Adopted
by the State Duma
on July 19, 1995
(in the wording of Federal Laws No. 126-FZ dated August 08, 2001,
No. 196-FZ dated December 30, 2001, No. 16-FZ dated January 10, 2003,
No. 39-FZ dated March 26, 2003, No. 58-FZ dated June 29, 2004,
No. 199-FZ dated December 31, 2005)
Chapter 1. GENERAL PROVISIONS
Article 1. Purposes of the Present Federal Law
The present Federal Law determines legal fundamentals of the federal policy in respect of natural monopolies in the Russian Federation and is aimed at achieving a balance of interests of natural monopoly entities and consumers, which ensures availability of goods sold by natural monopoly entities to consumers and effective functioning of natural monopoly entities.
Article 2. Scope of Application of the Present Federal Law
The present Federal Law shall be applied to relationships arising in commodity markets of the Russian Federation and in which natural monopoly entities, consumers, federal bodies of executive power, bodies of executive power of the constituent entities of the Russian Federation and bodies of local self-government participate.
The regulation of activities of natural monopoly entities provided for by this Federal Law may not be applied in the spheres of activities that do not relate to natural monopolies, except for the cases established by federal laws.
Article 3. Definitions of Basic Notions
For the purposes of this Federal Law, the following basic notions shall have the following meanings:
“natural monopoly” shall mean the state of the commodity market in which demand is more effectively satisfied when due to technological peculiarities of production there is no competition (due to substantial reduction of the production cost per unit of commodity as a result of increasing output), and in which commodities manufactured by natural monopoly entities cannot be substituted with other commodities in the market, thus causing the demand in the given commodity market to be less responsive to changes in price compared to the demand for other types of commodities;
“natural monopoly entity” shall mean commercial organization (legal entity) engaged in the production (sales) of commodities under conditions of natural monopoly;
“consumer” shall mean an individual or legal entity purchasing commodities produced (sold) by a natural monopoly entity;
“head of a natural monopoly entity (or commercial entity)” shall mean an individual authorized to act (without a power of attorney) on behalf of a natural monopoly entity (or other commercial entity).
The notions "commodity", "commodity market", "commercial entities", "group of persons" shall be applied respectively in the meanings specified in Article 4 of the Law of RSFSR "On Competition and Restriction of Monopolistic Activities in Commodity Markets".
The notion "public railway transport infrastructure” shall be applied in the meaning specified in Article 2 of the Federal Law “Charter of the Railway Transport of the Russian Federation".
(Part III is enacted by Federal Law No. 16-FZ dated October 10, 2003)
Article 4. Fields of Activities of Natural Monopoly Entities
1. The present Federal Law shall regulate activities of natural monopoly entities in the following fields:
(in the wording of Federal Law No. 16-FZ dated January 10. 2003)
transportation of oil and petroleum products via trunk pipelines;
transportation of gas via pipelines;
the paragraph is excluded. - Federal Law No. 39-FZ dated March 26, 2003.
railway transportation;
services of transport terminals, ports and airports;
public telecommunications and postal services;
(in the wording of Federal Law No. 199-FZ dated December 31, 2005)
electric power supply services;
(the paragraph is enacted by Federal Law No. 39-FZ dated March 26, 2003)
operating dispatch control services in the electric power industry;
(the paragraph is enacted by Federal Law No. 39-FZ dated March 26, 2003)
thermal power supply services;
(the paragraph is enacted by Federal Law No. 39-FZ dated March 26, 2003)
services for use of infrastructure of inland waterways.
(the paragraph is enacted by Federal Law No. 199-FZ dated December 31, 2005)
(Item 2 is enacted by Federal Law No. 16-FZ dated January 10, 2003)
3. It shall not be allowed to constrain an economically justified transition of natural monopoly activity fields specified in Item 1 of this Article from the state of a natural monopoly defined in accordance with paragraph two of part one of Article 3 of this Federal Law to the state of a competitive market.
