ANDREY TASRIKOVSKIY: THE TACTICS OF ANTI-CARTEL EFFORTS MUST CHANGE

New types of anticompetitive agreements, concluded without human presence, autonomous price coordination by robots and machine “self-learning” aimed at maximizing profit have become a modern reality. All this requires that the antimonopoly authority must modernize control.

That was the focus of a discussion session on “Digital economy and cartels” on 17 May 2018 at St Petersburg International Legal Forum.

The session moderator, Stats-Secretary – Deputy Head of FAS Andrey Tsarikovskiy, said at the outset of the discussion that “under the conditions of the digital economy, cartels have behaved very aggressively and soon we have faced a total stronghold of bid-rigging cartels”.

“The digital revolution has changed the social order and the economic paradigm. Competition can now be determined by platforms rather than products, data are becoming the key strategic asset, and sectoral boundaries are fading. In these realities we have realized that it is necessary to move away from the classical evidence in decision-making. Companies should also start building their defence in a different way and Courts should have a different approach to evidence”, pointed outDeputy Head of FAS.

He emphasized the difficulties in determining who commits “digital violations”.

“Who should FAS accuse when the law is violated using a digital tool? A platform author, its owner, a party to a P2P operation?”, asked the session moderator.

Andrey Tsarikovskiy said that another issue of antimonopoly regulation in the digital epoch is law-making that lags behind technological and social transformations.

“Now, when digital changes in the economy continue and the work of the antimonopoly bodies is reaching a new level, we must change the tactics of our anti-cartel efforts otherwise we will be nowhere”, summed up Deputy Head of FAS.

Head of FAS Anti-Cartel Department, Andrey Tenishev informed that the antimonopoly authority already has a number of digital tools to promptly expose and suppress violations. He outlined FAS experience of countering bad practices in the digital economy.

In particular, Andrey Tenishev described violations when “price algorithms are used, including price fixing and control, collecting and analyzing information about the costs, control over competitors’ pricing and forcing to observe the recommended prices.

He also talked about “digital” bid-rigging cartels implemented using robots.

“Auction robots are not a violation by itself; some, however, use them to form cartels. FAS exposed signs of violating the antimonopoly law at more than 2000 e-auctions where bots were used”, explained Head of FAS Anti-Cartel Department. “Auction robots leave even more traces than humans. As we observed, toady such programs are used in various cartel bid-rigging schemes”.

“FAS has devised and implemented a multi-parameter system to monitor and expose signs of bid-rigging cartels. The share of procurement cartels exposed through our pro-active method reached 80-85%”, informedAndrey Tenishev, and added that new judicial practice is already forming when direct evidence is no longer necessary to recognize a cartel. A critical totality of indirect evidence, indicating a latent anticompetitive bid-rigging agreement, would suffice.

Among the measures necessary to solve digital crimes, Andrey Tenishev proposed to adjust the concept of anticompetitive agreement in accord with the modern realities, set antimonopoly requirements to computer programs and price algorithms, introduce the exterritoriality principle for administrative violations and tighten liability for cartels that use price algorithms.

Experts, lawyers, representatives of foreign competition bodies took part in the discussion: Professor Ioannis Lianos, University College of London; a principal legal counsel, UN Secretariat, Pierre Horna; Partner, Law Offices “Yegorov, Puginsky, Afanasiev & Partners”, Natalia Korostylyova; an officer of State Administration for Market Regulation, China, Sin Van; Ass. Prof. Dmitry Petrov, Commercial Law Department, St Petersburg State University. They all arrived to a unanimous opinion on the need to modernize control in the digital era.