Antitrust and Competition

Conducting an antimonopoly compliance audit and developing internal policies for the largest retail chain in Russia

The largest retail chain represented in more than 50 regions of Russia contacted KIAP with a request to audit the company’s activities for compliance with antimonopoly legislation.

The primary goal of the project was to identify all processes that entail antimonopoly risks, the “holders” of these processes within the company, as well as their relationship. The task was complicated due to the fact that such work was carried out within the company for the first time and simultaneously with the internal transformation of the client’s business processes. Besides, in addition to the formal analysis of procedures, KIAP lawyers conducted an analysis of the practice of implementing the most risky processes through numerous interviews with employees, as well as analysis of their communication.

Based on analysis results, a matrix and risk map were prepared, which made it possible to structure and rank all identified risks. Based on the above-mentioned data, KIAP employees prepared draft local regulations, which formed the basis of the retailer’s antimonopoly compliance system.       

Participants: Ilya Ishchuk, Julia Paushkina, Daniil Zherdev, Nikita Lutskiy

Preparation of a legal opinion in accordance with Trade Law for one of the international food producers

The client contacted KIAP with a request to audit the applied business practices for compliance with antimonopoly legislation and the Federal Law “On the Fundamentals of State Regulation of Trade Activities in the Russian Federation” (“Trade Law”). In particular, they were interested in issues related to the procedure for calculating the threshold amount of remuneration paid by suppliers to retail chains, as well as minimizing the risks of violating Part 4 of Art. 9 of the Trade Law.

KIAP's services included a comprehensive analysis of the Client's relevant documentation, including contracts concluded between them and retail chains, and business policies for their implementation. Based on the results of the analysis of documents, current legislation and relevant law enforcement practice, KIAP lawyers prepared a legal opinion containing answers to the questions posed by the Client and recommendations for minimizing the risks of violating the law.             

Participants: Ilya Ishchuk, Daniil Zherdev, Anna Andreeva

Supporting the Russian Federal Antimonopoly Service’s approval of a transaction for the purchase of a group of companies for one of the leaders involved in fields development and operation and oil and gas supply

The client intended to buy at an auction a group of companies, one of the leaders in the market for equipment, vehicles and special equipment leasing. Since such a transaction required approval from the Russian Federal Antimonopoly Service, KIAP was tasked with preparing and submitting a petition as soon as possible in order to obtain a decision from the regulator before the auction.

Within three days, KIAP lawyers prepared a set of documents necessary to approve the transaction and submitted the same to the Russian Federal Antimonopoly Service. As a result, the transaction was approved within 8 working days without any additional requests or conditions.

Participants: Ilya Ishchuk, Anton Samokhvalov, Liubov Makhlai, Tamara Filinykh

Conducting an antimonopoly audit of the partner program of the leading Russian software vendor in the field of information security.

The main channel for the sale of the Company's products is the dealer and distribution network ending with the final link: so-called "partners". Taking into account the complex technical nature of the products and the lengthy pre-sales process, the Company is interested in the high competence of their partners. To control it, a special affiliate program establishing requirements for potential counterparties and conditions for providing incentive discounts has been developed.        

To check the affiliate program and business practices related to the same, KIAP employees conducted a comprehensive antimonopoly audit: analysis of the current affiliate program, standard agreements, personnel and corporate documents of the Company, as well as interviews with employees and analysis of their email correspondence.

Based on the results, a report including a description of antimonopoly regulation in relation to the Company’s activities, a risk map and their detailed analysis with links to sources was prepared, as well as a list of practical recommendations for eliminating and minimizing risks. In addition, a draft of a new affiliation program was developed taking into account all identified risks and KIAP recommendations, as well as the latest changes in the Company’s business policy.

Participants: Ilya Ishchuk, Daniil Zherdev

Preparation of responses to requests from antimonopoly authorities in the interests of an international manufacturer of construction products based on stone wool

The client received a number of requests from antimonopoly authorities requesting information on sales volumes and pricing. According to the requests, the antimonopoly authorities conduct an investigation for complaints about rising prices for construction materials as well as for possible anti-competitive collusion. To receive current advice and assistance in preparing responses to the regulator’s requests, the Client contacted KIAP.              

KIAP employees analysed information about the manufacturing, sales and profitability of products, and also provided recommendations on ways to correctly display information taking into account the identified features of production, sales and reporting.

Based on analysis results, responses to the requests received from the antimonopoly authorities were prepared. The information contained in the responses to requests made it possible to prove the Client’s compliance with antimonopoly restrictions when increasing product prices. As a result, an antimonopoly case was not initiated against the Client.

Participants: Ilya Ishchuk, Daniil Zherdev

Representing the interests of the largest participant in the market for the supply and repair of elevators and elevator equipment in a series of proceedings with antimonopoly authorities (cartel)

For several years, KIAP employees represented the Client’s interests in a series of proceedings with the Irkutsk Office of FAS in cases of antimonopoly violation and administrative liability, which were considered in various instances including the internal appeal of the FAS and the Constitutional Court of the Russian Federation.

The process deserves attention due to the fact that when considering the main antimonopoly case the position of KIAP was supported by the Central Office of the Russian FAS but the Arbitration Court made an unprecedented resolution by overturning the decision of the departmental appeal and leaving the decision of the OFAS unchanged thereby worsening rather than improving the position of the applicants. The appellate court left the decision of the first instance court unchanged despite the fact that the appellant was, among other things, the Central Office of the Russian Federal Antimonopoly Service.

