The development of competition and the removal of barriers to business can eliminate many of the effects of sanctions. Professor Seyed Mohammadreza Seyed-Nourani , Chairman of the National Competition Council of the Islamic Republic, shared Iran's experience in this area. He delivered a lecture “Iran's Economy under Sanctions: the Role of Antimonopoly Policy” at the National Research University Higher School of Economics (HSE University). The lecture was organized within the framework of the workshop of the International BRICS Competition Law and Policy Centre (BRICS Centre).
The moderator of the workshop, Director of the BRICS Centre Alexey Ivanov, reminded: Iran's economy has been operating under sanctions of varying degrees of severity since the victory of the Islamic Revolution in February 1979. Nevertheless, the country is developing not only its traditionally strong oil industry, but also pharmaceuticals and high-tech companies.
Andrey Tsyganov, Deputy Head of the Federal Antimonopoly Service (FAS) of Russia, said the FAS of Russia and Iran's National Competition Council have signed a Memorandum of Cooperation.
“We will learn what allows the Iranian economy to move forward and what role fair competition plays in this, the rules of which are monitored by the Competition Council,”
Andrey Tsyganov said.
Prof. Seyed Mohammadreza Seyed-Nourani explained that the National Competition Council (NCC) and the Competition Center, which monitors the implementation of the Council's decisions, were established in 2008. The council consists of 11 members with the right to vote and three observers appointed by parliament. The analog of the Russian FAS consists of representatives of the executive and judicial authorities, as well as business: two are appointed by the Supreme Court of Iran, one representative each is delegated by the Iranian Chamber of Commerce and the Iranian Chamber of Cooperatives. The government is represented by two each from the Ministry of Economy and the Ministry of Industry and Mining, an economist from the government, representatives of the budget planning organization, and one person from the Ministry of Justice is appointed.
The council elects a chairman who, as well as the government representatives, are confirmed in office by a decree of the President of Iran. The NCC Chairman emphasized the independent status of the Competition Council and its members: according to him, no government body can prosecute the council members for their decisions. Its structure allows making decisions that take into account the interests of all economic agents. The key factors for appointment as a member of the council are professionalism and expert knowledge in their field of activity.
The key elements of the Council's activities Seyed Mohammadreza Seyed-Nourani described as combating overpricing, unfair price changes and obstacles to the entry of new companies into the market, abuse of monopoly position in the market, as well as unfair use of information (especially insider knowledge and data on competitors) for commercial purposes in industries that are recognized as regulated.
The Council conducts market analysis and identifies the limits of the market for goods and services subject to regulation and the conditions of access to markets deemed monopolistic, submits recommendations to the government on the development of draft laws, and issues orders to cancel anticompetitive actions, including the annulment of contracts and transactions that violate the principles of competition. The Council also issues regulations on seizure of additional profits and seizure of property obtained due to violation of antimonopoly laws, conducts investigations and imposes fines.
In its regulatory activities, the National Competition Council studies markets, determines, using various indices, the degree of concentration and implements measures to support competition, including issuing licenses to entrepreneurs to do business in certain areas. Businessmen can appeal to the Council against the refusal to issue a license. The decision to issue a license to the NCC can be challenged in court, but, Seyed Mohammadreza Seyed-Nourani noted, due to the high qualifications of the council's staff, including lawyers, most of its decisions remain in force.
The biggest cases of competition infringement in recent years have been filed in the steel, telecommunications, pharmaceuticals and refined petroleum products sectors. Responding to a question from HSE Daily, the NCC Chairman said the largest fine - the equivalent of $1.7 million - was imposed on telecoms.
Seyed Mohammadreza Seyed-Nourani also remarked: tougher sanctions and impeded imports worsen competition conditions, for example in the procurement of cars and medicines. The inability to import stimulates price increases even without changes in import tariffs.
“In any case, imports fulfill some anti-monopoly function, it promotes competition. Of course, our priority is to support our own producers, but in the fight against monopolization of some sectors of the economy it is necessary to grant import permits at least in a limited amount, as this will help stabilize prices and improve the quality of manufactured products,”
he said.
Iman Cheratian, Professor at the Academic Center for Education, Research and Culture at Tarbiat Modares University (Tehran, Iran), explained that the Competition Center is divided into economic and legal departments and employs 64 people, including 12 with a degree similar to PhD, 27 are masters and 12 are bachelors.
