Analytics Law Review

This article looks at one of the key concepts in Russian antitrust law – the concept of dominant position, compares it with understanding of this concept in other jurisdictions and explains its underlying principles and current regulations. Although the concept of dominant position in Russia in its current meaning was introduced later than in the European Union and the USA, its nature is similar to the concept in these countries. The concept is based on extensive market power and unfair use of this power in relation to other market participants; it justifies existence of additional bans for such companies.

The concept of dominant position is not unique for Russian antitrust law. For example, the European Union case, Hoffmann - La Roche v. Commission, introduced a rule that actions of companies with significant market shares should be prohibited if they lead to the weakening of competition.[1] In the American case, Syufu Enters v. American Multicinema Inc., the court stated that a company had monopoly powers taking into account its market share (near 70%), which lowered a barrier to access the market.[2] The majority of European countries have adopted similar rules.[3]

The underlying principles of this concept are similar for different jurisdictions.[4] The concept is closely connected with the possession of substantive market power. When a company has power to influence the whole market, it seems reasonable to impose additional prohibitions and obligations on this company.[5] The purpose of the concept is also to protect "economically weak parties" (consumers and small companies).[6]

In Russia, the concept of dominant position was introduced in 1995.[7] It implemented the same underlying principles that justify the existence of extra regulation in relation to big market participants in other countries.

The definition and criteria of "dominant position" are provided in Article 5 of the Federal Law "About Protection of Competition in the Russian Federation" (the Law about Protection of Competition).[8] Two criteria determine whether a company has a dominant position: quantitative and qualitative. According to the quantitative criterion, the company can be treated as "dominant" if its market share is more than 35%.[9] If its share is more than 50%, its "dominant" status is presumed, unless a company can prove the absence of market power.[10] The "qualitative" criterion is defined by Article 5 as the ability of a company to influence the market in the following ways:

• to influence the conditions of the circulation of goods;

• to exclude other companies from the market;

• to block market access for other companies.[11]

The quantitative and qualitative criteria form the general rules to determine the "dominant position" status of a company. These rules apply with only minor exceptions.

One such exception was introduced in recent developments to the Law on Protection of Competition.[12] According to these developments, a company or a sole proprietor cannot be in a "dominant position" if its profit for the latest calendar year does not exceed RUB 400 million. This rule does not apply to some specific categories of companies (for example, financial organizations, companies with state participation, etc.).[13]

To determine the "dominant position" of a company, the relevant governmental authority (the Federal Anti-monopoly Service (the FAS)) must conduct a market analysis. The FAS's Order on Analysis of Competition State in Market sets forth the procedure of the market analysis.[14] According to this order, the FAS undertakes several stages of  market analysis, including determination of the period for study, the product and geographical boarders of the market, the number of market participants and their market shares, etc.[15] If the market analysis is not conducted properly, the FAS cannot refer to its results in court. For instance, the Highest Arbitration Court of the Russian Federation held that "in case of incorrect determination of geographical boarders of the market, the existence of a dominant position cannot be proved."[16] This position has been confirmed in many cases.[17]

"Dominant position" status of a company is not prohibited per se. It would be unreasonable to ban activities of companies with significant market shares that acted honestly and effectively.

However, Russian antitrust law imposes specific regulations in relation to companies with a dominant position. The purpose of such regulations is to ensure that companies do not abuse their market power. For example, Article 10 of the Law about Protection of Competition provides a list of actions that are prohibited if they lead to limiting competition or impairing others’ rights.[18] Among these actions are monopolistically high or monopolistically low prices, offering unprofitable terms to business partners, discrimination and other similar actions.

The list provided in Article 10 is not exhaustive.[19] The FAS can conduct investigations and conclude that a company with "dominant position" status abuses its position by other actions. However, in such cases the FAS should prove the existence of negative consequences for the market or for particular market participants.[20]

To conclude, the concept of dominant position in Russia is similar to this concept in other countries. If a company has significant market share and the potential possibility to influence the market, legislation imposes specific regulations to prevent abuses by companies with the dominant position. However, "dominant position" status itself is not prohibited. Therefore, if a company does not abuse its status, it cannot be found guilty of violation of antitrust law.

[1] Case 85/76, Hoffmann - La Roche v. Commission, 1979 E.C.R. 401.

[2] Syufy Enters. v. American Multicinema, Inc., 793 F.2d 990 (9th Cir. 1986), cert. denied, 479 U.S. 1031, 93 referenced by E. Gelhorn & V. Kovachich, Antitrestovskoye Zakonodatel'stvo I ekonomika, [Antitrust Law and Economy], 87 (Int'l Univ. of Law 1994).

