Transcript of the beginning of the meeting between Vladimir Putin and Igor Artemyev:

Vladimir Putin: Good afternoon.

Igor Artemyev: Thank you very much for an opportunity to meet you. I want to tell you about the activities of the Antimonopoly Service because today everyone is worried about a rise in food prices and also in fuel and energy prices.

From the beginning of this year, our service has filed about 400 cases involving the fuel and energy complex. Of these, 150 cases are directly related to petrochemicals and motor fuel. It seems our efforts are not enough to resolve the problem. After two years of stabilisation, when prices were rising consistent with the inflation rate, we now see a surge in diesel and jet fuel prices. We are implementing your assignment to step up our efforts in this industry.

At present, there are about 100 such cases in court. Antimonopoly agencies can now impose the so-called turnover penalties. This means that if we find, through court proceedings and our own investigation, that a company has violated a law, it will pay big turnover penalties amounting to 1% to 10%, or even 15%, of the company's total annual earnings. These penalties are comparable with the damage done to the country.

The same is true of the food markets.

Today, wholesale prices in the fuel and energy sector show a downward trend (a fall of about 10%), but we cannot be sure that the fall is the result of our activities. We see the same price decrease in the global markets.

Vladimir Putin: The prices have been falling for nearly a week there.

Igor Artemyev: True. However, we think that the main thing now is to reveal a breach of the law, and when it is revealed and investigated, we must call the guilty party to account. With about 150 court cases on our hands, we hope to prevail in about 70%-80% of them and thus prove our agency's accuracy. This will help prevent such transgressions in the future. Perhaps, this concerns high-profile cases, too, when the damage done to the state is particularly big.

Generally, given the government's support, which we feel now, the legislation adopted will allow us to pursue serious work, and we should answer for it.

However, if the second package of legislative initiatives is adopted, I want to emphasize that it should above all contain an anti-cartel programme directed against price collusion.

Vladimir Putin: You talked about this at the meeting and about a set of measures you are going to take.

Igor Artemyev: The 2006 law provided definitions conforming to the European definitions of price collusion and division of the market. Throughout the world, the same as in Russia, this is considered a crime. It is assumed that a new wording for Article 178 of the Criminal Code is to be adopted, for this is indeed a serious crime. In Europe, the establishment of a cartel is considered the most dangerous economic crime.

In Russia this article does not work after the amendments adopted in 2002. The government has already discussed this issue and we hope we will be able to submit the new wording for this article to the government which should prepare it for consideration by the State Duma.

Another thing, which is no less important, is that we cannot and we must not deal with operational investigations. We think an increase in the number of such law-enforcement agencies would be bad for our country and its economy. We need help from our colleagues in law-enforcement agencies. We reveal cartels - in the oil and pharmaceutical sectors and in a whole number of key sectors of the Russian economy - but we cannot substantiate our evidence in court in the right way. When we go to court, they tell us it is a pure coincidence that the prices have doubled simultaneously. We can prove price doubling by the monopolistic high prices, but we cannot prove price collusion when prices skyrocket simultaneously. Courts asked us to produce evidence of price collusion, a sort of secret agreement confirmed by signatures, but such documents are non-existent.

On July 5 of this year a plenary meeting of the Supreme Commercial Court explained that indirect evidence would be enough. That is, if companies negotiated [this issue], or just followed each other in raising prices without any economic reasons, this is collusion and therefore a crime. If our colleagues from the interior ministry and the prosecutor's office help us with their skills, knowledge and strength (we have been cooperating with them for two years but only on a very insignificant scale), we will do our job as it should be done, the way it is being done anywhere in the world.

Vladimir Putin: The struggle against cartels has long been going on, not only in Europe but in North America, too.

Igor Artemyev: The punishment for participation in a cartel is ten years in prison, and it is imposed without mercy in other countries. Our economy, the capitalist transitional economy, is too open for such harmful impact. Say, some five persons can meet and agree among themselves to raise the price of an indispensable commodity that cannot be replaced with anything else by 20%, 30%, 40% and even 50%. Diesel fuel cannot be replaced by any other alternative in the North where temperatures can drop below minus 40°, so one will pay any price for it. We must give special attention to protect the markets of irreplaceable basic commodities, especially socially important markets where the demand for such commodities is stable - medicines, some foodstuffs, fuel, including jet and diesel fuel you have mentioned. We are trying to concentrate our efforts on such work and orient our colleagues accordingly.

Vladimir Putin: Your activities must protect the consumer and promote economic progress, because a cartel collusion leads to stagnation in the key economic sectors.

Igor Artemyev: I agree with you. Instead of designing something new and developing an innovation-based economy, dishonest companies just fix unfair prices, grab the money and buy real estate assets abroad.

It looks as though the cartels have moved to this country from Western Europe which is actively fighting against them. They feel comfortable in this country, but there are many domestic homegrown cartels here as well.

We see a large number of bidding collusions today which are also typical of cartels, for example in bidding at auctions for mineral deposits, forest lands, Russia's natural resources, or a state order.

Quite often, both companies and government officials participate in such collusions.

If we could confirm collusion with substantial evidence, then each agency could do its own job: the interior ministry's investigation department would deal with the criminal aspect of the deal and we would continue our work within the system of administrative punishment. Since we have a wide network of territorial agencies (82 in all, one in each Russian region), we could carry out our work quickly, effectively and on a wide scale.

Vladimir Putin: Fine. Let us talk first in greater detail about the need to strengthen the regulatory and legal base and about the trends in this activity.