ANDREY TENISHEV: INVESTIGATING DIGITAL CARTELS – HUMAN - SOFTWARE STANDOFF?

How will cartel investigations in digital markets change?

“FAS practice already has examples of using various software for concluding and implementing anticompetitive agreements”, informed Head of FAS Anti-Cartel Department, Andrey Tenishev, speaking at the IV International Research-to-Practice Conference “Antimonopoly Policy: Science, Practice, Education” that took place in Skolkovo. “We investigated several bid-rigging cartel cases where auction robots and software had been used. FAS made decisions on two cases on illegal economic coordination. In the first one, a Russian subsidiary of “Apple” “manually” coordinated and achieved common prices for company products; in the second case - against LG, prices for dozens of smartphone models were coordinating with help of digital tools, maintaining prices at the same level”.

Pointing out positive aspects of digitalization, he underlined electornization of public procurement in Russia. Around 30% GDP are allocated through the procurement system: electronic tenders under the Law on contractual system are already mandatory, and under the Law on procurement many state-run corporations voluntarily transfer their procurement to an e-trading site.

“First, these are the same digital projects; second, this is a storage of big data about any operations that take place on the site”, Andrey Tenishev characterized the current procurement system. “The first sites in Russia were launched in 2012 and store all information about all participants and customers, who filed particular applications and other materials”.

Head of FAS Anti-Cartel Department highlighted two types of software.

“In the course of investigations we found auction robots that function instead of humans, which enables a more efficient participation in tenders. Competitors set their robots in such a way that they can successfully implement cartel agreements and do not compete with each other”, emphasizedAndrey Tenishev. “We found and analyze software that has no potential functionalities at all. It pursues a particular cartel scheme and covers the traces of its operation on an e-trading site”.

He continued: “We have not found artificial intelligence collusion so far. Behind software and robots there are always humans whose main objective is gaining unlawful profit through anticompetitive agreements”.

“In anticompetitive investigations human still counter humans. And humans armed with modern technologies must take this into account. We must counter new challenges, improve cartel exposure and proving. One of such tools is the “Big Digital Cat” software that is being developed. The law should be changed. For example, adjust the law on secrecy of communications with the modern realities, review approaches to cartel immunities with regard to subordinate group of persons and determine allowability criteria for coordinating economic activity with use of digital platforms”, summed up Andrey Tenishev.