13 september 2011
Background material for the Government Presidium meeting of September 13, 2011 (press release)
PRESS RELEASE*
The following issues are scheduled for discussion at the September 13, 2011 Government Presidium meeting:
1. Competition in the Russian Federation
Relevant materials have been submitted by the Federal Anti-Monopoly Service (FAS).
I. Assessment of the overall level of competition.
The information submitted in the FAS report testifies to the increase in the number of economic operators and, hence, to the positive trends in the development of the competitive environment.
Thus, the total number of companies and organisations grew by 2.8% between 2009 and early 2010 to reach 4.91 million.
The biggest growth was registered in housing management (an increase of 19.2% against 2009), real estate transactions and renting (7.6%), wholesale and retail trade, car sales and maintenance (7.1%), and transportation and communications (7.1%). For the first time since 2008, there was a modest increase in the number of manufacturing companies (1.9%).
At the same time there is a decrease in the number of companies involved in agriculture (6.5%) and construction (6.1%). Indicatively, although the number of manufacturing companies has increased (from 411,000 to 418,600), their share in the overall number of companies has declined. The share of companies producing cars, equipment and food products is decreasing the fastest.
During the past two years there has been a steady trend towards the reduction in the share of public and municipal companies (from 405,000 in 2008 to 383,000 in 2010) with a simultaneous increase in the number of private firms (from 3.855 million to 4.128 million in the same period). This trend is encouraging competition.
The share of major companies in the economy continues decreasing:10% of the GDP were produced by 10 major companies in 2005, 16 in 2007, 25 in 2008 and 32 in 2009.
To give a fuller description of the competitive environment the report quotes results of sociological polls of economic operators conducted by the All-Russian Centre for the Study of Public Opinion (VTsIOM) in 2010.
The majority of businesspeople expressed a positive opinion about the state of the competitive environment: 43% of respondents described it as “rather good” and 23% as “unequivocally good.” Indicatively, their opinion on the state of the competitive environment has remained fundamentally unchanged in the past three years.
II. Competition in specific sectors and markets.
The list of major commodity and services markets described in the report as non-competitive includes leasing containers and open rail cars for railway shipments; passenger air transportation; supply of electricity (capacities); and regional markets of flour and other socially important food products.
The market of leasing containers and open rail cars stands out for its high concentration of operators. The market terms are dictated by the dominant companies – Russian Railways and TransContainer, which own buildings and other property, hoist equipment, container terminals sites and other facilities used for these services. There are economic and technological barriers to entering this market, such as tangible initial investment, connection to automated systems and compliance with technical rules and regulations.
Passenger air transportation service is also a highly concentrated market (35% of airlines carry more than 96% of all passengers). The government’s measures on changing the licensing terms and establishing rules of access to airport services have encouraged competition.
The retail electricity market was highly concentrated and uncompetitive in 2010. The number of energy supply companies increased insignificantly as compared to 2009 (from 530 to 588). In 2010 the FAS revealed 1,508 violations of anti-monopoly legislation in this market, which is 19.2% more than in 2009.
In the regional flour markets the FAS revealed a limited number of dominant economic operators that are capable of influencing the terms of commodity circulation, which often results in monopoly high prices on flour and more expensive bread.
III. Regional programmes to promote competition
Adopted by the regions under the Competition Development Programme, the programmes are playing a substantial role in promoting a favourable competitive environment.
According to the FAS, all regions completed drafting these programmes in 2010. Almost half of the programmes (46%) are well prepared and provide for specific measures on creating the competitive climate with due account of the regions’ needs.
At the same time, 16% of regional programmes are unsatisfactory (13 regions), and 3% are extremely poor (in the Republic of Ingushetia, the Novgorod and the Tambov regions).
IV. Practical application of anti-monopoly legislation.
The FAS has registered a trend towards revealing an increasing number of violations of anti-monopoly legislation in the past few years.
In 2010 the FAS opened 11,431 cases on such violations, which is 18.3% more than in 2009. As a result, 10,249 violations were identified.
As before, more than half of these were committed by government bodies that were found guilty of adopting acts contradicting anti-monopoly legislation, granting property rights without auctions and awarding preferences in violation of the established procedures.
The share of offenses involving abuse of dominant position among all violations of anti-monopoly legislation by economic operators decreased to 18.7% in 2010 (from 19.1% in 2009). At the same time, the number of cartel agreement cases increased considerably – 607 cases were opened, which is 24% more than in 2009.
V. Proposals on stimulating competition in the Russian Federation.
The FAS report suggests the following measures on encouraging competition in specific industries:
In addition, the FAS suggests drafting a number of federal laws on regulating the market of natural monopolies. The proposed measures include the introduction of long-term tariffs that would depend on the quality and effectiveness of services and prevention of any attempts to curtail competition on this market.
2. Implementing federal targeted programmes and the Federal Targeted Investment Programme (FTIP) in the first six months of 2011
Relevant materials have been submitted by the Ministry of Economic Development, the Ministry of Education and Science and the Government Military-Industrial Commission under the Government of the Russian Federation.
