World price tags are being cut off from Russian goods

The State Duma yesterday approved in the first reading a bill on the gradual decoupling of prices for goods on the domestic market of the Russian Federation from global indicators. So far we are talking only about the possibility of the FAS not to take them into account when determining the monopoly high and low prices of goods. At the same time, the bill has already faced criticism from deputies due to the risks of widespread application of standards and even inflated prices on the domestic market. Experts acknowledge these risks due to the low level of competition in the domestic market, but note that the FAS will retain the same tools and the ability to “reconcile” with world prices.

The State Duma adopted in the first reading draft amendments to the law “On the Protection of Competition”, which makes it possible to decouple prices for goods in the Russian Federation from exchange and over-the-counter price indicators of world commodity markets. It was prepared by senators Vyacheslav Timchenko and Alexander Savin, the FAS supports the project – it corresponds to the “road map” of the service for the development of exchange trading in goods. The document excludes from the concept of monopoly high and low prices of goods a comparison with prices on foreign markets – FAS will not be obliged to take into account their exchange and over-the-counter indicators.

The explanatory note explains this by the fact that prices in the Russian Federation are often based on world prices without taking into account the situation in the domestic market, and the changes will ensure the priority of the interests of Russian consumers, regardless of external conditions. The FAS agrees that prices within the country should primarily take into account the balance of supply and demand and the capabilities of the domestic consumer. The project “will extend to goods for which domestic indicators have already been created,” they add. According to the materials of the State Duma, this is already the second version of the bill: it takes into account the remark about the prematureness of a complete abandonment of global indicators before the formation of their national system. However, the legal department of the Duma apparatus notes the risks of widespread application of the norm due to the lack of specification of cases of admissibility of the use of external indicators.

The head of the Institute of Economics and Regulation of Infrastructure Industries at the National Research University Higher School of Economics, Ilya Dolmatov, believes that foreign indicators are not entirely objective for the domestic market in the changed geopolitical conditions, but if necessary, the FAS retains a tool for comparing prices with world prices. Veta managing partner Ilya Zharsky points to a possible increase in uncertainty in markets, including fuels, metals, crops, fertilizers, chemicals, petrochemicals and medicines. “If the market is deprived of the opportunity to focus on world prices, benchmarks and pricing rules should be offered in return. Determining the market price within an isolated market seems extremely difficult,” he says. The president of the consulting company Alexandra, Alexander Belozertsev, believes that the state is increasingly trying to interfere in pricing in the country’s main commodity markets, ignoring the needs of the real development of market benchmarks for leading export products. “Although the Russian Federation is one of the largest exporters and importers of raw materials in the world, it still does not have its own generally accepted stock exchange indicators,” he notes.

Tatyana Basova, head of economic research at the consulting company Kulik & Partners Law.Economics, says that the changes will not eliminate disputes between economic entities and government agencies, but it will become more difficult to prove the validity of pricing. In antimonopoly regulation, the concept of a comparable market outside the Russian Federation will disappear. “FAS rarely agreed with companies’ arguments about the existence of such markets. Now companies will be deprived of the opportunity to argue that their prices do not exceed prices in such markets,” explains managing partner of the company Yaroslav Kulik.

Diana Galieva