"dominance" is generally defined as at least a 35% market share. In its initial years, the GAK classified thousands of firms as dominant at the federal and regional levels, and regulated these firms' prices, profits and output. The approach has been heavily criticized both inside Russia and by international experts because of its questionable economic rationale and unwieldy procedures, including its tenuous method for defining geographic and product market boundaries and justifiable costs. In 1997 the federal section of the GAK dominant firm registry included about 500 industrial enterprises, accounting for roughly 20% of all industrial output. At present, MAPSE oversight of prices and profits of dominant firms is less one of direct regulation and more of preventing anti-competitive pricing--both the charging of prices above competitively determined levels and of predatory and entry-deterring prices. However, the problems of a poorly clarified economic rationale and unwieldy procedures remain largely intact. With regard to mergers, prior approval of the MAPSE is required for acquisitions of more than 20% of the shares of a company, or acquisition of shares in any firm included in the register of dominant firms. Current rules specify two tiers of dominance: proposed mergers that result in 65% market share are _per se_ "undoubtedly dominant"; for proposed mergers that result in market share between 35% and 65%, the MAPSE bears the burden of proof that the merger would result in a "dominant" firm.

Surveys suggest that the MAPSE generally has been reluctant to enforce the law in clear cases of market abuse. In the WB-RAS survey, more than 30% of the respondent General Directors indicated that producers colluding to fix prices are not subject to sanctions under the anti-monopoly law. Political economy constraints and excessive use of discretionary--as opposed to rules-based--authority seem to be a major factor in preventing effective enforcement. The decline in industrial output during Russia's transition has made it difficult to take actions against important industrial enterprises. Case evidence reveals that regional MAPSE branches have had a tendency to protect local champions rather than act as part of a _federal_ anti-monopoly system. At the same time, many observers have concluded that although the MAPSE has an adequate statutory basis to be effective, it lacks the resources, skill base and information to deal sufficiently with prevailing anti-competitive problems.13 _Russia's Promotional Policies for New Entrants._ The policy framework for encouraging entry is focused on SMEs. Russian federal legislation supporting SME development dates back to 1993, when a Support Fund for Entrepreneurs was created that provided for short-term credits. A two-year holiday on profit taxes also was established. Subsequently, regional and local support funds were created, and it is at these levels that the bulk of SME support is implemented. In 1995 the State Committee for the Support and Development of Small Businesses was created (and as noted above, in 1998 it was subsumed under MAPSE). The Committee is charged with coordinating the allocation of support to SMEs, largely in the form of low-interest credits from Federal, regional and international sources, as well as technical assistance from the latter. New laws also have been enacted to foster the development of SMEs, including one in 1995 that defines eligibility limits on SME size ("small" enterprises have no more than 100 employees), allows SMEs to pay only a single tax on income, and to take advantage of other incentives, including accelerated amortization. However, licensing, registration and accounting problems at that the regional and local levels have prevented most SMEs to avail themselves of the law's benefits. In 1997 a new federal small business support program was initiated for small ventures to grow to one million, and the work force to expand by 3 million by 2000: Long-term plans call for SME contribution to the economy to double to account for 25% of GDP with the number of workers involved to increase to 25-30 million.

_Principles for Reforms_ Competition policy in most transition countries has been similar to Russia's experience. It has focused more on deterring anti-competitive conduct (through establishing price controls), rather than dealing with imperfections in market structure. It is not surprising that progress has been slow, since establishing effective competition policy involves considerable 9