[3]  Evgenia Borzilo, Antimonopol'niye Riski Predprinimatel'skoy Deyatel'nosty, [Antimonopoly Risks of Business], 97 (Statut 2014).

[4] A. Bayda, Osobennosty Deyatel'nosty Kompaniy, Zanimaushih Dominiruyushee Polozheniye na Ryinke, po pravu Evropeiskogo Souza, [Special Aspects of Work of Companies with Dominant Position according to EU law], 214 Lawyer 216 (2001).

[5] Id, at 217.

[6] Aleksey Ul'yanov, Uridicheskoye Obosnovanie Zashity Slaboy Storony v Dogovore, [Legal Basis for Protection of a Weak Party in a Contract], 114 Journal of Russian Law No. 8 115 (2013).

[7] Borzilo, supra note 3, at 97.

[8] Federal'nyi Zakon RF o Zashite Konkurenzii v Rossiyskoy Federazii ot 26 iuly 2006 g. No. 135-FZ [Federal Law of the Russian Federation on Protection of Competition in the Russian Federation of Jul. 26, 2006 No. 135-FZ], Rossiiskaia Gazeta [Ros. Gaz.], No. 162, Jul. 27, 2006 [hereinafter "the Law on Protection of Competition"].

[9] The Law on Protection of Competition, supra note 8, article 5(2).

[10] The Law on Protection of Competition, supra note 8, article 5(1).

[11] K. Alyoshin, A. Andorsenko, & Igor Artem'ev, Nauchno-Prakticheskiy Kommentariy k Federal'nomu Zakonu "O Zashite Konkurenzii", [Scientific-Practical Commentary to the Federal Law "On Protection of Competition"], 98 Statut (2^nd ed. 2016).

[12] Federal'nyi Zakon RF o Vnesenii Izmenenii v Federal'nyi Zakon "O Zashite Konkurenzii" i Otdel'nye Zakonodatel'nye Akty Rossiyskoy Federazii ot 3 july 2016 g. No. 264-FZ [Federal Law of the Russian Federation on Amendments of the Federal Law "On Protection of Competition" and Other Acts of the Russian Federation of Jul. 3,2016 No 264-FZ], Rossiiskaia Gazeta [Ros. Gaz.], No.146, Jul. 6, 2016.

[13] The Law on Protection of Competition, supra note 8, article 5(2.1), (2.2).

[14] Prikaz FAS Rossii "Ob Utverzhdenii Poryadka Provedeniya Analiza Sostoyaniya Konkurenzii na Tovarnom Rynke" ot 28 april 2010 g. No. 220 [Order of the FAS "On Analysis of Competition State in Product Market" of Apr. 28, 2010 No. 220], Biulleten' Normativnih Aktov Federal'nyh Organov Gosudarstvennoy Vlasti [Bulletin of Acts of Federal State Authorities] 2010 No.34 [hereinafter "Order on Analysis of Competition State in Market"].

[15] Order on Analysis of Competition State in Market, supra note 14, para.1.3.

[16] Opredelenie Vysshego Arbitrazhnogo Suda RF ot 10 june 2014 g. No. VAS-7160/14 po delu No. А76-22844/2012 [Decision of the Highest Arbitration Court of the RF of Jun. 10, 2014 No. VAS-7160/14 on case No. А76-22844/2012], Konsultant Plus [Consulting Plus] 2014.

[17] Opredelenie Vysshego Arbitrazhnogo Suda RF ot 26 avgusta 2013 g. No. 11627/13 po delu No. А44-230/2011 [Decision of the Highest Arbitration Court of the RF of Aug. 26, 2013 No. 11627/13 on case No. А44-230/2011], Konsultant Plus [Consulting Plus] 2013; Postanovlenie Arbitrazhnogo Suda Severo-Zapadnogo Okruga ot 22 april 2016 po delu No. А56-18075/2015 [Decision of the North-West District Arbitration Court of Apr. 22, 2016 on case No. N А56-18075/2015], Konsultant Plus [Consulting Plus] 2014.

[18] The Law on Protection of Competition, supra note 8, article 10.

[19] Postanovlenie Plenuma Vysshego Arbitrazhnogo Suda RF to 30 june 2008 g. No. 30 "O Nekotorih Voprosah, Voznikaushih V Svyazi s Primeneniem Arbitrazhnimy Sudami Antimonopol'nogo Zakonodatel'stva", para. 4, [Plenum of the Highest Arbitration Court of the RF of Jun. 30, 2008 No. 30 "About Some Issues Arisen before Arbitration Courts during Application of Antitrust Law", para.4], Vestnik Vysshego Arbitrazhnogo Suda RF [Vest. VAS] [The Highest Arbitration Court of the FR Reporter], 2008, No. 8.

[20] Id.