I. Implementation of targeted investment programmes in the first six months of 2011 has produced the following results:
According to the Federal Treasury, the allocations for 52 federal targeted programmes and two state programmes amount to 916.18 billion roubles as of August 1, 2011.
According to the Ministry of Economic Development, state contracts on these programmes (including contracts of the past years) were fulfilled in the period under review in the amount of 559.42 billion roubles (62.8% of the budget allocations for 2011). In the first six months of 2010, the relevant figure was 527.74 billion roubles or 71.2% of the annual budget appropriations.
According to the Federal Treasury, 344.91 billion roubles (37.7% of this year’s budget allocations) were spent from the federal budget on the planned programmes. This is higher than the funding spent as of August 1, 2010 by one percentage point (36.7%).
According to the Ministry of Economic Development, co-financing of the federal targeted programmes from regional and municipal budgets and extra-budgetary sources amounted to 293.73 billion roubles (16.3% of the annual planned figure) in the first six months of this year, which is a little above the level of the first six months of the past year (15.9%).
II. Main Results of the FTIP implementation in the first six months of 2011
The FTIP was carried out in 2011 in accordance with the relevant rules.
The government has allocated 895.6 billion roubles from the federal budget for the construction, reconstruction, technical re-equipment, purchase of real estate and implementation of measures (enlarged investment projects) under the FTIP (with due account of the amendments made by the Ministry of Economic Development in line with the established procedure). This sum includes 124.5 billion roubles of subsidies on co-financing of the construction of state property objects in the regions (municipal property) and 153.9 billion roubles of expenditures on the facilities covered by state defence contracts.
During the period under review, 205.5 billion roubles or 27.7% of the total budget investment were spent on the construction of facilities and on initiatives under the FTIP (including R&D but not counting state defence contracts), which corresponds to the level of funding in the first six months of 2010.
In the period under review, 124.7 billion roubles were spent on the FTIP programme part and 80.8 billion roubles on its non-programme part, that is, 25.6% and 31.7%, respectively, of all budget appropriations on the FTIP.
According to top administrators, spending of funds from all sources amounted to 76% from the total FTIP funding or 20% of the total appropriations on the FTIP implementation in 2011.
The FTIP provides for the funding in 2011 of 3,400 facilities (excluding those under state defence contracts), out of which 2,935 are federal property, 341 regional property and 134 are owned by open joint stock companies.
Under the plan, 1,408 facilities or 41.4% of the total will be put into operation in 2011. Almost all of them will be launched in the second six months of 2011.
3. Draft Federal Law on Amendments to the Federal Law on Physical Fitness and Sports in the Russian Federation
The draft has been submitted by the Ministry of Sport, Tourism and Youth Policy.
The draft defines a regional sports federation and specifies the accreditation procedures for national and regional sports federations, the functions of executive bodies in physical fitness and sports as regards accreditation of regional sports federations, the procedures for electing top managers and leading bodies of national sports federations for Olympic sports and the functions of the National Olympic Committee in forming the Olympic national team.
The draft extends the list of obligations of sports federations in training Russian national sports teams, organising national championships and cups, holding competitions for children and teenagers, reporting on their activities to the relevant federal executive body and publishing results of inspections on their websites.
The authors of the draft have added an article specifying the rights and responsibilities of accredited regional sports federations in organising regional championships and cups, compiling regional programmes for different sports and reporting on their activities to the relevant regional executive body.
The draft gives the right to the relevant regional executive body to send its representatives to sports events held by a regional sports federation and to the meetings of its top management in order to control regional sports federations’ compliance with the legal requirements.
To promote the current and future objectives of sports development and attract additional funds, the draft provides for the formation of boards of trustees (supervisory boards) in national sports federations.
4. Draft Federal Law on Amendments to Certain Legislative Acts of the Russian Federation
5. Draft Federal Law on Amendments to the Federal Law on Fire Safety Regulations
6. Signing the Protocol on Amendments to the Agreement on Special Protective, Anti-Dumping and Countervailing Measures as Regards Third Countries of January 25, 2008
The draft executive order has been submitted by the Ministry of Industry and Trade.
The Protocol provisions provide for specific amendments to the rules of special protective, anti-dumping and countervailing inquiries and measures to protect the Customs Union’s internal market, including pre-emptive measures pending the inquiry period.
The Interstate Council of the Eurasian Economic Community (the supreme body of the Customs Union) has endorsed the protocol, which is subject to ratification under the Federal Law on International Agreements of the Russian Federation.
7. Submitting to the president of the Russian Federation a proposal on signing the Protocol on Supplements to the Treaty on the Customs Code of the Customs Union (CU) of November 27, 2009
The draft resolution has been submitted by the Federal Customs Service (FCS).
The protocol provisions specify the terminology related to the movement of commodities through transmission lines and pipeline distribution networks and sets out specific procedures for customs operations during the transit of goods. The draft defines specific procedures for customs operations pending the transitional period until the signing of international treaties envisaged by Part 2, Item 1 of Article 337 of the CU Customs Code between a CU member state and an adjacent state on the operation of metres measuring the commodities transferred by transmission lines and pipeline distribution networks on the territory of the adjacent state.
