportunity to influence the decision-making process of the other entity, which achieves dominance in the market; b the acquisition of the legal entity’s stocks or shares by a competitor who has more than 30 per cent of the market share; and c acquisition of any rights that give one legal entity an opportunity to influence conditions of business activity of other legal entity. Regarding vertical or conglomerate mergers and acquisitions, Edict No. 499 substantially altered the provisions of the Law concerning such deals. According to the Edict, the DPAP has a right to approve by issuing preliminary permissions for vertical or conglomerate deals, connected only with acquiring by any person, entity or even state of 20 per cent of shares of the Belarusian legal entity, that meets the following requirements: a the balance-sheet asset value should exceed approximately 10.85 billion rubels; or b the value of receipts should exceed 21.7 billion rubels. Nevertheless, the effort of making legal provisions concerning vertical and conglomerate deals clearer was not very successful. The Edict does not clearly set out the required

Belarus content of merger notifications. In practice, the gaps in the law are forcing the DPAP and local antitrust authorities to interpret Edict No. 499’s provisions in a very subjective way. V HOLDINGS Before the end of the 2009, the legal institute of holdings did not have any relevant legal regulation and the companies, formally regarded as holdings, operated as a number of affiliated entities. In December 2009 the Edict of the President No. 660 on Matters of Establishing and Operating Holdings (‘Edict No. 660’) was adopted, and adjusted the corporate procedures concerning the holding formations. According to Edict No. 660, a holding is the corporate formation that includes a legal entity that has 25 per cent or more stocks or shares of other legal entities constituting a formation or owns the property of the unitary enterprise, and is able to influence the decisions of these legal entities. Under the provisions of Edict No. 660, only Belarusian or foreign limited liability companies, joint-stock companies, unitary enterprises and additional liability companies can be the members of the holding, although foreign companies, incorporated in countries that do not have bilateral agreements with Belarus concerning the exchange of tax information are deprived of the right to join the holding. As a legal approval of the holding’s establishment, the holding’s registration at the Ministry of the Economy including entry into the state register of holdings is required. Nevertheless, the Ministry of the Economy does not demand the DPAP’s permission for mergers and acquisitionss as an essential part of the data applied. Without the DPAP’s permission the establishment of the holding may be considered as invalid under the common rules concerning mergers and acquisitions deals and the holding’s members could be subject to administrative penalties for the breach of the antitrust law. The important point is that holdings are not automatically considered as the dominant market players. This notwithstanding, holdings are large formations, and to be recognised as having dominant position they need to meet the criteria determined in the Law. However, the application of antitrust law to holdings’ activities may be reconsidered in the future as the institute of holdings in the Belarusian legal system is the newest such change and there is no established practice or guidelines on how to deal with the holdings’ business. For example, in 2012 the DPAP approved the establishment of 25 holdings, including 16 at the national level. VI

UNFAIR COMPETITION

Unfair competition is probably one of the most applicable branches of the antitrust law, as it relates to the most essential for goods and services producers spheres, such as the intellectual property rights (including means of individualisation) infringement or unfair advertisement. As the claims concerning other branches of antitrust law are usually submitted by the state authorities, therefore they are not very frequent, litigations in the field of unfair competition are initiated by a wide range of companies dealing in the Belarus trade markets. According to Article 14-2 of the Law, the forms of unfair competition are related to reverse passing off, false advertising, making thresholds for the

Belarus business communication of competitors, disorganisation of competitors business and some similar offences. However, the claimants seldom choose the antitrust administrative procedure to protect their right for fair competition, as this procedure is burdensome and requires a lot of time, thus the claimant is not able to get an urgent resolution of the problem. According to Article 1 of the Law ‘unfair competition’ is any actions of legal entities that aim to obtain business advantages and that are forbidden by the Law or contradict the principles of honesty and reasonableness or may cause damages to competitors or defame their business. Following this term the DPAP regards the action as the case of unfair competition only if there is the whole set of four criteria: a actions are aimed at obtaining business advantages; b actions contradict the Law or the principles of honesty and reasonableness; c actions could cause damages to competitors or defame their business; and d the claimant and the respondent are competitors, dealing on the same trade market. All these above-mentioned circumstances should be confirmed by written proof, if not, the DPAP will probably refuse to handle the case. It is remarkable, that neither the Law, nor other legal acts determine particular proof, that are considered as proper and sufficient for the DPAP to start the procedure, therefore there are a lot of cases when the DPAP rejected the claim as the proof seemed improper. The official statistics confirm this suggestion. In 2012 only five instances of unfair competition were identified and only one of them was at the national level. This demonstrates that mechanisms to protect infringed rights are not actively employed. Therefore, entities whose rights are infringed by unfair competition prefer to requalify the case by narrowing it to an intellectual property rights violation or a violation of the advertising legislation to force the case by applying to other state authorities. For example, the Ministry of Trade is empowered to handle cases concerning unfair advertising, if the case does not refer to unfair competition. Also, the Ministry of Trade, unlike the DPAP, has great experience in the legal investigation of such cases and adjudicates the cases in a short time. VII

