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President of Russia Vladimir Putin: Mr. Artemyev, I would like to discuss several issues with you. You are aware of the draft presidential executive order on regulating the area of activity that you are in charge of, but which also concerns promoting competition.

You are probably aware of the criticism as well: some experts in the Presidential Executive Office and the Government believe that certain draft executive order provisions should be substantially re-worked. I would like to know what you think about this. That is first.

Second, tariffs. Tariffs are approved differently in different regions, and they vary significantly across the regions.

This affects the economy and our citizens, I mean housing and utilities. You have a proposal to organise this work based on a single ticket principle. I would also like to know your vision of it.

And the law on trade, of course. What is the FAS doing in this area? This issue is brought up constantly at various meetings, be it with business people, or the general public.

Head of the Federal Antimonopoly Service Igor Artemyev: Mr President, first with regard to the presidential executive order on the national plan for promoting competition in our country.

Firstly, this executive order is unlike any other – neither before the 1917 revolution nor after it was there ever an executive order in this country, where the head of state set guidelines for promoting competition in order to make the economy more efficient.

Today the Russian Government has completely coordinated that text. We worked in the Government for about a year and all disagreements were resolved but there are a number of legitimate comments, including some from the Presidential Executive Office, the expert administration, the Office of the Presidential Aide for Economic Issues and naturally, the State-Legal Directorate of the Executive Office.

I met with your aide, Andrei Belousov, this morning to discuss all possible changes and I think the text will be amended; we need to do a little more work to finally reach a consensus.

However, I believe it is very important that there are specific parameters that should be achieved regarding the national plan that is being drafted, analogous to the national plan for fighting corruption, which required a review every three years both by the sectors and overall, in terms of certain indicators.

Today, when the Government and the Executive Office are looking for additional reserves to boost the economy, competition remains an inexhaustible asset that we are not using very much yet.

Here, I believe we will probably need a month or a little more and, with your permission, we will present to you a fully coordinated executive order.

Vladimir Putin: Fine.

Igor Artemyev: Regarding tariff policy, I would describe what happened some time ago as ‘diverging galaxies’. It so happens that Russia never had a law on the fundamental principles of tariff policy that would be concerned precisely with fundamental principles, general rules, for example, of price formation.

For example, our water or heat regulations are indeed “diverging galaxies.” Or, say, power generation – production price formation is totally different there. Only 200 or 500 experts in the country can navigate the complexity while average people have no clue to where tariffs come from.

Of course, we are sometimes surprised when the Government and the Executive Office take a very tough approach and say that a tariff should not grow by more than 4 percent but we see a 26–30 percent growth. Why does that happen?

Because regions and local governments have a lot of loopholes for altering state policy, using these loopholes or the peculiarities of our legislation. If we had such a law – and we have drafted it now – it would not allow anything of that kind to happen.

I would like to say that tariff disparities for some water supply companies can vary by 50 times. Although we understand that there are different technologies, north to south, three-fold, four-fold, but 50 times! Power grid companies’ tariffs differ by a factor of eight. Power distribution companies, by a factor of 12 – not percentages, but times.

This is wrong, of course. Somewhere, loans are factored in – it is not clear what loans, those companies grant themselves, and this translates into a corresponding tariff. It is crucial to work very thoroughly and seriously on this law, and the Government has already recognised the need for it. The same goes for the executive order. This law is the first of its kind. It is fundamental and comprehensive.

The Government should make this effort to bring this law into being so that you could present it as a crucial foundation of future stability in this sphere. Because stability in tariffs is not only stability for our people but also for our entrepreneurs, factories and plants – everything depends on it.

As for the law on trade. After the deputies insisted on tougher language, last year it was passed; we analysed and conducted a total of about a thousand oversight events together with regional authorities throughout the country.

I would like to tell you that the deviation from the norm allowed by the law is 11 to 22 percent. Bonuses have not yet been put in order in accordance with the law; we found such violations in 22 percent of cases. Late payments in 11 percent. What does this mean?

Vladimir Putin: Sorry, one moment please. I met once again with the Council of Legislators…

Igor Artemyev: I have just seen the broadcast.

Vladimir Putin: Now manufacturers are forced to take expired goods back. There are more and more such tricks.

Igor Artemyev: We know this, Mr President. Most importantly, the maximum deviation for all types of violations for federal networks is 22 percent. Eighty percent of the networks brought their contracts and their relations with Russian producers in order; they recognise the law, do not complain, and behave in this sense much better than in past years. Life taught them a good lesson.

For example, it is much less common that we encounter the most flagrant kind of false marketing, when additional services are imposed on Russian manufacturers, which, in fact, is a kind of fraud. Therefore, after having completed all inspections, we published such a report on the website and sent it to the Government.

I am pleased to report that we are moving in the right direction, which we think is very important. And the law that was passed was passed correctly, because it was necessary to eliminate those bad practices.

Vladimir Putin: I would ask you to keep paying attention to this issue and continuously monitor the implementation of this law. And, if necessary, make suggestions for any adjustments based on the results of law enforcement practice.

Igor Artemyev: Yes, Mr President.

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