ANATOLY GOLOMOLZIN: BENEFITS OF DIGITAL ECONOMY SHOULD BE AUGMENTED AND RISKS – MANAGED
Development of digital economy requires reviewing approaches to antimonopoly regulation and enforcement, stated Deputy Head of FASat an international conference in Minsk
Deputy Head of FAS Anatoly Golomolzin discussed development of competition at an international conference – “Antimonopoly regulation in EAEU: the main trends and enforcement practice in the digital era” on 29 May 2018 in Minsk (Belarus).
He pointed out that an economic model has changed considerably in recent years: turnover conditions on goods and financial markets are being transformed. Digital economy is characterized by market multi-sidedness, global circulation of goods, and diversity of the monetization means. Intellectual property and information control the modern markets.
“When control of algorithms and data pools creates the basis for unilateral actions and coordinated conduct of competitors under integrated platforms, competition as the invisible market hand fairly distributing the essentials, is replaced with the “digital hand” in many sectors. This hand, being an artificial, man-made, came become a means of manipulation”, concluded Anatoly Golomolzin. “Experts rightly believe that here markets can be dynamic, but controlled by just few firms. In such controlled ecosystems traditional markets of the great free competition – market transparency, freedom of entry and the right of choice – can be nothing but a mirage. One cannot tolerate such market “errors” only because they emerge in the digital economy. We must augment benefits of digital economy and control possible risks”.
According to Deputy Head of FAS, in the past ten years the list of world leaders in terms of capitalization has changed. The largest raw-extracting and industrial companies gave way to “digital giants”. Russia is among few jurisdictions that have accumulated experience of exposing and suppressing violations of the antimonopoly la by transnational corporations. FAS investigated cases against “Google”, “Apple”, “Microsoft”.
Development of digital economy requires reviewing approaches to antimonopoly regulation and enforcement. To achieve it, the fifth antimonopoly package was devised.
“New criteria are necessary for market analysis – it is important to evaluate possibility to influence general goods circulation conditions on the market based on possessing infrastructure; network effects also should be evaluated”, saidAnatoly Golomolzin. “Immunities for abuses and restricting—competition cartels related to exclusive rights in intellectual property, should be abolished. We must understand that such exemptions exist nowhere in the world, there is an understanding that both laws are aimed at the same goals: introducing innovations and extending the product range. A common approach is to minimize adverse consequences of a particular law for the market. Specific approaches to antimonopoly enforcement in the sectors with goods circulation with use of the IP rights is formalized in the Guidelines of the USA, Japan and the EU. At joint meetings of FAS Expert Councils on developing competition in communications and in information technologies we discussed it with colleagues and agreed that jointly with amendments to the law we will propose to draft recommendations on antimonopoly enforcement when it concerns intellectual property”.
Deputy Head of FAS put an emphasis on the priorities of the Russian Federation with regard to advancing competition. He mentioned No. 618 Presidential Order "On the main directions of the state policy towards developing competition" of 21.12.2017, that approved "2018 - 2020 National Plan for Developing Competition in the Russian Federation".
“We are devising Road Maps for developing competition in 19 segments of the economy that will be adopted in the near future. In particular, Road Maps on telecommunications and information technologies. The 34th session of the Headquarters for Joint Investigations of the antimonopoly law in the CIS member-states discussed antimonopoly enforcement in the digital economy, institutional preconditions for developing digital economy, international practices and challenges on the digital agenda of the antimonopoly law and enforcement. WE will be moving in this changing world with our joint efforts”, underlined Anatoly Golomolzin.
Head of FAS Department for Regulating Communications and Information Technologies, Elena Zaeva, discussed specifics of digital markets and antimonopoly remedies.
The speaker pointed out that the concept of network effect emerged in the economy quite a while ago - in 1930s. In 1994 Court considered a claim of the Antitrust Division of the US Department of Justice to “Microsoft” and classified network effects as barriers.
Using the cases of “Microsoft” and “Google”, “Yandex.Taxi – Uber” and “Bayer-Monsanto” mergers, Elena Zaeva demonstrated how FAS takes account of network effects in market analysis and injunctions.
Head of FAS Department for Regulating Communications and Information Technologies emphasized that such market feature as network effects can be an entry barrier but under particular circumstances can deter possible abusing – for instance, as established in “Yandex.Taxi – Uber” merger. Taking into consideration the market specifics, FAS injunction was designed to maintain switching possibility for consumers.
Having completed an investigation against “Google” FAS issued an injunction designed to “open” the established systems in the IT field, where network effects are significant for the dominant position because users are not inclined to switch or parallel use.
According to the injunction, “Google” must stop the violation and to no determine of Google Play application store with the requirements aimed at excluding competing services from the most efficient pre-installment channel.
With the example of “Bayer-Monsanto” merger, Elena Zaeva showed how a systemic closed complex, comprising not only separate markets but entire sectors integrated into digital clusters.
FAS order to “Bayer” concerned conduct requirements aimed to create conditions for developing potential competition from Russian companies on the markets of seeds and digital platforms for precision farming.
“To advance potential competition it is important that the system is not closed and in the future possibility to access the key assets is provided”, summed up Head of FAS Department for Regulating Communications and Information Technologies.