Most economists divide existing monopolies in global economies into three main types: closed (state) monopolies, which exist because of legal restrictions associated with protection from possible competition; open, appearing for a relatively short period of time due to the natural market situation; natural monopolies that arise in situations where demand is satisfied more efficiently in the absence of competition due to the technological characteristics of production.
In the Russian Federation, the activities of such companies are regulated by the legal norms of Federal Law No. 147 “On Natural Monopolies” of August 17, 1995. This legal act determines the operation of the subjects of natural monopolies in many areas of the economy, including rail transport. The Federal Antimonopoly Service monitors the activities of these companies. At present, 6,011 enterprises are registered in the register of natural monopolies. In addition, obligations to comply with the requirements of this law may also be imposed on organizations that actually carry out activities provided for by the aforementioned federal law, which has repeatedly led to various conflicts in the final definition of a business in as a subject of natural economy.
If we continue to talk specifically about rail transport, we can conclude that the creation of several companies in this industry instead of just one will automatically lead to an increase in production costs and prices, which is not disadvantageous for either company, neither for the authorities of the State, nor for the public interest.
Open joint-stock company “Russian Railways” began operations on October 1, 2003. The sole shareholder and founder of Russian Railways is the Russian Federation. The powers of the shareholder on behalf of the state are exercised by the Russian government. At present, the company is almost an absolute monopoly providing rail freight and passenger services. Russian Railways has the third longest railway network in the world and related infrastructure in the Russian Federation. At the end of 2020, the company and its subsidiaries employed more than 0.8 million people (more than 1% of all employees in the national economy), which makes the holding company the largest employer in the Russian Federation.
The President of the country Vladimir Putin in 2022 noted that in modern conditions the enterprise performs the most important functions, working as efficiently as possible, emphasizing that highly qualified people work in the management of the operation, which must receive their due.
It should also be clarified that, despite the monopoly position in the railway services market, Russian Railways is striving to create a more efficient holding management structure and maintain high standards for the provision of services. The development of the enterprise will contribute to the successful implementation of the entire reform of railway transport in the Russian Federation, which should bring positive results both for the organization itself and for consumers.
However, at the same time, the natural monopoly status of Russian Railways is the reason for the weak competition in the freight transport market and its virtual absence in the passenger transport sector in Russia. The main objective of business, like any business organization, is to make financial profit. Herein lies one of the main problems with this economic phenomenon, which consists in the fact that the relevant federal law, which was discussed above, imposes various restrictions and social functions on Russian railways that are not not characteristic of business entities. For example, fares for commuter rail transport, which the company provides, are controlled by regional authorities, when set, they try to achieve a balance between social interests and equilibrium transport. It is no longer a question here of making a profit. One of the few legal ways to solve this problem may be the creation of subsidiaries by Russian Railways, the creation of affiliated companies allows you to cope with the negative consequences of the transfer of state responsibilities in the field of social policy to an economic entity.
Moreover, at present, the domestic railway industry is in urgent need of reform for a number of reasons, one of which is precisely the monopolistic position of Russian Railways in the market. In Russia, the technical condition of rolling stock is rather poor (many wagons and locomotives need to be replaced due to their long service life and poor technical condition). To solve these problems, it is possible to consider the creation of other vertically integrated state organizations that will be engaged in rail transport. You can think about the formation of the economic conditions necessary for the emergence of commercial enterprises at the regional level of rail transport. A rather deplorable situation is also observed with the state of the railway in certain regions, there are indeed abandoned roads.
Summing up, it should be emphasized that the implementation of various economic and social programs aimed at the development of Russian railways is extremely important for the entire national economy, since the efficient operation of this enterprise plays a key role in the existence of rail transport in Russia. Russia. In addition, it is necessary to improve state regulation in the field of natural monopolies, it should be aimed at improving competitive mechanisms, which will give this sector of the economy a more commercial character.
Author: Victor Anufriev
