MEMBERS OF EXPERT COUNCILS DISCUSSED CHANGES TO ANTIMONOPOLY LAW IN DIGITAL ECONOMY

FAS Expert Council on Communications and Expert Council on Developing Competition in Information Technology analyzed the “fifth antimonopoly package” at joint meeting on 16 April 2018 at the Federal Antimonopoly Service

The Chairman of Expert Councils, Deputy Head of FAS Anatoly Golomolzin pointed out: “Digital economy is penetrating all areas of life and all fields of activities are changing rapidly, the market boundaries are fading. The types of violations are also changing. And it is essential to exclude restrictive business practices and to be able to properly adjust the antimonopoly law to the new conditions”.

“The antimonopoly body faces a number of challenges when investigating cases upon signs of violating the Federal Law “On Protection of Competition”. First, the “buyer-seller” relationship practically do not exist in the digital economy, which engages complex, multilateral structures. Second, it is difficult to estimate the market volume since it has different monetization models and various network effects. The market power is based on possessing big data or infrastructure rather than is built up on the traditional money terms and assets ownership. To analyze all these new factors, modern mechanisms enabling to take into account the entire specifics of digital markets should be embedded in the law”, said  Head of FAS Department for Regulating Communications and Information Technologies, Elena Zaeva.

Deputy Head of FAS Sergey Puzyrevsky presented the key provisions of the “fifth package” of amendments. They comprise changing the concept of dominance in the digital economy, introducing the concept of price algorithms, and clarifying the meaning of control over economic concentration. Certain enforcement mechanisms to apply violators in order to execute FAS injunctions are also proposed because the standard enforcement measures seem inefficient. Immunities for intellectual property will be abolished. “No other country in the world has such immunities in force. We should abolish them if only to adjust our law in line with the international law”, emphasized Sergey Puzyrevsky.

Head of FAS Anti-Cartel Department, Andrey Tenishev outlined the amendments that concern use of price algorithms for coordination of economic activity.

Representatives of the antimonopoly authority gave all necessary explanations on the specifics of legal antimonopoly regulation in view of the amendments to the antimonopoly law proposed by FAS and answered questions from the participants of the joint meeting of the Expert Councils.

Emphasizing the importance of norm-setting work, Anatoly Golomolzin stated: “The situation on the global markets has changed dramatically. Ten years ago the TOP-5 companies for capitalization were in industry, the base materials sector or the financial sector. Now the leaders are firms from the digital market - Apple, Google, Microsoft, etc. Russia is among few jurisdictions in the world, where they know how to counter violations committed by those and other digital giants”.

“Digital economy has changed the working conditions on all markets, breakthrough technologies transformed the trends. It used to be that the size of assets and staff numbers were the main factors of market power”, added Anatoly Golomolzin. “Now the main drivers of market power are big data, pools of IP rights, the economy based on algorithms. The market features have also changed. They have become multisided, the goods dovetail with each other and complement each other, turnover is increasingly globalised, and diversified forms of income monetization are developed”.

To substantiate FAS law-setting initiatives, along with domestic experience Deputy Head of FAS gave examples of similar changes to the antimonopoly law in other countries, for example, Germany. Commenting on removing bans for applying the antimonopoly law to the items covered by exclusive rights, he pointed out that it is a universal standard of the antimonopoly law used thought the world, which is based on the rule of reason. Anatoly Golomolzin thinks that with adopting amendments to the Russian law, such as, for instance, in the US, the EU and Japan, the Guidelines on their application will be drafted through consultations with businesses and experts.

Deputy Head of FAS agreed with the participants that discussion should be continued and it is necessary to refine the wordings in the part of defining price algorithms and the field of its application in the antimonopoly law, some inaccuracies in defining dominant position. These amendments do not change the overall concept of the draft law.

Summing up the meeting results, Anatoly Golomolzin stressed that such meetings will take the main questions and concerns of market participants off the table, and the proposed improvement of the antimonopoly law will not create additional administrative barriers and will encourage healthy competition and efficient development of the economy.