INTERVIEW: Igor Artemyev, head of Russia's Federal Anti-Monopoly Service

By bne IntelliNews February 13, 2007

Jason Corcoran in Moscow -

Much of the responsibility for having turned Russia's anti-monopoly commission into one of the country's more effective market regulators rests on the broad shoulders of its director, Igor Artemyev.

The career politician, who once played full-back for the Leningrad rugby union club in the old USSR league, has proved that he is willing and able to charge and tackle opponents considerably larger than himself.

Although the Federal Anti-Monopoly Service (FAS) is not free from political pressure, it has a track record of following the law and has been involved in a number of high-profile cases where Russian domestic producers and even state-controlled entitles, such as the savings bank Sberbank, have been held to account.

With reform of the electricity sector in progress and deregulation occurring in other natural monopolies like the railways, Artemyev told bne in an exclusive interview that the FAS is well on it on way to becoming a European-styled regulator.

"I consider the FAS to be my main project in life and I think there is tremendous potential putting its full powers in place and I put a high value on this. I want the anti-monopoly service to be a truly European body in terms of its contents and style," he says.

New anti-trust legislation will allow the FAS to take legal action against government officials and to fine companies up to 4% of their revenues, a 10-fold increase on existing fines, though still some way short of the EU levy of 10%.

"Until 2004, the maximum fine was RUB500,000, or $17,000, for any client," explains Artemyev. "This meant that after a year of litigation, the company would just pay the fine, which was peanuts, and keep going as before."

"For more dangerous crimes, such as forming cartels, there may be imprisonment of three, five, seven or even 10 years and we would like this law to be force by the end of this year. Then the FAS will be a more powerful lobby. At the moment, we are just beginning and we are still having very little impact on real economics," he says.

Sanctuary from the law

Overall, Artemyev claims that FAS wins 80% of its cases, although that figures drops to 30% when it comes up against the state-controlled Gazprom. The FAS has tangled continuously with what Artemyev refers to as Russia's last zapovednik, or sanctuary, of natural monopolies.

Although he says there had been no pressure from the Kremlin, the FAS has only been able to delay the energy giant's wresting of control over companies such as Mosenergo and Northgas.

The FAS will continue to oppose Gazprom's growing monopolism, but Artemyev is realistic about what can be achieved. "We normally launch about 20 suits against Gazprom a year and there have never been any complaints from the government or the Kremlin. But there is one rational reason why Gazprom won't be reformed and that is because Russia is carrying through a reform of its electricity industry that no other country has done before in terms of its scale. It's impossible to carry out this kind of reform simultaneously with reform of Gazprom. This definitely can't be done. There may be irrational reasons as well."

High profile campaigns have also put the spotlight on Russia's leading mobile phone companies, the construction and banking industries.

The FAS makes no distinctions for foreign companies and last week fined beverage maker PepsiCo Holdings for breaking advertising laws.

"Russian companies are more often the target of such action, but recent cases [against foreign firms] are Nissan, Ushan, Visa, Adidas International and Western Union," he says. "It's all about having good lawyers and being able to explain the new law. We have taken a neutral and friendly position with foreign business and we meet executives from foreign companies to try to explain our position."

Artemyev is a unique figure in the cabinet, as he was co-opted from the opposition Yabloko party in 2004. Far from leaving the party, he retained his position as a deputy to party chairman Grigory Yavlinsky and says the two roles don't conflict.

"Under the laws of the state service, I must be loyal to my employers and I am loyal to them. I know that both the president and the prime minister have good knowledge of my years and so far I have never been able to break any etiquette as regards Yabloko and as regards my employers," he says.

Artemyev, who served as vice-governor of St Petersburg from 1996 to 1999, says he will stay on at the FAS for as long as his prime minister and president want him. A survivor of the rough and tumble of St Petersburg public life, he is philosophical about the dangers of shining light on murky business practises in Russia.

"I knew the banker Andrei Kozlov very well and he is a tremendous loss," he laments. "As for being afraid, I have been through this before when I was deputy governor of St Petersburg. What was happening in St Petersburg in the mid-1990s is a lot worse than what happens today. At that time I was very anxious. I think you should just do what you are able to do and just trust your stars."

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