(Item 3 is enacted by Federal Law No. 16-FZ dated January 10, 2003)
Article 5. Bodies, Exercising Regulation of Activities of Natural Monopoly Entities
1. To regulate and control activities of natural monopoly entities, federal executive bodies for regulating natural monopolies (hereinafter referred to as the “natural monopoly regulatory agencies”) shall be constituted pursuant to the procedures established for federal executive authorities.
2. To exercise their powers, natural monopoly regulatory agencies shall be entitled to establish their territorial bodies and to vest them with powers within their competence.
3. The bodies of executive power of the constituent entity of the Russian Federation responsible for state regulation of tariffs shall participate in exercising state regulation and supervision of activity of natural monopoly entities in the procedure established by legislation of the Russian Federation.
(Item 3 is enacted by Federal Law No. 199-FZ dated December 31, 2005)
Chapter II. STATE REGULATION AND CONTROL OVER ACTIVITIES
OF NATURAL MONOPOLY ENTITIES
Article 6. Methods to Regulate Activities of Natural Monopoly Entities
Natural monopoly regulatory agencies may employ the following methods to regulate activities of natural monopoly entities (hereinafter referred to as the regulatory methods):
price regulation, implemented by means of determination (fixing) of prices (tariffs) or price ceilings;
identification of consumer groups that shall receive services under a mandatory service arrangement and (or) the fixing of a minimum level of services rendered in the event that full consumer demand for the commodities produced (sold) by a natural monopoly entity cannot be satisfied, while taking into account the necessity to defend rights and legal interests of citizens and ensure state security, environmental safety and cultural values.
When oil is exported outside the customs territory of the Russian Federation, the right of access to the system of Russian trunk pipelines and terminals in seaports shall be granted to organizations that produce oil and are registered in the established procedure as well as to organizations that are parent companies in respect of organizations that produce oil, in proportion to the volumes of produced oil delivered to the trunk pipeline system, taking into account the 100 per cent throughput capacity of trunk pipelines (based on their technical capabilities).
(Part II is enacted by Federal Law No. 126-FZ of August 8, 2001)
The list of commodities (works, services) of natural monopoly entities with state regulated prices (tariffs) and the state regulation procedure of prices (tariffs) for these commodities (works, services) including pricing fundamentals and rules for state regulation and control shall be established by the Government of the Russian Federation.
(Part III is enacted by Federal Law No. 199-FZ dated December 31, 2005)
Article 7. State Control over Activities of Natural Monopoly Entities
1. For the purposes to pursue an efficient state policy in fields of activity of natural monopoly entities, natural monopoly regulatory agencies shall exercise control over activities undertaken or involving natural monopoly entities and that may result in impairment of interests of consumers of products subject to the provisions of this Federal Law, or in restraining the economically justified transition of the relevant commodity market from the status of a natural monopoly market into the status of a competitive market.
2. Natural monopoly regulatory agencies shall exercise control over:
any transactions as a result of which a natural monopoly entity acquires the right of ownership for fixed assets or the right to exploit fixed assets not intended for use in the production (sales) of the commodities regulated subject to the provisions of the present Federal law if the value of such fixed assets exceeds 10% of the natural monopoly entity capital value under the most recently approved balance sheet;
capital investment made by a natural monopoly entity into the production (sale) of commodities, not regulated by this Federal Law, when the investment exceeds 10% of the natural monopoly entity assets value under the most recent approved balance sheet;
sale, lease or any transaction as a result of which a commercial organization acquires either the property right or right of ownership and (or) the right to exploit fixed assets of a natural monopoly entity intended for use in the production (sale) of the commodities regulated subject to the provisions of the present Federal Law if the value of such fixed assets exceeds 10% of the natural monopoly entity capital value under the most recently approved balance sheet;
3. For the performance of actions specified in Item 2 of this Article, a natural monopoly entity shall be obliged to submit a request to perform such actions to the relevant natural monopoly regulatory agency and provide information required for passing a resolution.
