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Legal Dilemma: Concerted Actions



The article deals with the concept of concerted actions of economic entities as a special type of anti-competitive action as it is defined in some jurisdictions like Russia, and Kazakhstan and the practice of understanding and interpretation by local antitrust authorities.


As per Article 8 of Law of the Russian Federation “On Protection of Competition” dated 26.07.2006 #135-FZ concerted actions of economic entities are the actions of economic entities in the commodity market in the absence of an agreement that satisfies the totality of the following conditions:

  1. The result of such actions is in the interests of each of the specified economic entities;

  2. The actions are known in advance to each of the economic entities participating in them in connection with the public statement of one of them about the commission of such actions;

  3. The actions of each of these economic entities are caused by the actions of other economic entities participating in concerted actions and are not the result of circumstances that equally affect all economic entities in the relevant commodity market. Such circumstances may be a change in regulated tariffs, a change in prices for raw materials used to produce a product, a change in prices for a product on world commodity markets, a significant change in demand for a product for at least one year or during the life of the relevant product market if this period is less than one year.

As per Article 170.2 of Entrepreneurship Code of the Republic of Kazakhstan dated 29.10.2015 # 375-V the actions of market entities may be recognized as coordinated if they meet the following conditions in aggregate:

  1. These actions restrict competition;

  2. The result of such actions corresponds to the interests of each of the market entities;

  3. The actions of market entities are known in advance to each of them in connection with the public statement of one of them or the public placement of information by one of them about the commission of such actions;

  4. The actions of each of the specified market entities are caused by the actions of other market entities participating in concerted actions;

  5. The actions of market entities are not a consequence of circumstances that equally affect these market entities (changes in tax and other legislation of the Republic of Kazakhstan, consumption dynamics, tariffs for services of natural monopoly entities, prices for raw materials and goods used in the production, sale of goods);

  6. The total share of market entities in the relevant commodity market is thirty-five percent or more. At the same time, the minimum value of the share of one market entity in the relevant commodity market should be five percent or more.

It is noted that the normatively established signs of concerted actions have shortcomings. Their use to assess the behavior of subjects can limit the freedom of contract and other legal opportunities provided to participants by civil law application.


The first feature, which implies the satisfaction of the interests of each person participating in concerted actions by achieving a single result for all, contradicts the general theoretical understanding of interest as a subjective-objective category. Practically in a highly dynamic market where competitors have almost the same market positions will act in a way that corresponds to their interests. Otherwise, it does not make sense to run commercial activity if the acts will not correspond to their interests.


The second feature, indicating that the actions are known to each participant in them in connection with the public statement of one of them, indicates the similarity of concerted actions with other violations of anti-competitive agreements. It is still not clear if this public statement should be done on behalf of the company orally or in writing. It is also not clear if publicly available information which is spread by customers of one of the manufacturers would be viewed as a public statement on which competitors may rely.


The third sign, by virtue of which the actions of each entity participating in concerted actions are caused by the actions of other economic entities and are not the result of objective economic reasons, is not applicable to all participants in concerted actions. This sign tries to formalize the approach, however, each industry and economic entity’s activity should be viewed on a case by case approach taking into account economic analysis. The authorities should also take into consideration that business takes a decision not purely just relying on objective reasons only. For each business, it is also important to stay competitive. The way how they may understand it is via the data they buy in the markets. So, the norm means contradicts market practices and does not take into account market reality.


The study of the practice of applying the norms on concerted actions shows that the assessment of the behavior of economic entities is mainly based on the objectified result of their actions, the subjective side is not always taken into account. This approach allows the antimonopoly authorities to use the structure of concerted actions to qualify agreements of economic entities that restrict competition when there is no evidence of their existence. It is proposed at the legislative level to refuse to recognize concerted actions as an independent anti-competitive offense.

 

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