OREANDA-NEWS. June 04, 2014. To execute the instructions by First Deputy Chairman of the Government of the Russian Federation, Igor Shuvalov (the Protocol of the Meeting “On Disagreements between the Ministry of Economic Development and the Federal Tariff Service on the Amendments to No. 130555-6 Draft Federal Law “On Introducing Changes to the Federal Law “On Customs Regulation in the Russian Federation” of 03.07.2013 No.ISh-P13-75pr), FAS analyzed the state of competition on the markets of duty free services within the limits of checkpoints on the State Border of the Russian Federation in 2012-2013. The results are submitted to the Government of the Russian Federation.

Product boundaries were determined as duty free services with consolidated commodity groups (alcohol products, tobacco products, food products, perfumes and cosmetics, jewelry, accessories, haberdashery, bags and suitcases, toys, literature, etc.) within the limits of checkpoints on the State Border of the Russian Federation.

The survey was limited by the geographic boundaries of 44 air, 33 road, 9 sea, 2 railway and 1 river checkpoints on the State Border of the Russian Federation, that form separate markets.

The findings shows that 67 checkpoints on the State Border of the Russian Federation have only one operating economic entity, at 14 checkpoints there are two economic entities in operation and at 3 checkpoints – there are three economic entities in operation. It is possible to conclude that competition on these markets is underdeveloped. All above duty-free markets are highly concentrated.

Four or more economic entities operate only at 5 checkpoints on the State Border of the Russian Federation. However, by calculating market concentration coefficients it is established that only the market of duty-free trade with alcohol products within the boundaries of “Sheremetyevo Airport” air checkpoint (Терминал F) (Moscow region) in 2012-2013 was moderately concentrated, other markets of duty-free services were highly concentrated.

It was also established that some economic entities operated within the boundaries of several checkpoints on the State Border of the Russian Federation. 40 economic entities had the dominant position on the markets in question in 2012-2013.

The high level of market concentration is explained by their “closeness” since entry of new participants to the market is significantly hampered due to certain insurmountable barriers (limited number of premises for organizing duty-free stores and their inadaptability for trading with particular goods).

“FAS believes that in view of the specifics of duty-free trade, it is a separate type of trading and cannot be regulated by common rules and requirements regulating trading within the “domestic” territory of the Russian Federation. Therefore, the current law must provide for specifics of its regulation”, pointed out Deputy Head of FAS Department for Control over Social Sphere and Trade, Nadezhda Sharavskaya.