Requirements concerning the contents of the said information and the form of its submission as well as the procedures for petitions consideration shall be determined by rules approved by the relevant natural monopoly regulatory agency.
A natural monopoly regulatory agency may reject the petition if activities stipulated therein may lead to negative consequences set forth in Item 1 of this Article and likewise in cases when the applicant has failed to submit all the required documents or, when it follows out from the review of the said documents, that information contained therein essential for passing a resolution is unreliable in character.
The natural monopoly regulatory agency shall provide the applicant with a written notification regarding its resolution (acceptance or rejection) within 30 days from the receipt of the petition. Rejections shall be based on relevant grounds.
Should any additional information be required for passing a resolution, the natural monopoly regulatory agency involved may request the applicant to provide the said information and extend the deadline for review of the petition by 30 days under the proviso that such a request, together with the notification of an extension of the term for the review of the petition, are forwarded to the applicant within 15 days from the receipt of the petition.
If no response from the natural monopoly regulatory agency is received within 15 days from the expiration date of the petition review period, or if consent is rejected on grounds deemed by the applicant as unlawful, the applicant may appeal to court to protect his rights.
4. An entity or group of entities that, through a market acquisition of shares (participatory interests) in the charter (aggregate) capital of a natural monopoly entity, or as a result of other transactions (including contract of agency, asset trusteeship contracts, or mortgage contracts), acquires more than 10% of the total number of votes of all shares (participatory interests) comprising the charter (aggregate) capital of a natural monopoly entity, is obligated to notify the relevant natural monopoly agency of the event as well as of all the events resulting in a change in shareholding structure of the said entities within 30-days period from the date of acquisition of the said rights. A natural monopoly entity acquiring shares (participatory interests) in the charter (aggregate) capital of another commercial entity granting the former a right to dispose of more than 10% of the total number of votes, shall bear the same liability.
In order to exercise control over the compliance with the requirements set forth in this Item, the natural monopoly regulatory agency is authorized to request from commercial entities (companies, partnerships) information concerning their shareholders disposing of more than 10% of the votes.
Article 8. Obligations of Natural Monopoly Entities
1. Natural monopoly entities may not refuse to sign production (sale) contracts with particular consumers to provide commodities which are subject to regulation under this Federal Law given that natural monopoly entity disposes capacities to produce (sell) such commodities.
2. Natural monopoly entities shall be obligated to submit to the appropriate natural monopoly regulatory agency:
current activity reports within the procedure and terms set forth by the agency;
capital investment draft plans.
3. Natural monopoly entities shall be obliged to ensure access to commodity markets and (or) produce (sell) goods and services which are subject to regulation in accordance with this Federal Law on nondiscriminatory conditions according to the requirements of the antimonopoly legislation.
(Item 3 is enacted by Federal Law No. 39-FZ dated March 26, 2003)
Chapter III. NATURAL MONOPOLY REGULATORY AGENCIES,
THEIR FUNCTIONS AND AUTHORITIES
Article 9. Natural Monopoly Regulatory Agencies
1. Natural monopoly regulatory agencies are established in the fields of activity indicated in Article 4 of this Federal Law.
2. General management by a federal executive agency regulating natural monopolies is entrusted to its head.
(Item
3. No longer in force. - Federal Law No. 58-FZ dated June 29, 2004.
4. No longer in force. - Federal Law No. 58-FZ dated June 29, 2004.
Article 10. Functions of Natural Monopoly Regulatory Agencies
Natural monopoly regulatory agencies shall perform the following basic functions:
establish and maintain a register of natural monopoly entities undergoing state regulation and control;
determine regulatory methods as provided for by this Federal Law with respect to specific natural monopoly entity;
exercise control within the scope of their competence over compliance with this Federal Law;
in line with the established procedure submit proposals on amending the current legislation on natural monopolies.
