Tuesday, April 6, 2010

Window on Eurasia: Russia’s Anti-Monopoly Agency Not about Trust Busting, Moscow Economist Says

Paul Goble

Vienna, April 6 -- Many have drawn a parallel between Russia’s wild capitalism in the 1990s and the gilded age of capitalism in the United States a century earlier and suggested that eventually progressive measures like anti-trust legislation will transform Russia’s economy just as they did to the American after 1900.
But if that is to happen, Russia’s Federal Anti-Monopoly Service (FAS) is not going to play that role unless it is fundamentally transformed, one Moscow analyst says, because up to now it focused on prices rather than competition in much the same way the Soviet State Committee on Prices (Goskomtsen) did (newtimes.ru/articles/detail/17599/).
In an article entitled “Anti-Trust Russian-Style,” Vadim Novikov, a senior researcher at the Moscow Academy of Economics, calls attention to a recent statement by FAS head Igor Artemyev that what his agency is doing represents “an historic case which will be remembered even a century from now as a key move in the question of the anti-monopoly policy of Russia.”
Unfortunately, Novikov continues, what everyone will in fact remember is that “the anti-monopoly policy in Russia (anti-trust) is in the first instance the history of control over prices and not about competition or the productivity of the economy,” a reflection that post-Soviet Russia has made little change from Soviet practice in this area.
As the economist points out, “the contemporary Russian anti-trust model was formulated under the influence of events of 20 years ago. The anti-monopoly law adopted in 1991 was supposed to become a counterweight to the all-embracing presence of the state and to make up for the absence of market traditions and rules of business exchange.”
That goal explains some of the features of Moscow’s approach “which are being preserved even now.” It involves “not only major companies but also organs of power. It protects new entrants into the market, small and mid-sized enterprises having inherited from the perestroika the political task of creating a class of private owners.”
The Russian “anti-trust” law also was intended to promote “honest” and “just” competition rather than being “restricted to issues of monopoly power,” all the more so because there was a view that monopolies represented “a non-monetary factor of inflation” rather than a broader range of problems.
That attitude continues to inform Russian officials working in this area, many of whom continue to pursue “excessive” profits and “monopoly” prices rather than the economic organizations that allow these things to occur, something entirely different from the anti-trust approach of the European Union and the United States.
“But over the last 20 years,” Novikov continues, “the situation has essentially changed.” Anti-trust regulation no longer has “an exceptional status” and “just like all other types of regulation is considered by many experts as a potential administrative barrier and obstacle for competition.”
At the present time, he continues, “at the center of the economic order of the day both for the government and for the opposition is not so much the issue of the establishment of a private sector and the formation of the rules of business activity as is the increasing of the productivity of the economy.” And that different focus requires a different approach.
Indeed, Novikov says, “if someone today in these new circumstances were to think up an anti-monopoly law ‘from square one,’ [the measure he would propose] would have little in common with the existing one,” something that few in the government or the opposition appear to recognize.
And if the Federal Anti-Monopoly Service is successful in the cases it has brought against oil producers now, “anti-trust” in any genuine sense is likely to be “politically impossible. The government will continue to seek control over prices rather than to promote competition. And the FAS will remain something like a new edition of the Soviet Goskomtsen.

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