Russian and foreign companies. Are they competitors?
In practice, there are cases when goods are produced by a foreign company, then imported by various organizations, including Russian ones, to the territory of the Russian Federation, where they are sold to final consumers.But at some point on the territory of the Russian Federation a trademark is registered in the name of a Russian company, similar to the designation used on the packaging of goods of a foreign company, and the rights holder of the trademark begins to raise difficulties on the import and sale of goods of a foreign legal entity, putting it out of business.In the described situation, a classic example of unfair competition from the rights holder can be seen.Article 14.4 of the Federal Law of 26.07.2006 No. 135-FZ “On Protection of Competition” (hereinafter - the Law on Protection of Competition) provides a tool to fight this kind of abuse by recognizing the actions of the rights holder to acquire and use the exclusive right to a trademark (service mark) as an act of unfair competition.Another example: a foreign company is the rights holder of a trademark protected in the Russian Federation, in the territory of which various business entities begin to sell goods using this trademark.Such actions can be qualified as an act of unfair competition, which contradicts paragraph 1 of Article 14.6 of the Law on Protection of Competition.As you know, the fundamental condition for the initiation and consideration by the antimonopoly body of a case of violation of antitrust laws is the establishment of competitive relations between the applicant and the defendant.So, from the provisions of paragraph 5.1 of Article 45 of the Law on Protection of Competition, it follows that when considering a case of violation of the antimonopoly legislation, the antimonopoly body analyzes the competitive situation in the amount necessary to make a decision on the presence or absence of violation of the antimonopoly law.Thus, the analysis of the competitive situation and, accordingly, the preparation of an analytical report (review of the competitive situation) based on its results is an obligatory step in the consideration of each case of violation of antitrust laws, regardless of the composition of the alleged violation.In the absence of competition between the applicant and the defendant, the antimonopoly body refuses to initiate proceedings on violation of the antimonopoly legislation or terminates the proceedings if the lack of competition is identified after the initiation of the case.It is logical to assume that the foreign organization itself does not conduct activities on the territory of the Russian Federation, and therefore the conclusion suggests itself that it cannot be a competitor to the Russian company and cannot exercise its right to file a statement recognizing the actions of the copyright holder as an act of unfair competition.However, if we look more in detail, it will become clear that everything is not so easy.Part 1 of Article 3 of the Law on the Protection of Competition stipulates that this Federal Law applies to relations that are related to the protection of competition, including the prevention and suppression of monopolistic activity and unfair competition, in which Russian legal entities and foreign legal entities/ organizations participate.By virtue of Part 2 of this Article, the provisions of this Federal Law shall apply to agreements reached outside the territory of the Russian Federation between Russian and (or) foreign individuals or organizations, as well as to actions performed by them if such agreements or actions affect the competitive situation on the territory of the Russian Federation.This provision establishes the general principle of extraterritorial application of the Russian antitrust laws to agreements reached outside the territory of the Russian Federation between Russian and / or foreign individuals or organizations, as well as to actions taken by them if such agreements or actions affect the competitive situation in the Russian Federation.
Competition, in turn, means rivalry between business entities, in which the independent action of each of them excludes or limits the ability of each of them to unilaterally affect the general conditions for the circulation of goods in the relevant product market (paragraph 7 of Article 4 of the Law on Protection of Competition).According to paragraph 4 Article 4 of the Law on the Protection of Competition, the commodity market is understood as the sphere of circulation of goods (including goods manufactured abroad), which cannot be replaced by other goods, or interchangeable goods, within the boundaries of which (including geographical ones) based on economic, technical or other possibility or expediency, the acquirer may purchase the goods and such an opportunity or expediency is impossible outside of it.At the same time, the existence of competitive relations between the relevant persons is to be established by identifying the facts of the direct sale of homogeneous or interchangeable goods in the relevant market.Thus, within the meaning of the Law on the Protection of Competition, competitors are business entities that sell goods on the same product market or business entities that purchase goods on the same product market.As can be seen from the above legal norms, the Law on Protection of Competition allows the existence of competitive relations between Russian and foreign legal entities.In addition, the legislator does not make the presence or absence of competitive relations dependent on the place of registration of an economic entity, since it is obvious that in the open trading space, goods produced in different countries of the world are on the same product market, and therefore manufacturers of these goods (willing or not) become competitors and must comply with the norms and principles of competition law.An interesting example of this situation, in my opinion, is the case of violation of antitrust laws in relation to Doshirak-Kazakhstan LLP (Republic of Kazakhstan), initiated by the claim of DOSHIRAK KOYA LLC.The plot of this case is the fact that a Kazakh company put into civil circulation on the territory of the Russian Federation “Doshirak” instant noodles (90 g tray) with beef and chicken flavor in packaging, the design of which imitated the packaging design of DOSHIRAK KOYA LLC products.Moreover, the trademark was used in the design of the packaging of noodles, according to international registration No. 897236, owned by the Korean company Paldo Co., Ltd.Having examined the case, the commission came to the conclusion that such actions could lead to the confusion of products of different manufacturers on the Russian instant food product market and cause an outflow of consumer demand from the products of DOSHIRAK KOYA LLC, marked with the Doshirak trademark, which became famous in Russia in 1996.By the decision of the FAS Commission of Russia dated 26.12.2016 in case № 1-14-93/00-08-16 on violation of antimonopoly legislation, the actions of Doshirak-Kazakhstan LLP were recognized as an act of unfair competition and contravene paragraph 2 of Article 14.6 of the Law on Protection of Competition.Upon the results of consideration of the case, the FAS Commission of Russia issued an order to terminate unfair competition.