Article 11. Scope of Authority of Natural Monopoly Regulatory Agencies
(in the wording of Federal Law No. 199-FZ dated December 31, 2005)
1. Natural Monopoly Regulatory Agencies are authorized to:
adopt decisions binding upon natural monopoly entities, connected with the introducing, revising or revoking regulation, or with applying of regulatory methods stipulated by this Federal Law, including fixing of prices (tariffs);
establish rules for setting prices (tariffs) for commodities (works, services) of natural monopoly entities;
take decisions, within the scope of their competence, on cases concerning violation of this Federal Law;
submit to natural monopoly entities mandatory orders to cease violations of this Federal Law, as well as mandatory orders to redress the consequences of the said violations, to enter into a consumer contract or revise existing contract, and to surrender to the federal budget profits derived in the result of violations of this Federal Law;
take decisions regarding addition of an organization into the register of natural monopoly entities or expelling from such register;
submit to bodies of executive power and bodies of local self-government mandatory orders to repeal or amend acts adopted by them that are not consistent with this Federal Law, and (or) mandatory orders to cease violations of this Federal Law;
apply to court with claims and participate in legal proceedings in cases related to application or violation of this Federal Law;
exercise other authorities under the federal legislation.
Item 2 of Article 11 become effective from January 1, 2007 (Part 2 of Article 35 of Federal Law No. 199-FZ dated December 31, 2005).
2. Disputes and dissents arising between natural monopoly entities, their consumers and bodies of executive power of the constituent entities of the Russian Federation, connected with establishment and application of prices (tariffs) regulated according to this Federal Law, are subject to obligatory settlement by a natural monopoly regulatory agency in the pre-trial procedure. The procedure of pre-trial consideration of the said disputes and dissents shall be approved by the Government of the Russian Federation.
Article 12. Grounds for Taking Decisions by Natural Monopoly Regulatory Agencies to Apply Regulatory Methods
the cost of production (sales), including wages, the cost of raw materials and other materials and overhead costs;
taxes and other fees;
the value of fixed productive assets, the need for investments for reproduction of the said assets, and depreciation;
the forecasted profit from potential sales of commodities (services) at various prices (tariffs);
remoteness of various consumer groups from the site of production of commodities;
the degree to which the quality of the commodities produced (sold) satisfies consumer demand;
state subsidies and other support provided by the state.
2. While taking decisions on applying of certain regulatory methods, the natural monopoly regulatory agency is obligated to consider information submitted by interested parties relating to activities of the natural monopoly entity under the question.
Article 13. Right of Access to Information on Activities of Natural Monopoly Entities
1. For purposes to perform the functions assigned to natural monopoly regulatory agencies, their officials are granted unimpeded access to information concerning activities of natural monopoly entities available from bodies of executive power and local self-government and likewise from natural monopoly entities.
2. Natural monopoly entities, bodies of executive power and local self-government, in response to requests of natural monopoly regulatory agencies are obligated to submit reliable documentation and provide written and oral clarifications and any other information required by the agency to facilitate natural monopoly regulatory agencies in performing their functions as provided for by the present Federal Law.
3. Information of commercial confidential nature acquired by a natural monopoly regulatory agency under the provisions of this Article shall not be subject to disclosure.
Article 14. Public Disclosure of Decisions of Natural Monopoly Regulatory Agencies
1. Natural monopoly regulatory agencies are obligated to disclose to public through the mass media their decisions to introduce, revise or revoke regulation of activities of natural monopoly entities, and also information on the addition to or expelling from the register of natural monopoly entities, on regulatory methods applied to natural monopoly entities, and specific indices and requirements imposed by natural monopoly regulatory agencies on natural monopoly entities.
Natural monopoly regulatory agencies shall annually publish a report on their activities.
