Why Enforcement against Excessive Pricing in the Russian Federation is not Sufficiently Successful?

Abstract

In developed competition jurisdictions, excessive pricing is more a subject of academic and expert discussions than an actively used instrument of competition enforcement. Russian competition enforcement is an exception in this regard. During the last ten years the Russian competition authority, the Federal Antirust Service (FAS), made several hundred decisions on the violation of rules prohibiting excessive pricing. Th e question remains whether Russian enforcement is consistent with international experiences, and which part of enforcement limits a positive welfare effect. To achieve this objective the article explains the targets of excessive price enforcement, the legal standard for excessive pricing, and remedies applied in Russian competition law. Th e main conclusion is that the selection of targets does not generally contradict the objectives of competition enforcement. Th ere are clear theories of harm specifi c to two of the main target groups: dominant exporting companies that apply third-price discrimination in the domestic market vis-à-vis export markets, and dominant companies that increase prices aft er deregulation, in case there is no new entry. Standards for proving price excessiveness represent a questionable part of enforcement, and they oft en turn out to be weak under judicial review. Th e application of either lower or higher standards for establishing price excessiveness results in decreasing the deterrence eff ect. A fear of decreasing deterrence explains the recent shift from ex-post intervention to ex-ante price remedies.