ANATOLY GOLOMOLZIN: SITUATION HAS IMPROVED THROUGH PURSUING RECOMMENDATIONS OF CIS MEMBER-STATES COMPETITION AUTHORITIES
Deputy Head of FAS Anatoly Golomolzin chaired a session of the Headquarters for Joint Investigations of the Antimonopoly Law by the CIS Member-States
On 25 September 2018, Deputy Head of FAS Anatoly Golomolzin chaired the 35th session of the Headquarters for Joint Investigations of the Antimonopoly Law by the CIS Member-States during the Competition Week in Russia.
Opening the session, he announced a three-item agenda: the work of the Headquarters for studying the markets of medical equipment in the CIS Member-States; the report on “Building up competition policy under developing of digital economy”; and the report to mark the 25th anniversary of the Interstate Council on Competition Policy (ICAP).
The progress of the Headquarters’ work on studying the markets of medical equipment in the CIS Member-States was described by Deputy Head of the Department of Social Sphere and Services – Head of Social Sphere and Services Division, the Ministry of Antimonopoly Regulation and Trade, Belarus (MAPT), Natalia Vasilevskaya.
The report analyzed the current system of state regulation of the medical products in the CIS Member-States, including registration and licensing medical products, the conditions for patent protection, quality control, price regulation, etc. Issues related to circulation of medical products were discussed such as defining medical product substitutability, вpublic procurement and so on.
The attendees took part in the follow-up discussion of the report.
Head of FAS Department of Social Sphere and Trade, Timophei Nizhegorodtsev commented: “The report on studying the medical equipment markets is very timely and important. Competition restriction on this market causes significant losses in the budgets of our countries. It is associated not only with medical products substitutability, that is not ascertained anywhere in our space and this gap allows to “shape” procurement for particular suppliers. It also concerns demonopolization of the market of expendable materials, medical product and their spare parts maintenance. Artificial monopolies are formed on each of those markets and they additionally “draft away” all free money from the budgets allocated for medical products”.
“We should not just register the problem. Based on the report, we should propose measures to demonopolize the markets. These measures will touch not only our national laws but evidently the supranational law established in EAEU since in the part of market regulation is was formed practically without involvement of antimonopoly bodies”, added Head of FAS Department of Social Sphere and Trade.
Summing up the discussion, the Headquarters’ Chairman, Deputy Head of FAS Anatoly Golomolzin emphasized its urgency and relevance. The attendees agreed to refine is (the lacking materials should be submitted to the Headquarters’ by the beginning of December 2018). At the beginning of 2019 the final stage of discussing the report and its recommendations will start.
Head of FAS Department for Regulating Communications and Information Technologies, Elena Zaeva, presented a report: “Building up competition policy under developing of digital economy”.
According to the speaker, many countries undertake due measures to create conditions for digital economy and devise special government programmes. At the same time, the measures pursued do not take into account the importance to develop modern competitive relations.
For instance, state programmes form conditions for monopolizing the digital economy infrastructure – both the physical ICT infrastructure and electronic infrastructure, determining sole service suppliers at the very outset. Such measures also divide service technologies since markets are considered as different technological paradigms rather than a common digital system. Legal relations in the digital technology are regulated under the technological principle.
In this context, when planning and pursuing the measures towards developing digital economies, FAS would recommend the CIS Member-States to base them on the need to ensure the conditions for competition development and the principles of technological and network neutrality in regulation; support the common electronic on the basis of interconnected ICT infrastructures, particularly, by adopting common rules and standards, and prevent market monopolization, particularly, through sole suppliers, except when such decisions are determined by the interests of state security, protection of people’s life and health.
Head of FAS Department for Regulating Communications and Information Technologies pointed out that in digital economy new challenges emerge for antimonopoly regulation. With digitalization of the global economy, direct impact of transnational corporations upon competition on the national markets is increasing. Big data – the oil of the modern era – become an absolute value. A new conceptual approach to business organization emerges: “attention economy”. Digital platforms and data are becoming the key asset.