ABUSE OF DOMINANCE

According to the Law, dominance in the market should be regarded as an exclusive position of the company in the market of goods, when such goods have no substitutes or interchangeable goods. This exclusive position gives a possibility to influence strongly the common circulation of commodities in the market or to complicate market entry for other suppliers of such goods. A company will be considered as achieving dominance if this company meets any of the following requirements: a the share of company’s goods on the market exceeds that determined by the legislation, in that particular market of goods; b the share of company’s goods in the market is stable in comparison with shares of its business rivals on this market;

Belarus c d

the company complicates market access for its business rivals, when this complexity is caused by the marking policy of the company; or the company has been included in the state register of commercial legal entities that have achieved market dominance. At the start of 2013 the state register listed 557 companies, including 162 on the national market. In 2012 eight new entities were included into the register at national level and 11 at local, and 129 companies were excluded from the register (49 of them at national level) due to having forfeited dominant status.

The market of goods according to the antitrust law of Belarus is defined under the following criteria: territory and kinds of goods. According to the territorial criterion goods markets are divided into two groups: the national market and the local market. Goods are determined in accordance with a standard list, adopted by the government of Belarus, therefore the kinds of goods are considered as a class and are not narrowed down to specific kinds of goods of the same class. The Law contains a distinguishing provision concerning the control over the dominant market players. A legal entity, achieving dominance in the market, may be excluded from the state register of commercial legal entities, which achieve dominance in the markets and lose its dominant status under the agreement with the DPAP, that determine certain obligatory conditions of the legal entityâ&#x20AC;&#x2122;s business activity, that prevent the latter from pursuing monopolistic policy. According to the Law and the Edict the DPAP controls legal entities that achieve dominance in the market and applies special price regulation and special requirements to the mergers or acquisitions of such entities (as mentioned supra). Under the Edict the DPAP concludes antitrust agreements with some of the legal entities that achieve dominance in the market, which deny the legal entities the opportunity to run monopolistic activity and determine price ranges. i Trends Since the common economic space treaties that restrict the establishment of any mechanisms aimed at regulating a level of prices within the common market were adopted, the Belarusian government has been assuming the measures to regulate prices for socially valuable goods (e.g., sugar, bread, baby food) by means of antimonopoly regulative norms. Thus, in 2011 a certain number of local manufacturers of socially valuable goods was included in the state register of companies achieving dominance in the market under the governmental decision that was not supported by the relevant examination of the companiesâ&#x20AC;&#x2122; market share or any other antimonopoly investigations in regard of the companiesâ&#x20AC;&#x2122; business. This trend was also observed in 2012. There is no court practice in respect of the invalidation of official decisions to include a company in the state register of companies achieving dominance in the market. This can be explained by the lack of legal experience to object to DPAPâ&#x20AC;&#x2122;s decisions and poor understanding of relevant antimonopoly legislation.