The transfer of commodities across the CU customs border by transmission lines and pipeline distribution networks is regulated by Chapter 47 of the CU Customs Code. The procedures for the movement of commodities across the CU customs border that are not covered by the CU Customs Code are regulated by the legislation and (or) international treaties of the CU member states.
Specific procedures for the transfer of goods through pipelines and transmission lines that are not regulated by the CU Customs Code are envisaged by the Federal Law on Customs Regulations in the Russian Federation.
8. Signing the Agreement on Certain Aspects of the Movement of Commodities Through Transmission Lines and Pipeline Distribution Networks across the CU Customs Border
The draft resolution has been submitted by the FCS.
The draft agreement defines import, export and transit procedures for customs-controlled commodities transferred by transmission lines and pipeline distribution networks on the CU customs territory, including mixed shipments involving pipelines, specificities of their declaration and their customs transit procedures.
The transfer of commodities across the CU customs border by transmission lines and pipeline distribution networks is regulated by Chapter 47 of the CU Customs Code. The procedures for the movement of commodities across the CU customs border that are not covered by the CU Customs Code, are regulated by the legislation and (or) international treaties of the CU member states.
Specific procedures for the transfer of goods through transmission lines and pipeline distribution networks that are not regulated by the CU Customs Code are envisaged by the Federal Law on Customs Regulations in the Russian Federation.
9. Amendments to the Statute on the Ministry of Economic Development
The draft resolution has been submitted by the Ministry of Economic Development.
The Federal Law on Technical Inspection of Motor Vehicles and on the Amendments to Certain Legislative Acts of the Russian Federation provides for the endorsement by federal executive bodies of the following legislative acts:
* A model technical inspection agreement;
* Procedures for keeping a register of technical inspection operators;
* Procedures for the formation and publication of an open and accessible resource containing information from the register of technical inspection operators;
* Accreditation rules for technical inspection operators.
Items 9, 15 and 17 of the Plan on Preparing Drafts of Regulatory Legal Acts required for the Implementation of the Federal Law on Technical Inspection of Motor Vehicles and on the Amendments to Certain Legislative Acts of the Russian Federation assign the said powers to the Ministry of Economic Development.
To legalise these powers of the Ministry of Economic Development it is necessary to introduce relevant amendments into the Statute on the said ministry.
10. Formation of the organisational committee for the preparation of an international conference and exhibition on protecting intellectual property rights, countering fake and low quality products and elaborating measures to promote the production of quality goods The draft executive order has been submitted by the Ministry of the Interior.
The draft provides for the formation of the organisational committee and endorsement of its member composition with a view to preparing and hosting in February 2011 of an international conference and exhibition on protecting intellectual property rights, countering fake and low quality products and elaborating measures to promote the production of quality goods.
The draft suggests the following line-up for the committee:
chairman (First Deputy Prime Minister Igor Shuvalov); three deputy chairmen (member of the Federal Assembly Federation Council Aslanbek Aslakhanov, Deputy Minister of the Interior Igor Alyoshin, Deputy Minister of Industry and Trade Georgy Kalamanov), committee members representing concerned federal executive bodies (the Ministry of Economic Development, the Foreign Ministry, the Federal Ssecurity Service (FSB), the Ministry of Education and Science, the Federal Service for Intellectual Property, the Federal Service for Supervision of Consumer Protection and Welfare, the Finance Ministry, the Ministry of Healthcare and Social Development, the Federal Customs Service (FTS)and the Ministry of Culture) and organisations (the national public organisation of medium and small business OPORA RUSSIA, the national public organisation Delovaya Rossiya, the interregional public organisation the Moscow Entrepreneur Association (MEA), the non-profit Russian Union of Commodity Producers and the Chamber of Commerce and Industry of the Russian Federation).
The participants in the conference and exhibition will:
* Discuss the elements and principles of a system to counter the turnover of counterfeit goods on the national commodity market;
* Determine the ways of improving legislation against counterfeit goods (including legislation to protect copyrights and adjacent rights in the Internet and future directions of countering counterfeit content);
* Improve measures on countering illegal production and import of goods;
* Review the status of cooperation between government bodies (including law-enforcement agencies), Russian and foreign producers and business communities on countering counterfeit goods and drafting proposals on making it more effective;
* Elaborate common rules of conduct for market participants and end users of products;
* Compile a Russian system for identifying the origin of goods;
* Intensify a public awareness campaign (primarily among end users of products);
* conduct fairs of Russian and foreign products, such as medicines, foods, tobacco, jewellery and perfume products, software, spare parts and telephones and other products for which there is great demand with simultaneous demonstration of their counterfeit versions;
* demonstrate technology and inventions for identifying counterfeit products.
11. Allocating to the government of the Samara Region budget money from the Government Reserve Fund for the Prevention and Liquidation of Emergency Situations and the Aftermath of Natural Disasters in order to conduct relief efforts following the flood on the region’s territory in April 2011.
Moscow,
September 12, 2011
* Press releases by the Department of Press Service and Information are based on the materials submitted by the executive federal bodies for discussion by the Government Presidiu.
