PROJECT OF THE "FIFTH ANTIMONOPOLY PACKAGE": HIGHLIGHTS

The Agency considers that it is important to adopt a number of laws that provide for antimonopoly restrictions for digital giants

In the course of modernization of the antimonopoly legislation, four antimonopoly packages were adopted. In view of the development of new technologies and in pursuance of the instruction on improving antimonopoly regulation in the digital economy, which was given by the President of the Russian Federation in the National Competition Development Plan for 2018-2020, the FAS Russia has prepared new legislative initiatives to amend the Law on Protection of Competition and the Code of Administrative Violations of the Russian Federation (the “fifth antimonopoly package”).

In addition to benefits, the digitalization of the economy also carries risks associated with the monopolization of commodity markets and the possibility of abuse of market power by “digital giants” to the detriment of consumer interests.

Currently, the growing economic power of digital platforms requires lawmakers not only in Russia, but also in other countries to determine the rules and provisions for their activities. Similar initiatives are being considered and discussed in many countries around the world.

As part of the “fifth antimonopoly package”, the FAS Russia proposes to prohibit various forms of abuse by digital giants.

The document will define new criteria for “dominant position” in the Internet space market, including: ownership of the 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 of interchangeable services for securing transactions.

This will not hinder the operation of digital platforms, but if they are dominant, it will prohibit discrimination against customers, monopolistically high prices for services provided, and so on.

At the same time, antitrust rules will not apply to startups of small companies with annual revenue of less than 400 million rubles. The mechanisms will only apply to companies that have a significant turnover and can have an impact on the market.

Besides, it is necessary to take into account direct and indirect network effects, the “parallel use” of several online services and the ability to switch, economies of scale, access to competitive-relevant data, and the role of innovation.

It is also proposed to consider appropriate sanctions for violation of such rules and requirements of the antimonopoly legislation.

Such sanctions should be commensurate and comparable to the scale of violations.

“Since digital monopolies will be the subjects of such responsibility, which are usually global in nature, the consequences of their violations can significantly break economic processes and the rights of a large number of users,” said Sergey Puzyrevskiy, Deputy Head of the FAS Russia. “In this regard, when discussing draft laws with experts and representatives of the business community, several options for such sanctions were considered: from blocking Internet traffic of a digital platform in the territory of the Russian Federation to increased penalties”.

As a result of the discussion of the “fifth antimonopoly package”, it was decided to revise the draft law only in terms of doubling penalties for digital platforms in cases where they flout the requirements of the Antimonopoly legislation and repeatedly maliciously fail to comply with such rules and instructions of the FAS Russia.