LACK OF ANTIMONOPOLY MECHANISMS IN DIGITAL MARKET IS DANGEROUS FOR BUSINESS AND CITIZENS

30-06-2020 | 14:31

The draft Fifth Antimonopoly Package is currently under consideration by the Government of the Russian Federation

In the current conditions, the structure of markets is changing – they are moving to the Internet space, digital platforms are being used more often, and the number of online orders is increasing.

"It is impossible to imagine the functioning of traditional commodity markets without digital platforms. We must admit that unfortunately antimonopoly legislation is not keeping up with this area yet," said Sergey Puzyrevskiy, Deputy Head of the FAS Russia at the session "Market power of technologies" of the online conference "Antitrust law: new challenges of the pandemic".

It should be noted that due to new technologies, the geographical boundaries of the market themselves no longer exist, which is dangerous for both citizens and businesses. That is why special mechanisms are needed to influence digital giants, which are elaborated in the draft of the Fifth Antimonopoly Package.

The document will define new criteria for a "dominant position" in the Internet space market, including: ownership of infrastructure (software or computer programs) that is used for concluding transactions between sellers and buyers; network effects; and a share of more than 35% in the market for interchangeable transaction services.

"It will not hinder the work of digital platforms, but if they are dominant, it will force them to work in accordance with antimonopoly rules (prohibition to discriminate customers, prohibition of monopolistically high prices for services rendered, etc.). at the same time, antitrust rules should not apply to startups of small companies. Therefore, the draft law provides that its provisions will not apply to companies with annual revenue of less than 400 million rubles. The mechanisms will only apply to those who have a significant turnover and can influence the market," explained Sergey Puzyrevskiy.

According to him, it is necessary to take into account direct and indirect network effects, "parallel running" of several online services and the ability to switch, economies of scale, access to competitively relevant data and the role of innovation when assessing market power in IT markets.

"In addition, the Fifth Antimonopoly Package should rebuild the system and mechanisms for control over economic concentration, because now the acquisition of tangible assets is taking a back seat: technologies have become more important, they are the ones that cost a lot of money. The size of the asset value should be a key in this regard," the speaker said.

In conclusion, Sergey Puzyrevskiy clarified that in the new antimonopoly package, the use of a price algorithm will be considered an aggravating circumstance in cartel collusion.

In turn, Artem Molchanov, Head of the Legal Department of the FAS Russia, who also took part in the conference, added that the network effects have vividly proved themselves over the last few years.

"Market participants were in a deplorable position when industries or individual businesses could not fit into the network, and those who could, got even more power. We must understand that this is no longer a theoretical threat, but a practical phenomenon that we will either keep and accept the digital monopolization of all related and dependent markets, or decide to protect competition. We have to put "anticrossing barriers" against abuse of the law," he said.



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