OREANDA-NEWS  On 03 March was announced, that in order to prevent coordination of economic activity between the market participants on the markets of milk products, on 22nd February 2009 the Federal Antimonopoly Service (FAS Russia) sent a note of warning to the "Russian Union of Dairy Plants" Non-Commercial Organization (RSPMO) and the National Union of Milk Producers ("Soyuzmoloko").

FAS Russia's warning was caused by information in the media that on 22nd January 2008 RSPMO and "Soyuzmoloko" signed a Cooperation Agreement on coordinating activities of the two unions in order to devise anti-crisis measures for the dairy industry and proposals for its further development, increase the quality of products and their availability to the customers, and stimulate overall efficiency of the dairy industry.

In particular, according to the Agreement, the working group, formed within the framework of the Agreement, must by 1st March 2009 formulate the procedures for monitoring the cost of milk production and the cost of processing raw milk into the main types of dairy products. The group must also devise indicators of the level of cost and price of raw milk, at which business cannot be profitable. RSPMO and "Soyuzmoloko" also intend to draft a long-term agreement (minimum 5 years) to specify the terms and conditions, under which producers deliver and processing plants accept raw milk. Such conditions will include: amounts of the raw milk to be delivered for processing in the spring-summer and autumn-winter seasons; prices (the pricing formula) for the raw milk delivered for processing, depending on the season. Special attention will be paid to the structure of industry costs and comparable rates of inter-industrial profitability.

FAS Russia emphasizes that certain provisions of the proposed Agreement can be in violation of Article 11 the Federal Law "On Protection of Competition".

To prevent any antimonopoly violations, FAS Russia proposes that prior to signing the Agreement, and in accord with Article 35 the Federal Law "On Protection of Competition", RSPMO and "Soyuzmoloko" shall forward a draft Agreement to FAS Russia for verifying its compliance with the antimonopoly legislation.

Reference: Article 11 the Federal Law "On Protection of Competition" prohibits agreements or concerted actions between economic entities on goods markets, if such agreements or concerted actions result or can result in:

- Fixing or maintaining prices (rates), discounts, mark-ups (margins) surcharges

- Market division - geographical, by volumes of sales or purchase of goods, by the mix of distributed goods, or by composition of sellers or buyers (customers)

- Economically or technologically unjustified refusal to sign contracts with particular sellers or buyers (customers)

- Economically, technologically, or otherwise unjustified fixing of different prices (rates) for the same goods

- Restricting entry to or exit from the goods market, or eliminating economic entities form the market

- Other competition-restrictive consequences.