Belarus VIII NATURAL MONOPOLIES The Belarusian concept of ‘natural monopoly’ is similar to that of most other post-Soviet countries and concerns state approval of production of some exclusive goods and services by certain legal entities, when the proper provision of such goods and services seems to be more effective if there is no competition in a particular market. Historically, this concept of natural monopolies has been accompanied by a Soviet idea of viewing large firms as national main market players to be protected from unbridled market forces and competition policy. Law No. 162-Z on the Natural Monopolies, dated 16 December 2002, defines the following economic sectors as the spheres of natural monopoly activity: gas and oil transportation through trunk oil pipelines; electricity distribution; centralised water supply and waste disposal; electrical and postal services for common use; railway shipping services; shipping terminals and airport services; and maintaining lines of flight and the management of air traffic. As far as the natural monopoly sectors are major contributors to the state budget, the majority ownership of the companies in the natural monopoly sector generally belongs to the state ministries and authorities. RUE Beltelecom is controlled by the Ministry of Communications, RUE Belarusian Railway is mainly owned by the Ministry of Transport and Communications. However, in 2009 after the Belarusian government focused on the state’s economic problems and the natural monopoly sector, the common state policy moved towards the development of the privatisation of state-owned enterprises and increasing competition. Subjects of natural monopolies are also included in a designated register, which at the start of 2013 listed 194 companies, including 27 entities at the national level. i

Minskenergo case

The most renowned case in the sphere of antitrust regulations in 2012 was the claim filed by the DPAP against a natural monopoly – Republican Unitary Enterprise Minskenergo. The DPAP found Minskenergo guilty of abusing market dominance by refusing to conclude a service contract with a third party. According to the Belarusian legislation a subject of natural monopoly cannot refuse to conclude a contract for electric energy distribution provided it has the technical capacity for such services. Minskenergo contested the decision in court, but the court of first instance upheld the decision of the DPAP. Currently the case is being appealed. The Minskenergo case is the first example of a state-owned enterprise being charged with an antitrust violation. IX CONCLUSION Despite the hopes for rapid improvement of antitrust legislation in Belarus, no noticeable changes took place in 2012. An independent antitrust authority has not been established yet either. The process of its creation is hindered by the unwillingness of the state to have a powerful independent authority that would have the mandate to identify and eliminate antitrust violations. One of the reasons behind this is that most of the violations (although not determined by antitrust authorities) can be attributed to state-owned companies and associations, which historically play a crucial role in the country’s economy.

Belarus This statement in respect of Belarusian exporters was confirmed by a number of cases considered in 2012 by the Federal Antimonopoly Service of the Russian Federation (‘FAS’). For example, the Belarusian legislation on goods distribution networks of Belarusian companies outside of Belarus expressly obliges Belarusian companies to indicate in the contract ‘the region of operation’. This leads to such violations of antitrust regulations as ‘division of the market based on territorial principles’ and refusal to conclude contracts with certain parties. The existence of goods distribution networks was the reason the FAS held a major heavy-machinery manufacturer in Belarus (BelAZ) liable for violating of antitrust law. Similar cases are currently being considered by the FAS. The process of legislation harmonisation in common economic space can only be completed by the end of 2013 with the enactment of the following key legal acts – the Law on Counteracting Monopolistic Activities and Promoting Competition and the Law on Natural Monopolies. The drafts of these laws have been under review by the respective state authorities for over a year. New antimonopoly legislation to be adopted seems to be similar to Russian competition law, and the main terms and definitions are taken from the texts of the common economic space treaties. However, certain norms of updated local antimonopoly legislation will be specific. For example, according to the draft of the the Law on Counteracting Monopolistic Activities and Promoting Competition, a market share that determines a company’s dominance in the market is 35 per cent; however, some companies can be considered as having achieved dominance if their market share is at least 15 per cent. Antitrust legal norms harmonised with Russian legislation have been incorporated into the draft Law on State Regulations of Trade and Public Catering. The adoption of the Law is planned for the middle of 2013 and will be the start of the introduction of antitrust regulations into the industry-specific legislation.

Appendix 1

about the authors

Tatiana Ignatovskaya Stepanovski, Papakul & partners Tatiana is an advocate and partner, and is head of the commercial practice at Stepanovski, Papakul & partners. She specialises in competition and antitrust law, IP/TMT, international trade, energy and natural resources. She is mentioned in reference guides of leading lawyers of the world: Chambers Global; Chambers Europe; PLC Which Lawyer?, International Lawyers and Legal 500. Tatiana supports government authorities in the development of local legal acts or official presentations in respect of competition and antitrust law development in Belarus and in the CIS. Currently she is a member of the Council for Supporting Competition in the CIS. Stepanovski, Papakul & partners 16, Kuibyshev Street 4th Floor, 220029 Minsk Belarus Tel: +375 17 209 44 83 Fax: +375 17 204 86 72 info@spplaw.by t.ignatovskaya@spplaw.by www.spplaw.by

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