Russia / CIS: Administrative fines issued for the first time in a cross-border cartel in the Eurasian Economic Union
According to an announcement by the Russian Federal Antimonopoly Service (FAS) of 23 September 2019 the Eurasian Economic Commission (EEC) in cooperation with FAS uncovered a cartel on the territories of Russia and Kazakhstan and imposed administrative fines on the involved companies and their general directors. Although the imposed fines are small, this case confirms the tendency of growing prosecution of antitrust violations in the Eurasian Economic Union (EAEU).
Consequently the antitrust rules of the EAEU should be taken into account when distributing goods in the respective countries. This applies especially to the exclusive allocation of sales regions or the determination of different prices in EAEU member states.
The member states of the EAEU are Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan. The EEC, similarly to the EU Commission in the European Union, has the competence to prosecute and impose sanctions for antitrust law violations. The EEC is still in the early stages of exercising this competence, therefore there are not many EAEU antitrust cases yet. For example as a result of an investigation of the EEC in 2016 Caterpillar changed their distribution agreements that had previously contained exclusive distribution rights for each member state. In proceedings involving PAO NLMK and OOO VIZ Steel in 2017 the EEC identified an abuse of a market dominant position by way of fixation of different prices for distributors in various member states.
In the present case the Ministry of Economics of Kazakhstan had reverted to the EEC in early 2018, reporting facts of a possible violation of the EAEU cross-border competition rules by the Russian company ZAO “Delrus”. The EEC was cooperating with the Russian Federal Antimonopoly Service (FAS) during the investigations. As an outcome of the investigations it was determined that the Russian ZAO “Delrus” and the Kazakh TOO “Delrus RK” used their dominance on the medical equipment service market to agree on regional market sharing. In particular, the Kazakh company “Scuderia” had requested services for calibration of the ultrasound detectors of Fibroscan equipment from the Russian company “Delrus”. “Delrus”, however, turned down the request without giving reasons and redirected “Scuderia” to the Kazakh “Delrus RK” where the service fee would have been 2.5 times higher.
The EEC identified a cartel agreement between the two companies, referring as evidence to “Delrus”’s denial of contracting with a Kazakh customer and redirecting them to its competitor in Kazakhstan, even though the Russian company could have provided the service itself. It was held that the competitors had knowledge of each other, had correspondence with each other and redirected customers to each other depending on the customers’ region. The EEC issued fines against both of the companies involved in the amount of about RUB 500,000. Furthermore, fines were imposed on the general directors of the companies ZAO “Delrus” and TOO “Delrus RK”.
Do you have questions? Please contact: Stefan Wolfgang Weber
or Artem Kara
Practice Group: Antitrust & Competition