In 2022, it has conducted more than 150 multilateral antitrust investigations, handled 122 cases on price regulation and market access, 24 on the control of large companies, 251 on licenses, and issued 16 decisions on the prohibition of government support.
The most intense struggle was over the recognition of the automobile industry as a monopoly industry. Despite opposition from some agencies, the NCC decided to introduce price regulation for automobiles from March 21, 2023 (Persian New Year).
Alexey Ivanov wondered how important antimonopoly regulation is in the face of sanctions. Seyed Mohammadreza Seyed-Nourani believes that anti-Russian restrictions have not yet reached the level of sanctions against Iran.
“You still have everything ahead of you, while I saw - the most modern cars are driving, your residents are dressed in fashionable clothes of leading manufacturers, it is noticeable that women seem to be unaffected by the sanctions,”
said the Chairman of the NCC.
He noted that the political unity of the country became the foundation of successful development under the sanctions, and at the same time emphasized that protection of competition within the country is of great importance. Any monopoly, Seyed Mohammadreza Seyed-Nourani noted, limits the state's capabilities. If any structure within Iran acquires a monopoly position, it can only serve as a source of abuse, and it is very important that the fight against monopolism is based on the ideas of Islam, which considers competition an important condition for the discovery of the individual.
According to him, the Council makes proposals to the government in case of any manifestations of monopolism, including in the activities of state and natural monopolies.
“Of course, we are counteracted, we are constantly faced with this in the courts, but I am sure that the activities of the Competition Council are of great importance, especially amid the sanctions,”
said the NCC Chairman.
In order to overcome sanctions, it is important to form a knowledge-based economy. In it, both small and large businesses are important, each playing a different role.
“It is not only the small that looks beautiful, but also the big,” Seyed Mohammadreza Seyed-Nourani said. "For example, take the automobile industry: it is better to have three concerns than 40 small businesses.”
Dmitry Potapenko, Chairman of the Afanasy Nikitin Association, asked whether Russian and other foreign companies, including transportation companies, can appeal to the council when they face excessive tariffs and unequal conditions in their work.
According to the NСC Chairman, much depends on the terms of contracts: some of the contracts between Iranian and foreign companies are subject to government and parliamentary approval. Also important is the compliance of the documents with international trade law. Given the friendly relations between Russia and Iran, there should be no problems in handling.
“All contradictions can be resolved peacefully in friendly negotiations,”
Seyed Mohammadreza Seyed-Nourani is sure.
Andrey Tsyganov asked whether a Russian or Kazakh carrier has the right to appeal to the Council if the contract stipulates worse conditions compared to the Iranian company?
“We have not had any precedents so far, if we consider it, it is quite possible that we will make such a decision. It is possible that we need the interpretation of the legislature,”
replied the Chairman of the NCC.
Seyed Mohammadreza Seyed-Nourani proposed to organize research cooperation between the National Competition Council and the HSE University.
“Let's prepare joint proposals, define a list of issues on which the parties are interested in cooperation, determine the boundaries of the upcoming work and prepare a Memorandum of Intent,”
he said.
Answering Alexey Ivanov's question about the peculiarities of Iran's corporate governance and antitrust policy, Seyed Mohammadreza Seyed-Nouraninoted the importance of following the principles of the Islamic economy, which is based on the principles of a healthy market and fairness.
“It is a market with a lot of information, a lot of buyers and sellers. In it, there are no or limited manifestations of anti-competitive actions and monopolism, and there is no possibility of cheating the counterparty. This is what we understand as the Islamic economy.”
explained the NCC Chairman.
Marat Zembatov, Deputy Director of the HSE Institute of Education, also took part in the discussion.
At the conclusion of the workshop, Alexey Ivanov thanked Seyed Mohammadreza Seyed-Nourani for the interesting lecture and expressed hope that the workshop would result in the formation of two areas of cooperation - the North-South transport corridor and a new educational project.
Following the visit of the Iranian delegation, Seyed Mohammadreza Seyed-Nouraniaccepted Alexey Ivanov's invitation to visit Russia again in May. It was also agreed to sign a cooperation agreement between the National Competition Council, Allameh Tabatabaei University and the HSE University to develop economic and educational ties and to expand the space of cooperation between Russian and Iranian business in priority areas.
Source: HSE Daily
