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Regular version of the site

Pro-active and protective methods of competition policy: comparative advantages

2009

The purpose of this research work is to analyze possibilities for applying pro-active methods of competition policy, aimed at intensifying competition in the Russian markets.

Weak competition exacerbates the problems in the economy that arise in times of economic instability. Lower demand intensifies competition due to a change in the incentives for market participants. At the same time, the policies carried out by the Russian government, including the anti-crisis measures, in some cases constrain competition incentives, thus weakening any positive effects of the crisis. In this environment, the importance of a competition policy, both protective and pro-active, rises. In the meantime, the Russian competition policy is currently characterized by an obvious tendency towards protective measures and insufficient use of the pro-active methods of a competition policy.

There are instruments for stimulating competition in various areas of state policy, including technical regulation and foreign trade policy. Currently, the existing system of technical regulation induces excessive entry barriers  on the one hand, and fails to stimulate non-price competition among manufacturers on the other hand (even though demand among Russian manufacturers for voluntary certification as a part of the technical regulation system is getting only stronger, boosting the potential of technical regulation as a tool of competition policy). Conversely, foreign trade policy is aimed at balancing the federal budget and supporting manufacturers rather than at competition promotion. This research offers a model of evaluating the potential impact of a change in foreign trade tariffs on competition, which has not yet been carried out in Russia.

In this environment, an anti-trust policy bears the burden not only of its own mistakes, but also the responsibility for performing unnatural functions for the protective policy. We have analyzed the problems related to one of the key innovations of the 2009 anti-trust legislation – determining a monopolistically high price. We have concluded that the changes made to the legislation may de facto undermine the efficacy of applying anti-trust laws. We have considered the difficulties that arise out of performing the main task of the anti-trust legislation – preventing price collusion. We have carried out a preliminary analysis of the effectiveness of anti-trust laws using the example of the anti-trust prosecution of certain Russian oil companies.