2. Natural monopoly regulatory agencies are obligated to disclose all cases of liability application for violations of this Federal Law in mass media.
3. Information on liquidation of natural monopoly regulatory agencies and grounds for such a decision shall be published in mass media.
Chapter IV. LIABILITY FOR VIOLATIONS OF THIS FEDERAL LAW
Article 15. Consequences of Violations of the Present Federal Law
1. Upon violation of this Federal Law, natural monopoly entities (their heads), bodies of executive power and local self-government (their responsible officials), in compliance with decisions (orders) of natural monopoly regulatory agencies, are obligated to:
cease violations of this Federal Law and (or) redress consequences of the said violations;
restore the situation existing prior to the violation or take other actions stipulated in the decision (order);
repeal or change the act, which does not comply with this Federal Law;
enter into a contract with a consumer receiving mandatory service;
amend the said contract;
pay à fine;
provide restitution for damages incurred.
3. Penalties imposed by decision of the natural monopoly regulatory agency are to be paid to the Federal budget within the term set forth in the decision.
Article 16. No longer in force. - Federal Law No. 196-FZ dated December 30, 2001.
Article 17. Restitution by a Natural Monopoly Entity of Damages Incurred as a Result of Violation of the Present Federal Law
Should the activity (or inactivity) of a natural monopoly entity violating this Federal Law cause damages, including those resulting from overcharging another entity, such damages shall be subject to restitution by the guilty natural monopoly entity as provided by the civil legislation.
Article 18. No longer in force. - Federal Law No. 196-FZ dated December 30, 2001.
Article 19. No longer in force. - Federal Law No. 196-FZ dated December 30, 2001.
Article 20. Restitution of Damages Incurred by a Natural Monopoly Entity or Another Commercial Entity Due to Unjustified Decisions or Activities (Inactivates) of a Natural Monopoly Regulatory Agency
In case if a decision adopted by a natural monopoly regulatory agency is in violation of this Federal Law, including decisions regarding determining (fixing) of prices (tariffs) without proper economic substantiation, and as a result the natural monopoly entity or another commercial entity suffers damages, they have the right to demand compensation for such damages in accordance with the procedure envisaged by the civil legislation.
Chapter V. PROCEDURES FOR TAKING DECISIONS (ORDERS)
BY NATURAL MONOPOLY REGULATORY AGENCIES,
AND PROCEDURES FOR THEIR IMPLEMENTATION AND PROTEST
Article 21. Procedures for Taking Decisions by Natural Monopoly Regulatory Agencies Concerning Introduction, Revision and Revocation of Regulation of Activities of Natural Monopoly Entities
1. Decisions relating to all issues concerning the introduction, revision or revocation of regulation of activities of natural monopoly entities as well as use of regulatory methods stipulated by this Federal Law, are adopted according to the procedure established by the Government of the Russian Federation,.
(in the wording of Federal Law No. 58-FZ dated June 29, 2004)
Issues relating to the introduction, revision or revocation of regulation of the activities of a natural monopoly entity can be considered on the basis of proposals of agencies of federal executive power, regional authorities, and local self-government, consumer organizations, associations and unions thereof and business entities.
A natural monopoly regulatory agency shall adopt decisions on issues concerning the introduction, revision or revocation of regulation of the activities of a natural monopoly entity as well as use of regulatory methods stipulated by this Federal Law, based on the results of analysis carried out on grounds provided in Article 12 of this Federal Law. An independent economic examination may be conducted under the decision of the natural monopoly regulatory agency.
A representative of the natural monopoly entity has the right to appear in the examination process conducted by the natural monopoly regulatory agency for introduction, revision or revocation of regulation of activities of the natural monopoly entity under the question. The natural monopoly entity must be given a notice of the date of such a consideration in advance.
The natural monopoly regulatory agency shall take decision on revision and revocation of regulation of activities of natural monopoly entities considering the progress in demonopolization of natural monopoly activity fields.