“Benefits of digital economy generate threats for competition, not only similar nature of legal relations in the CIS Member-States, but also similar impact of transnational corporations upon competitiveness of national economies”, pointed out Elena Zaeva. “Transnational corporations create multi-sided systems capturing not only several markets in their traditional understanding but also several industries. Emerging monopolistic and oligopolistic clusters are protected by intellectual property rights”.
She emphasized absence of the necessary tools for suppress competition restrictions in the digital sphere and absence of enforcement mechanisms to push transnational corporations to observe the national competition law.
“In the nearest future countries may face lack of mechanisms for competition protection on the most significant, including socially important markets”, warned Elena Zaeva.
Therefore, the Headquarters recommends the CIS Member-States to adopt measures as quickly as possible to improve the antimonopoly law, particularly, consider:
- Possibility to suppress competition restrictions in the segments associated with exclusive rights for the results of intellectual activity and equated means of individualization
- Possibility to suppress competition restrictions by persons that are not residents of a particular state and (or) operate outside the territory of the state
- Introduce additional tools for market analysis and, particularly, establishing dominance in view of the digital market specifics
- Introduce additional tools enabling full and comprehensive consideration of transactions in view of specifics of market performance in the digital economy
- Introduce enforcement mechanisms to execute the standards on competitive conditions commensurable with the exposed violation, inv view of the specifics of market performance in the digital economy as well as aspects of market globalization.
Summing up the discussion, Anatoly Golomolzin stated that “the report concerns two aspects: measures to develop digital economy based on the fundamental principles of competition development, and proposals on competition protection on the digital markets, including improvement of the antimonopoly law”.
“The draft report was submitted to the CIS Executive Committee on 18 July 2018 and is now being considered by CIS Governments. In October 2018 is will be discussed by the Economic Commission of the CIS Executive Committee”, informed Deputy Head of FAS.
The next item of the Headquarters’ agenda wasa report commemorating the 25th anniversary ofthe Interstate Council on Competition Policy (ICAP). The speaker was Deputy Head of FAS Anatoly Golomolzin.
In 25 years of ICAP work several reports were drafted on the state of competition on socially important markets (telecommunications, aviation, retail chains, oil and petrochemicals, medicinal drugs and some others), the findings of five studies were approved by the Council of the Heads of CIS Governments. The conclusions and recommendations formulated in the studies are now used in practical works of the antimonopoly authorities of the CIS Member-States.
In line with ICAP decisions of 30 May 2018 and the Headquarters of 28 May 2018 in Minsk (Belarus), the antimonopoly bodies of the CIS Member-States prepared information on result-oriented implementation of the recommendations for developing competition on the markets of air transportation, telecommunications, sale of food products through retail chains, oil and petrochemicals, medicinal drugs, presented in the report: “The Interstate Council on Competition Policy: practical results”.
The antimonopoly authorities of Armenia, Belarus, Kazakhstan, Kirgizia, Russia and Tajikistan were involved in the work.
“The Report outlines how the situation on a number of markets improved dramatically by pursuing the recommendations drafted by national competition authorities and approved by the Governments of the CIS Member-States. The passenger traffic increased by orders due to increased number of competing carriers, expanding the number of air transportation routes between our countries, improving airport operation based on the rule for non-discriminatory access. Thanks to the adopted measures, the costs of communications services in international roaming decreased, while the volume communications services between subscribers from our countries increased. Recommendations drafted by the Headquarters increased availability of medicinal drugs considerably, the situations on the petrochemicals market and retail trade have improved. Reports on medical products, digital economy and the materials of the Coordination Council of the International Aviation Council were discussed exactly to develop the measures adopted”, explained Anatoly Golomolzin.
“The work is not over, it continues. We intend to study new forms of trade, including e-commerce and new forms of payment. The second study would cover road transportation markets. The Headquarters’’ members agreed to draft a review of those markets, analyze the issues and devise proposals to improve the situation under the frame of a detailed analysis and report drafting”, concluded the Headquarters’ Chairman.