Putin Makes Aggressive Move to Bust Up Monopolies, Warns Entrepreneurs Not to Abuse Their Position
Only high treason could be punished more harshly than violating anti-monopoly rules. Vladimir Putin reminded the State Council how legislation developed in the countries that are now called market-based. Violating laws on competition causes enormous damage to the economy. The president urged entrepreneurs not to be opportunists, and governors not to create artificial advantages for local companies.
Alexander Balitsky is reporting.
The President signed a decree on development late last year, And today is the time to draw the first conclusions. Healthy competition and freedom of entrepreneurship are the key to the development of the country's economy. Without it, no breakthrough or advance is possible. The Kremlin understands this perfectly. The fact that the first session of the State Council after the presidential elections is dedicated to the development of competition is an indication of the government's focus on it. The country even has adopted a national plan. And the Anti-Monopoly Service has recently submitted as many as four legislative packages. The only thing left to do, is to enforce them, said Putin to the governors. It turns out that local authorities are responsible for the lion's share of competition violations, 98% of the cases, almost like Griboyedov would write.
President Putin: "We consider this to be no big deal, that it's nothing serious; in other words, "we need to take care of the local guy" state enterprises and municipal enterprises. But in fact, the damage to Russia’s economy is colossal. We cannot see or feel it, but it is huge".
Officials should create the conditions for fair competition, instead of helping certain businessmen. Budget expenditures are rising, and companies with officials in their pockets don't care about the quality of production or services they provide. All this also undermines business confidence, depriving it of incentives.
President Putin: "Ultimately, it affects consumers, Russian citizens. It should be particularly noted that public and state-run companies are occupying the niches that could be taken by small and medium-sized businesses. They are forcing them out of the markets and monopolizing these markets".
Igor Artemyev, Head of the Federal Anti-Monopoly Service: "In addition to the public procurement legislation, we propose to create a list of works which are to be given only to small businesses, like, only small businesses should paint fences in Russia as well as cleaning or changing bulbs. They can do this just fine".
But not only state monopolies and municipal enterprises force out small and medium businesses. So-called regional protectionism does as well. It aims to create favorable conditions for local producers. But what about competition? Putin addresses the governors.
President Putin: "I want you to turn around and listen to me: a local producer means a Russian producer, not antiquated, this is extremely important. I agree that it is possible and necessary to use regional preferences for supporting business for the purpose of increasing employment and incomes of residents and revenues of budgets. However, it is one thing when benefits are equally available for everyone but it’s another story altogether when discriminatory restrictions are created for entrepreneurs from different regions or bans are imposed on the imports of goods. This directly contradicts the principle of the unity of the country’s economic space. Such overprotection is distorting the environment of competition. I would like to add, that companies with these artificial advantages, and certainly, you understand this, will become less effective in the long term and will impose on you low-quality goods or services for inflated prices".
By 2020, state purchases from small and medium-sized businesses will have doubled, which will encourage their growth even further. For now, the situation is far from ideal. Though, there are good examples. The electronic tenders system is working in Moscow.
Sergey Sobyanin, Mayor of Moscow: "Regions only have to write an application and go online together with their suppliers. And it is profitable not only for them to make purchases, but also to get their small and medium businesses there, thus creating a powerful nationwide e-store".
President Putin: "I recommend incorporating this good practice".
Vladimir Zhirinovsky, LDPR party: "Mr. President, but they can not ensure good quality. E-store doesn't mean good quality, they'll keep adding palm oil, fast food, etc, kids are eating this trash".
President Putin: "Mr.Zhirinovsky, it's the duty of the supervisory organizations. We should choose on a competitive basis, but a high-quality product. If it's low-quality, a deception, supervisory organizations should check it".
Particular attention was paid to housing and utilities (utility rates too) and construction.
Gennady Zyuganov, head of the Communist Party: "We need to have professional builders in all bodies of government and management. When rules and regulations are often violated, then you can expect anything".
And Vladimir Zhirinovsky suggested assessing the quality of services provided to the citizens in the regions by their faces.
Vladimir Zhirinovsky, head of LDPR: "Tomorrow, on April 6, people will go to work in all regions. Where are the happiest faces? That's where a good governor is. Gloomy, dissatisfied, irritated and angry faces illustrate the activity of a governor and the mayor best of all. Let them show you".
President Putin: "I think that if we implement only this criteria, tomorrow everyone will smile. But this is unlikely to reflect the real state of affairs in the regional economies".
Competition is the engine of the market economy, and at least 3 players are supposed to compete on the market, one of them necessarily representing the private sector.
Alexei Dyumin, governor of the Tula Region: "We understand it will result in more jobs, new industries, in every sense of the word".
Sergei Tsivilev, who's been recently appointed governor of the Kemerovo Region, speaks about business, including trade.
Sergei Tsivilev: "We will support business, we are interested in the fact that business can provide high-quality services to the population. But the people's safety is our top priority. Under no circumstances will we tolerate negligence about it. But I want to say that everyone understands this. The owners, managing these facilities, they have already developed their own program, they all want to make it transparent and open. So, I think, together we'll put things in order".
Business representatives listened to the President's speech attentively too. They asked about the responsibility and punishment for breaking the anti-monopoly legislation.
Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs: "We should consider the necessity of imprisonment for breaking the anti-monopoly legislation when a strict punishment could be purely economic, like compensation of damage and fines. It could be a considerable sum".
President Putin: “How did the anti-monopoly legislation develop in those countries that today are called countries with developed market economies? Only high treason and murder were punished more harshly than violating anti-monopoly rules. I want everyone to hear this, too. We can deregulate it, too. But it has nothing to do with administrative influence on business.”
According to the President, this doesn't only concern businessmen.
President Putin: "Generally, these cartel agreements don't just happen by themselves. It's not only collusion on the market between specific economic entities, but as a rule, public authorities get involved as well. It's the merging of business and the state, in the worst sense of the word, which we must fight and prevent in our country's economy".
So-called road maps and recommendations to ensure a competitive environment will be drafted for each industry from pharmacy chains to construction. A breakthrough will need a united effort by the authorities, business, and society. One can't be opportunists who only care about their own well-being, says Putin, adding that we must hit the ground running.
Alexander Balitsky, Andrei Grigoryev, Alexander Malyshev, and Natalya Lundovskaya for Vesti.