While conducting the case of challenging an administrative fine, the courts of various instances disagreed on the procedure for bringing the Client to administrative liability which entailed “two rounds” of consideration of the case, as a result of which a fine imposed in the amount of 42 million roubles was declared legal.

In parallel, a complaint was filed in the interests of the Client with the Constitutional Court of the Russian Federation to challenge the procedural rules applied in the antimonopoly case, which allowed the courts of the Irkutsk District to support the position of the regional antimonopoly authority contrary to the opinion and conclusions of the Central Office of the FAS.

During the trial period, KIAP employees prevented the collection of a fine by bailiffs to whom the FAS sent a writ of execution before the deadline established by law, and upon completion of all procedures, they obtained an additional instalment plan to pay the fine for 3 months.    

As a result, the measures implemented by KIAP made it possible to defer the payment of the fine for a long period (3.5 years), within which the Client was able to take into account this risk, create reserves and, thus, minimize the negative effects for the business. In addition, the actions of KIAP specialists made it possible to minimize the criminal legal consequences for the Client’s management.      

Participants: Ilya Ishchuk, Daniil Zherdev

Representing the interests of a European retail chain in a series of proceedings with antimonopoly authorities (creating discriminatory conditions for suppliers)

KIAP lawyers represented the interests of the retailer in a series of odious cases of antimonopoly violation and administrative liability for creating discriminatory conditions for suppliers of fish and fish products.

In fact, this is the first case of the Russian FAS in relation to the Trade Law, which was new at the time of its initiation and with which the antimonopoly authority tested the main prohibitions established for retail chains. We can say that on the basis of this case, the law enforcement practice of administrative and judicial authorities began to take shape on the issue of qualifying the provisions of contracts between retail chains and suppliers as creating discriminatory conditions for suppliers. As a result of the consideration of this case, the previously existing contractual structures of largest Russian retailers were significantly changed, since the experience of our client allowed determining the limits of acceptable behaviour of retail chains in relations with suppliers.

It is worth noting that, just like the main case, the case of bringing to administrative liability was followed by the entire Russian grocery retail industry for five years. The case was considered three times by the Moscow District Arbitration Court, since the cassation court sent it for a new trial twice.

As a result, 63 administrative fines totalling 126 million roubles issued against our client were declared illegal by the court despite the fact that the courts recognized the decision of the antimonopoly authority, which served as the basis for initiating administrative cases, as legal.

In total, more than 2,500 volumes were collected (in the case of an antimonopoly violation) and 1,500 volumes (in the case of administrative liability) during the two trials, respectively, which makes these processes one of the largest in terms of the amount of evidence presented.

Participants: Ilya Ishchuk, Julia Paushkina

Representing the interests of one of Europe's major manufacturers of cardboard and cellulose during the consideration of an antimonopoly case in the Russian Federal Antimonopoly Service (monopolistically high price)

KIAP employees represented the interests of the Company during the consideration of administrative proceedings initiated in connection with suspected violation of antimonopoly legislation expressed in the establishment of a monopolistically high price for bleached kraft pulp from softwood.

Accompanying the project from the very beginning of claims from the Russian FAS, during meetings of the Commission of the Antimonopoly Authority, KIAP lawyers were able to prove that the Company does not occupy a dominant position in the market, and, as a result, the provisions of the Law on Protection of Competition regarding the establishment of a monopolistically high price for it do not apply.

As a result, the Russian FAS decided to stop considering the case due to the absence of a violation of the Law on Protection of Competition, and the Company avoided the fines in the amount of about 32 million roubles.

Participants: Ilya Ishchuk, Julia Paushkina

Representing the interests of an airport infrastructure operator in a case initiated by the Russian FAS for violation of Articles 15 and 16 of the Law on Protection of Competition

Russian FAS initiated a case against the airport infrastructure operator, the head of the region, the regional government and several regional ministries for violation of Articles 15 and 16 of the Law on the Protection of Competition. The subject of the investigation by the antimonopoly service was the circumstances of the implementation of the investment project for the construction of the air terminal complex of the international airport.

During the consideration of the case, KIAP employees were able to prove that, despite the fact that the defendant concluded an agreement for the organization of data and documents exchange for subsequent participation and ensuring the winning of the airport infrastructure operator in the selection of an investor, the actions of the defendants did not limit, eliminated or prevented competition.

As a result, the antimonopoly authority made a decision to terminate the case due to the fact that the defendants have not violated the antimonopoly legislation.

Participants: Ilya Ishchuk

Representing the interests of a European retail chain during proceedings before the Federal Antimonopoly Service of the Republic of Tatarstan (price collusion)

At the request of the regional government, the Federal Antimonopoly Service for the Republic of Tatarstan began an unscheduled inspection of buckwheat manufacturers, suppliers and sellers due to a synchronous increase in prices for it suspecting the six largest retailers, including our client, of price collusion, which led to an increase in the price of a socially important product.

The Client invited KIAP to act as their representative during the inspection. KIAP’s employees developed a procedural strategy and communicated with the regulatory authority on behalf of the Client.

Due to the explanations received and the evidence presented, the Federal Antimonopoly Service of the Republic of Tatarstan came to the conclusion that the Company is the only retailer that is not a member of the cartel, and excluded it from the case 7 months after the start of the inspection. The remaining 5 retailers were found guilty of concluding an anti-competitive agreement and were subject to liability in the form of a turnover fine.

Participants: Ilya Ishchuk, Julia Paushkina