Abuse of dominance in Russia

Abuse of dominance

How is abuse of dominance defined and identified? What conduct is subject to a per se prohibition?

Abuse of dominance is defined as acts (or omissions) of a dominant entity that result or may result in the prevention, elimination or restriction of competition or infringement of rights of other business entities in the sphere of their entrepreneurial activities or unrestricted range of consumers. Russian legislation on abuse of dominance follows an effects-based approach, as it requires a negative effect on competition or third parties to determine the existence of a violation.

The list of acts (omissions) qualified as abuse of dominance is not exhaustive, but it names certain violations that are per se considered as abuse of dominance. Such acts include, in particular:

• fixing of monopoly high or monopoly low prices;
• withdrawal of goods from circulation if it results in an increase of prices for such goods;
• imposition of contractual conditions unprofitable for a counterparty or not related to the subject matter of an agreement;
• economically or technologically unjustified reduction or termination of the production of goods;
• economically or technologically unjustified refusal to deal with certain customers;
• economically, technologically or otherwise unjustified setting of different prices for the same goods;
• fixing of unreasonably high or low prices for a financial service;
• discrimination;
• creating barriers for the access to a market or withdrawal from a market for other business entities;
• breach of regulatory prescribed pricing rules; and
• manipulation of prices on wholesale or retail markets of electrical energy (capacity).

Does the concept of abuse cover both exploitative and exclusionary practices?

The concept of abuse covers both exploitative and exclusionary practices.

What link must be shown between dominance and abuse? May conduct by a dominant company also be abusive if it occurs on an adjacent market to the dominated market?

When deciding an abuse of dominance case, FAS shall prove that a business entity is dominant on the market and committed actions qualified as abuse of dominance. Dominance per se is not qualified as an antitrust violation.

A conduct of a business entity may be qualified as abuse of dominance if it occurred on the dominated market. However, FAS assesses negative impact of a dominant entity’s conduct on both dominated and adjacent markets.

What defences may be raised to allegations of abuse of dominance? When exclusionary intent is shown, are defences an option?

A business entity may raise the following defences to allegations of abuse of dominance:

• a business entity is not dominant on the market: FAS determined the product and geographic market wrongfully or made a mistake in calculation of a business entity’s market share;
• a business entity’s acts (omissions) were economically and technically justified and cannot be qualified as abuse of dominance; and
• a business entity’s acts (omissions) are permissible if they collectively meet the following conditions:
• they do not give an opportunity to a dominant entity to eliminate competition on the market;
• they do not impose restrictions on third parties that are not consistent with purposes of such acts (omissions); and
• they result in an improvement of production, sale of goods and promotion of technical or economic progress or increase of competitive abilities of Russian goods on the world market and in receipt of comparable benefits by customers.

However, this defence cannot be used for certain types of abuse of dominance, including price fixing, withdrawal of goods from circulation, imposition of unprofitable contract terms on a counterparty, unjustified refusal to contract with certain counterparties, setting different prices for the same goods, price fixing for financial services; breach of regulatory prescribed pricing.

Defences are an option for both exclusionary and exploitative intent.