There are a number of significant legislative changes in Russia, says Alrud Senior Partner Vassily Rudomino, citing the strengthening of competition regulations in digital markets and new data protection laws as among the major ones.
“Competition regulation digitalization is a trend that affects many markets, including Russia,” says Rudomino. “Since competition legislation was not able to keep up with the pace of change, the Federal Antimonopoly Service – the FAS Russia – introduced amendments to the Competition Law (the so-called Fifth Antimonopoly Package) to address the new challenges.” According to Rudomino, in addition to adapting the regulations to the complexities of digital markets, the amendments that are expected to be enacted in the first half of 2020 address voluntary commitments and monitoring trustee concerns. “That brings Russian competition legislation closer to that of the European Union,” he says.
There are two important trends in Russian legislation related to data protection, Rudomino says: (1) increasing regulatory requirements and the powers of the data protection authority, and (2) harmonizing Russian data protection laws with European legislation. The first includes the enforcement of the Data Localization Law, which obliges all data controllers to process personal data collected in Russia inside the country. In 2016, LinkedIn was blocked in Russia due to non-compliance with this law, says Rudomino, and “now Russian lawmakers are considering a new draft law, which will introduce new liabilities for breach of the Data Localization Law,” including fines of up to RUB 18 million (approximately EUR 250,000).
New rules on conducting audits by the data protection authority also came into force in 2019, Rudomino says. “These rules allow more frequent audits of certain data controllers, in particular from companies transferring data to countries that fail to provide adequate protection of personal data – like the USA – and from companies processing biometric-personal data,” he explains.
When it comes to harmonizing data protection laws with European legislation, Rudomino says, recently Russia signed a protocol modernizing Strasbourg Convention 108 on the protection of individuals’ rights in the case of automated processing of personal data. “In this regard, Russia will have to incorporate several significant amendments into its national legislation,” he says, adding that among the amendments is a mandatory procedure for data breach notification, another introducing genetic data as a new type of sensitive data, and others strengthening the data minimization principle and the privacy-by-design concept.
Lastly, he says, residents entering Russia’s Special Economic Zones in 2020 and 2021 are expected to receive increased tax benefits. “The government wants to improve the regime of the special economic zones to attract more new investments and try to find a way to give more energy to the economy,” he says. He sighs that the current 1.45% growth rate is “not enough for an economy like Russia’s.”
Finishing up, Rudomino points to the continued effect of sanctions on the Russian economy. “We see that sanctions and the geopolitical crisis are impacting the legal businesses here,” he says, pointing to the decreased presence of international law firms in the market. Although he admits, “this helps Russian firms to continue gaining a foothold on international competitors and stay focused on exploiting the opportunity to the maximum.”
