Results: the ways to delimitate competencies

28.11.2012. Vedomosti

Radmila Nikitina, Acting Head of Competition Law Group of the Law Firm "YUST"

The issue of delimitation of competencies between antitrust bodies and consumers’ rights protection authorities is topical in the law-application practice of antitrust bodies as well as courts.

The areas of effect of competition law and of the consumers’ rights protection law may overlap in the matters of regulation of relations with individual consumers. This is especially true for Articles 10, 11 of the Competition Law and Article 16 of the Consumer’s Rights Protection Law.

For example, part 1 Article 10 of the Competition Law prohibits those economy subjects, which occupy a dominating position, to infringe upon the interests of the others, including by forcing the contractor to accept disadvantageous conditions or by refusing to enter into an agreement. In its turn, part 4 of Article 11 of the Competition Law prohibits such agreements as cause or may cause imposition of disadvantageous conditions or refusal to enter into an agreement.

Similar provisions are contained in Article 16 of the Consumer’s Rights Protection Law. According to that Article, it is prohibited to infringe upon the consumer’s rights, including linking the purchase of certain goods (works, services) to mandatory purchase of other goods (works, services).

The problem is further complicated by the fact that application of competition and consumers’ rights protection legislation are within the competence of different public authorities. The issues related to safeguarding control over the observance of antitrust legislation rest with the FAS of Russia, and in the sphere of protection of consumers’ rights – with Rospotrebnadzor.

Therefore, current legislation actually endows the FAS of Russia and Rospotrebnadzor with redundant powers. The respective competencies usually overlap in cases related to the imposition of disadvantageous agreement conditions on consumers. Those violations are not commonly connected with the risks of unfavourable consequences for competition, and fall within the sphere of competence of antitrust authorities for a purely formal reason.

In practice, not only does the current state of events lead to redundancy of functions of public authorities, but it also permits to bring an economy subject to administrative liability twice for a single action, as said action may be simultaneously qualified as a violation of competition law and of consumers’ rights protection law. This problem is well illustrated by an example with the banks, which render consumers’ credit services, when they include in the agreement conditions, which are unfavourable for the borrowers; or by the case of carriers occupying dominating positions, when they include additional services in the tariff for passengers’ transportation.

Practical solution

As there is no clear legal regulation, the law-application practice attempts to resolve the problem of delimitation of competencies of antitrust bodies and consumers’ rights protection authorities. The possibility of arising of negative consequences for the competitors is suggested as a criterion.

The forming of such approach was stimulated by the Resolution No. BAC-14175/10 by the Board of the HCA of Russia dated 05.04.2011, on the case of appeal against a decision by the antitrust authority, which ruled that the inclusion by “RZhD” OJSC of payment for the use of bed linen in the transportation tariff was abuse of a dominating position. The Board of the HCA of Russia declared the decision of the antitrust authority illegal and pointed out that the authority had no powers to consider the antitrust case as the possibility of arising of negative consequences for the competition as a result of actions by “RZhD” OJSC was not proven. According to the Court, consumers’ rights protection provisions are applicable to such relations.

Following the Resolution by the Board of the HCA of Russia, the exclusion from the sphere of antitrust regulation of the cases related to infringement of the consumers’ rights without affecting competition received support from the law-application practice (resolutions of the Eleventh Court of Appeal dated 21.06.2012 on the case No. A72-9642/2011, dated 06.07.2012 on the case No. A72-742/2012, resolution No. 50-467/2012 by the Court of Arbitration of Perm Territory dated 26.06.2012, decision No. 22-ФАС52-05/11 by the FAS Department of Nizhny Novgorod dated 27.08.2012). Doubtlessly, a different practice also exists, when the courts take the opposite position on the issue.

When evaluating the vector of movement of the law-application practice towards restrictive interpretation of the antitrust bodies’ competence, its positiveness should be stressed.

First of all, this is obvious, when one looks at the problem from the point of view of the purposes of antitrust regulation. In most countries with a developed market economy the purpose of protection of the consumers’ interests in competition law is achieved indirectly – by protecting the competition (competition structure of the market and elimination of the inefficiency in the market’s operation). When the competition structure of the market is present, the consumer may receive the largest choice of goods of the highest quality for the lowest price.

Unlike the antitrust legislation, the consumers’ rights protection law is mainly characterized by granting the guarantees to the consumers as participants of civil law relations during the interaction with economy subjects and is directly aimed at the protection of subjective rights of individual consumers.

Respectively, from the point of view of the purposes of antitrust regulation, the exclusion from the competition law sphere of the cases connected with the infringements of the consumers’ rights, when there is no risk of negative influence on competition, appears correct, since competition law is not aimed at protection of subjective rights of individual consumers, and the instruments of the antimonopoly legislation are insufficient for that.

The other advantages of restricting the competence of antitrust authorities include the necessity to eliminate the redundancy of Rospotrebnadzor functions and double liability of economy subjects for the same action, application of disproportionate sanctions for violation of antitrust legislation to the offences, which are much less dangerous to the public as they do not affect competition in an adverse way.

Therefore, the law-application practice has set a vector of development of competition law, which should be supported by the lawmakers. In this connection, it appears correct to delimitate the competencies of the antitrust bodies and consumers’ rights protection authorities in the legislation on the basis of the criterion of effect over competition. Alternatively, the subject composition may be used as a criterion for the delimitation of competencies: exclusion from the sphere of antitrust regulation of cases with the involvement of individual consumers. In practice, both criteria will have positive results.

The source of the publication is available here.