(the paragraph is enacted by Federal Law No. 16-FZ dated January 10, 2003)
2. Decisions to introduce, revise or revoke regulation or to reject the submitted proposal shall be adopted within six months from the receipt of such proposal. A rejection or partial rejection of the proposal must reasonably motivated.
(in the wording of Federal Law No. 58-FZ dated June 29, 2004)
Article 22. Relevant Grounds for Considering by Natural Monopoly Regulatory Agencies of Cases of Violations of the Present Federal Law
1. Natural monopoly regulatory agencies are authorized, within the scope of their competence, to examine cases regarding violations of this Federal Law and take decisions regarding to such cases.
2. The grounds for consideration of such cases include applications commercial entities, consumers, consumer public organizations, associations and unions thereof, and evidence provided by bodies of executive power, local self-government bodies and prosecutors.
3. Natural monopoly regulatory agencies are authorized to take initiative to consider cases based on information derived from mass media and other available materials showing violations of this Federal Law.
Article 23. Procedure for Considering by Natural Monopoly Regulatory Agencies of the Cases Concerning Violations of the Present Federal Law and Taking Decisions Regarding Such Cases
1. The procedure for considering by natural monopoly regulatory agencies of cases concerning violations of this Federal Law is established by the Government of the Russian Federation.
2. Decisions adopted by natural monopoly regulatory agencies on the basis of consideration of the case under question shall be submitted to interested parties in writing within 10 days from the adoption of such decisions. Orders issued on the basis of the said decisions shall be submitted to the interested parties within the same period.
3. Decisions on cases associated with violations of this Federal Law affecting public interests shall be published in mass media within a month of their date of adoption.
Article 24. Procedure to Execute Decisions (Orders) of Natural Monopoly Regulatory Agencies
1. Decisions (orders) of natural monopoly regulatory agencies shall be implemented by natural monopoly entities (their heads), bodies of executive power and local self-government (their officials) within the time period stipulated by the decisions (orders) but no later than 30 days from their receipt.
4. If a natural monopoly entity does not comply with the order to surrender to the federal budget the profits received as a result of violations of this Federal Law, natural monopoly regulatory agencies have the right to mount a suit to confiscate the unlawfully derived profit.
5. No longer in force. - Federal Law No. 196-FZ dated December 30, 2001.
Article 25. Procedure for Appealing Against Decisions (Orders) of Natural Monopoly Regulatory Agencies
1. Natural monopoly entities (their heads), bodies of executive power and local self-government (their officials) as well as consumers, consumer public organizations, associations and unions thereof, and the prosecutor may appeal to court to declare invalid in part or in full decisions (orders) of natural monopoly regulatory agencies in the event of its inconsistency with this Federal Law.
2. Submission of an appeal to court shall suspend execution of the decision (order) of the natural monopoly regulatory agency, made in compliance with the results of consideration of the case related to violations of the present Federal Law, for the period during which it is under consideration by the court, prior to legal enactment of the court's judgment.
(Item
Chapter VI. CONCLUDING PROVISIONS
Article 26. Conditions to Establish Federal Executive Agencies to Regulate Activities of Natural Monopolies
Federal bodies of executive power for regulating natural monopolies shall be formed within the limits of budgetary expenditures allocated for maintaining the state machine.
Article 27. On Enactment of the Present Federal Law
1. The present Federal Law shall come into force from the day of its official publication.
2. It is proposed to suggest to the President of the Russian Federation and entrust the Government of the Russian Federation to bring their normative legal acts into compliance with this Federal Law within the period of six months from the date of its official publication.
The Government of the Russian Federation shall be instructed in line with the established procedure to submit proposals within the three-month period to the State Duma of the Federal Assembly of the Russian Federation to bring Laws of the Russian Federation into compliance with this Federal Law.
President
of the Russian Federation
B. YELTSIN
Moscow, Kremlin
August, 17, 1995