OREANDA-NEWS. May 06, 2010. Following the instructions of First Deputy Chairman of the Government of the Russian Federation, Vladimir Zubkov, at the beginning of 2010 the Federal Antimonopoly Service (FAS Russia) examined a draft Agreement about general principles of cooperation between milk producers and processers within the framework of "SOYUZMOLOKO" - the National Union of Milk Producers (the Agreement) The Agreement is aimed at stabilization and development of the Russian milk complex. FAS Russia has formulated the following position, reported the press-centre of FAS Russia:

Considering the draft Agreement, FAS Russia took as a premise that the Agreement was planned between members of "SOYUZMOLOKO" - milk producers and processers.

By essence the Agreement is not a cartel and FAS Russia treats it as a "vertical" agreement, which is defined in Article 4 of the Federal Law "On Protection of Competition". The Agreement will not cause the consequences specified in Part 12 Article 11 of the Federal Law "On Protection of Competition", because it does not lead to fixing resale price, or restrict buyer's ability to independently determine the price for reselling the goods (processed products) to other persons, and does not contain requirements not to buy raw milk from competitors - milk producers that did not sign the Agreement.

FAS Russia also takes into account the fact that the Federal Law "On Protection of Competition" does not forbid "vertical" agreements between economic entities if the share of each participant does not exceed 20% of the relevant market. This is the situation if the above producers and processers (buyers) of raw materials participate in the Agreement, which in accord with Article 12 of the Federal Law "On Protection of Competition" will be an allowable "vertical" agreement.

The draft Agreement does not contain a requirement to set a fixed purchasing price for raw milk, and simply sets an estimated bench-mark market price per kilogram of milk at 11 Rubles, which in 2011 should be a reference point for independent setting of prices by economic entities, and at the same time creates certain price indicators necessary to plan agricultural activities.

At the same time the draft Agreement provides for specific mechanisms for transition to minimum purchasing price for raw milk in 2010 on the basis of indicative net costs under the formulae determined by the National Research Institute of Agricultural Economics, of the Russian Academy of Agriculture, with further correction of the bench-mark price per kilogram of raw milk in view of seasonal production of milk in a particular region, quality indicators and consumer demand.

Also the Agreement does not create opportunities for individual persons to eliminate competition on the relevant market. At the same time all market participants maintain their independence in economic decision-making.

To prevent actions that lead or can lead to restriction of competition, FAS Russia monitors the relevant market in question, guided by the prohibiting norms of Articles 10 and 11 of the Federal Law "On Protection of Competition".

FAS Russia emphasizes that it is prohibited for the authorities of the constituent territories of the Russian Federal and local self-government bodies to coordinate actions of economic entities in terms of them joining the Agreement, as well as forcing economic entities to make any other arrangements "in furtherance" of the Agreement.

Such actions of the authorities of the constituent territories of the Russian Federal and local self-government bodies, in particular, restricting the rights of economic entities for selling, buying, acquiring otherwise, exchanging goods; giving instructions to economic entities about priority delivery of goods for a specific category of buyers (clients) or about signing contracts on a priority basis; restricting buyers in their choice of economic entities that offer the goods - violate Part 1 Article 15 of the Federal Law "On Protection of Competition" and are prohibited by the antimonopoly legislation.

Article 16 of the Federal Law "On Protection of Competition" prohibits direct participation of the authorities of the constituent territories of the Russian Federal and local self-government bodies in the Agreement that leads or can lead to preventing, restricting, eliminating competition, in particular, increasing, reducing or maintaining prices.

FAS Russia and its regional offices will endeavour to identify signs of antimonopoly violations in implementing the Agreement and, should particular facts be established, undertake measures to eliminate them.