The Russian Government has adopted Resolution No. 1254 dated 17 August 2020 “On amending the Regulation on the Public Control (Surveillance) Over State-regulated Prices (Tariffs)” (the “Resolution”), which amends the Regulation governing the public control (surveillance) procedures in the area of state-regulated prices (tariffs).

The amendments have become necessary as the Federal Antimonopoly Service (“FAS”) of Russia cancels the scheduled audits conducted as part of public control over state-regulated prices (tariffs) in view of the current regulation being redundant and imposing an excessive burden on controlled entities.

Notably, these control measures have already been suspended in 2020 due to the pandemic. From now on, pursuant to the adopted Resolution the scheduled audits that used to be conducted by the FAS will no longer be performed with respect to legal entities and individual entrepreneurs.

Moreover, in relation to local governments of communities and urban districts exercising the tariff regulation powers granted to them, the Resolution abolishes the regional state control in the form of systematic surveillance over compliance with compulsory requirements, analysis and forecasting of the state of such compliance in exercise of the relevant powers, including state control over conformity with information disclosure standards.

At the same time, scheduled audits are still being conducted at the regional level. They are performed by executive bodies of constituent entities of the Russian Federation responsible for state regulation of prices (tariffs).

At the moment it is permitted to carry out audits if the following conditions are met:

• the operations of legal entities and individual entrepreneurs and/or the production facilities they use are classified as pertaining to an extremely high or high level of risk;
• legal entities and individual entrepreneurs are not included in the Unified Register of SMEs (The Russian Government’s Resolution No. 438 dated 3 April 2020 “On the specifics of exercising state control (surveillance) and municipal control in 2020 and on amending clause 7 of the Rules whereby the state control (surveillance) and municipal control bodies prepare annual plans of scheduled audits of legal entities and individual entrepreneurs”).

Despite the easement of administrative burden in the form of an exemption of businesses from scheduled audits in the tariff regulation area, companies should not let their guard down, because regional authorities can still conduct a scheduled audit to identify other breaches of legislation.

Moreover, the Resolution has abolished the provision that allowed officers of a regional state control body, if they identified any offences, to abolish:

• resolutions that the local governments of communities or urban districts adopted (i) beyond their authority to regulate the heating energy tariffs, or (ii) at variance with Russian legislation in the area of heat supply;
• resolutions taken within the powers granted under the Law on Water Supply and Water Removal, if such resolutions contradict Russian legislation (while exercising the regional state control (surveillance) authority).

What to think about and what to do

Despite the measures that have been taken to ease the regulation and support businesses, the antimonopoly authority still promptly addresses any violations of current laws. Thus, companies need to follow up on the measures being taken by the government and the changing regulations to remain good-faith participants of the market.

Pepeliaev Group’s experts