BRICS food products market were discussed at the “Competition Week in Russia”

03-10-2017 | 13:15

On 21 September 2017, Head of FAS Department for Control over Chemical Industry and Agro-Industrial Complex, Anna Mirochinenko presented a draft report of BRICS Working Group on global food product chains at an International Event – the “Competition Week in Russia”.

Anna Mirochinenko emphasized: “Efficient performance of agro- and food products markets is the basis of BRICS national security”.

She highlighted the main Report points. For instance, Head of FAS Department described exchanges in the market performance paradigm: “Demand for food products is increasing under limited natural production factors; the need to enhance production efficiency through use of high-technology solutions is growing. The market is also characterized by entry of transnational corporations, affecting the adjacent markets, extrapolation of intellectual property rights to the objects of live nature, changing business-models to “package” solutions”.

Regarding the Concept of global food products value chains, Anna Mirochinenko pointed out that unlike the traditional approach to value creation, where each segment is considered an independent market, the Concept presumes evaluating profit distribution between the chain participants, links between them and identifying the “key” resource that determines the market power of a chain participant.

She said: “Intellectual property rights extend to biotechnological solutions, selection achievements, and bio-protection. As a result, a complex closed system is formed, leading to high seed market concentration, insurmountable entry barriers and inefficient regulation”.

Due to rapid economic concentration, the global seed market has formed a sustainable oligopoly. “If Dow/DuPont, Monsanto/Bayer, Syngenta/ChemChina deals are approved, 60% of the market will be controlled by three companies”.

As new approaches to evaluating market power, Head of FAS Department for Control over Chemical Industry and Agro-Industrial Complex mentioned “informal” seed turnover, assessment of other forms of corporate consolidation, business-models, changing attitude to threshold values, that determine an impact of a merger upon competition (new technologies, big data).

She stated: “The global seeds market is being monopolized, national markets depend on supplies of imported goods, and there can be system-wide failures in supplying food products to the population due to exterritorial risks; foreign companies can control famers’ profitability, and there is an adverse impact upon adjacent industriesAll this predetermines the need to strengthen cooperation between BRICS antimonopoly bodies in this field”.

The main areas of cooperation should become: developing new approaches to evaluating economic concentration transactions, based on the Concept of global food product value chains in view of the social importance of the markets; review of the balance between intellectual right protection and competition law to ensure non-discriminatory access to selection achievements and new technologies, practical cooperation in investigations of cross-border transactions.