10 October 2012
PaRR (Policy and Regulatory Report) publishes commentary by Evgeny Bolshakov

FAS investigation into Pollock fishing cartel may become an international case

Parties to an alleged Pollock fishing cartel in the Russian Far East could face charges from international regulatory authorities, several Russian antitrust lawyers told PaRR.

Regulatory authorities from outside Russia may see the cartel from an international angle, said Nikolay Voznesenskiy, head of the Competition and Antitrust Practice at Goltsblat BLP, the Russian practice of London-based law firm BLP.

Voznesenskiy said that given the Pollock market's significant international scope, the parties to the alleged cartel may face charges in non-Russian Pollock markets, where authorities may wish to investigate the alleged cartel’s cooperation.

On 18 September, 2012, Russia's Federal Antimonopoly Service (FAS) initiated an antimonopoly case against a trade body, the Pollock Catchers Association, and 53 fishery companies in the Russian Far East.

According to FAS, the Association is suspected of illegal coordination of economic activity of economic entities (Part 5, Article 11 of the Federal Law on Protection of Competition).

The FAS statement on the investigation cited Alexandr Kinyov, head of the FAS' Anticartel Department “FAS disposes of information on the fact that within the alleged cartel, the coordinator of which has been the Association and the participants-companies-members of the PCA, there were repeated negotiations and exchanges of letters to concert the volume of Pollock harvested and the products of fish processed (pollock caviar, pollock fillet, “Pollock without head”, fish flour).

“Terms, conditions and prices for sale, and respective agreements were negotiated and signed. All this caused or could cause the restriction or elimination of competition between competitors in this market, and, as a consequence, the creation of an artificial deficit of these goods and increase of prices for them.”

FAS has named Chinese Pacific Andes International Holdings Limited (Pacific Andes) as arraigned to the case as an entity deposing information.

Chinese Pacific Andes has been criticized by Russian politicians since at least 2008 for its large take of the domestic Alaska Pollock catch.

The issue became an increasingly focal point ahead of the parliamentary election in December 2011 and the presidential vote four months later.

FAS is currently trying to determine the relationship between the Pollock Cathers Association and Pacific Andes.

If FAS manages to prove that there was an "agreement" between the Association and its member companies with regard to resale prices and volumes of goods, a violation of the law would be proved, said Evgeny Bolshakov, senior associate at Egorov Puginsky Afanasiev & Partners’ Antitrust Practice. In this respect, this is a straightforward case because it requires only factual evidence, Bolshakov said.

A representative of the Pollock Catchers Association told PaRR that it still has not received an official note from FAS in regards to the start of investigation. This process is likely to be long and can take up to nine months, which is a maximum timeframe, said Bolshakov.

Companies involved in the cartel could face fines of up to 15% of their pollock revenues, but it would depend on revenue and market share, he added.

by Natalia Lapotko in London