WHY NON-PRICE ASPECTS ARE IMPORTANT IN MERGER CONSIDERATION?

Quality, assortment and novelty may be as essential for consumers as price

Renato Ferrandi, a senior OECD competition expert, expressed this opinion on the second day of a joint workshop of OECD Regional Centre and the Antimonopoly Service organized on 28-30 May at FAS Centre for Education and Methodics in Kazan.

“M&A that touches these parameters can cause serious problems in terms of the state of competition. Building up market power leads to an ability of one or several companies to gain profit raising prices, reducing output and assortment, deteriorating the quality of goods and services”, explained Renato Ferrandi.

He said that mergers can generate positive changes, for example, give a potential for new product positioning supply scale on the market, or other changes that help improve its quality.

He also discussed innovations and competition.

“Companies that have the dominant market position may attempt to maintain prices at the same level rather that be involved in risky innovative projects. They can use their market power to create barriers to innovations”, pointed out Renato Ferrandi.

Andrey Shaposhnikov, Deputy Head of Information Technologies Unit, FAS Department for Communications and IT, analyzed mergers on a multisided digital markets using an example of “Yandex.Taxi – Uber” merger. He described the main tools employed by FAS to consider the merger. The Antimonopoly Service surveyed the market of taxi aggregators, defined its geographic, time and product boundaries, gave a general market assessment, etc.

“The geographic market boundaries showed that consumers can order taxi from anywhere in any town. The taxi aggregator can work in different towns without an office. The product market boundaries demonstrated that consumers can call a taxi by any method and taxi aggregators are ready for such information relations”, reported Andrey Shaposhnikov.

“In view of the circumstances exposed in market analyses and the merger consideration, FAS concluded that competition protection measures should be undertaken. The antimonopoly authority issued an order to “Yandex.Taxi” and “Uber”, specifying that taxi aggregators must inform passengers and drives about ride conditions with maximum details in a mobile application interface and do not set any bans for them to use applications of other aggregators on their mobile devices”, explained Andrey Shaposhnikov.

The participants also did a training exercise to study specifics of considering mergers and acquisitions in digital economy.