DIGITALIZATION OF THE ECONOMY REQUIRES NEW APPROACHES TO ANALYSING ECONOMIC CONCENTRATION TRANSACTIONS

20-12-2017 | 11:45

Economic digitalization is characterized by changes in a conduct business-model. Under these conditions, to evaluate companies’ positions on the markets with a strong innovative element, for which considerable network effects, use of big data and intellectual property objects are typical, and to consider transactions between them it is necessary to shift from traditional market analysis and focus on the qualitative changes on the market.

 

On 5 December 2017, at the III International Research-to-Practice Conference – “Antimonopoly Policy: Science, Practice” representatives of Russian and foreign academic community, economists, antimonopoly counsels and FAS representatives discussed new approaches to determining markets in order to establish dominant position and considering economic concentration transactions with a strong innovative element (Section on “Digital economy and competition policy”. The moderator was Director of Institute of Law and Development of High School of Economics – Skolkovo, Alexei Ivanov.

 

Anna Mirochinenko, Head of FAS Department for Control over Chemical Industry and Agro-Industrial Complex, gave a detailed report on the FAS analysis of Bayer-Monsanto merger – the largest transnational companies operating on the market of seeds and plant protection.

 

Evaluating the merger FAS shifted from the traditional methods of analyzing economic concentration that include estimates of the shares of the company formed after merger as the crucial factor determining the market power. FAS focused its efforts on the qualitative changes on the global agro-industry markets, that rather than a static analysis of the merger consequences require a prospective analysis  of possible positioning of a particular company on the emerging agro-technology based on its innovative potential”, said Anna Mirochinenko.

 

According to Head of the specialized Department, FAS evaluated potential threats for competition on the Russian market from the merger and set a number of behavioral requirements designed to create conditions for development of potential competition by Russian companies in selection as well as on the market of digital platforms for precision farming.

 

In particular, it concerned technology transfer to Russian companies coupled with access to the key genetic data and knowledge, necessary to breed cultivars and hybrids, non-discriminatory access of Russian resources suppliers (seeds, plant protection, fertilizers, etc.) to digital platforms for precision farming and access of companies to the array of data (soil, climate, etc.), based on which forecast models are built up on digital platforms for precision farming.

 

Considering the merger, FAS exposed several problematic areas that require changes in the current law. Such changes, in particular, should include extending the period for considering those mergers that require in-depth analysis and engagement of experts that possess special knowledge. Access of interested executive bodies and engaged experts to confidential information provided by the merger parties without their consent as well as engaging the third parties to monitor how injunction issued by the antimonopoly authorities are executed”, concluded Anna Mirochinenko.

 

The session attendees exchange experiences and approaches to analysis of economic concentration on the market of information services. Lianos Yanis, a professor at the University College of London, outlined the specifics of Facebook acquiring WhatsApp messenger. Andrey Shastitko, Head of the Department for Competition and Industrial Policy, Economic Faculty, Moscow State University, Director of the Centre for Competition Studies and Economic Regulation, Russian Presidential Academy of National Economy and Public Administration, made a report on the issues of “legal monopoly”, associated to the rights for intellectual property objects. Irina Knyazeva, a professor of the Management Department, Siberian Institute of Administration, a branch of Russian Presidential Academy of National Economy and Public Administration, focused her presentation on aftermarket analysis.

 

The III International Research-to-Practice Conference – “Antimonopoly Policy: Science, Practice” took place on 5-6 December 2017 at “Skolkovo” Innovation Centre. The main themes of the event were new approaches to antimonopoly and tariff regulation and public procurement control under the conditions of economic digitalization. The Conference programme comprised a special meeting of representatives of BRICS antimonopoly bodies to discuss a draft Report on the state of competition on the seeds market in the BRICS economies and a regional meeting of heads of antimonopoly bodies form the CIS member-states under the frame of UNCTAD Discussion group.

 



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