Publication: Monitor Volume: 3 Issue: 165

A large gap in First Deputy Prime Minister Boris Nemtsov’s efforts to subject Russia’s monopolies to closer social control was filled at the end of August with the appointment of Natalia Fonaryova as head of the State Antimonopoly Committee (SAC). (Russian agencies, August 28; Rossiiskaya gazeta, August 29) However, while Fonaryova has worked for SAC since 1992, her appointment leaves unanswered some questions about the government’s commitment to competition policy.

Since its creation in 1991, SAC has promoted the development of market competition in the Russian economy. Its central and 82 regional offices worked closely with the state property agency during 1992-1993 to break up many of the monopolistic organizations created during the Soviet period, and SAC has frequently opposed (with varying degrees of success) efforts by other government agencies to raise barriers to competition in order to favor certain privileged firms or organizations. Many observers therefore expected SAC to play a leading role in Nemtsov’s efforts to reform Gazprom, United Energy Systems (UES), and Russia’s other "natural monopoly" sectors (i.e., industries where a single firm can produce at lower costs than many firms). This did not happen, however. SAC’s first director, Leonid Bochin, resigned under pressure in January, and no replacement was named for nearly eight months. The absence of a strong competition agency raised questions about — and reduced the effectiveness of — Nemtsov’s efforts to reform Gazprom and UES.

Although Fonaryova’s appointment could help Nemtsov to press for further reforms of the natural monopolies, her specialty lies in the regulation of advertising, which is an altogether different sphere of competition policy. Likewise, at a meeting with SAC officials following Fonaryova’s appointment, Nemtsov emphasized the need to monitor regional "smart alecks" who favor "monopolies of the Soviet type that restrict the sales of bread, timber, dairy, and meat products outside of their regions." (Russian agencies, August 28) A chance to appoint a strong reformer who would push pro-competitive solutions to Russia’s economic problems may therefore have been missed.

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