ANDREY TSYGANOV: FAS IS AIMED AT EXPOSING VIOLATIONS OF THE ANTIMONOPOLY LAW IN THE DIGITAL WORLD

Deputy Head of FAS discussed the “digital” effect on cartel formation and behaviour in the markets at Gaidar Forum

On 17 January 2019, the Х Jubilee Gaidar Forum included a session on “Competition and competition policy in the context of digital transformation”.

“Digital is transparency, ability of consumers to perform searching through numerous different options.  It means that consumers are better informed about the quality and properties of the expected products. In business the speed of decision-making is increasing. The algorithms processing big data help make the most efficient decisions in terms of business. Use of digital technologies leads to global costs reduction of doing business, which ultimately must result in an increase of public benefit”, started his speech Andrey Tsyganov.

“Digital is exclusive. Because information is stored somewhere, was collected by someone and is provided to somebody. At the same time open and free provision of information becomes a luxury, i.e., access to information becomes a problem, what we call a market entry barrier in the antimonopoly language”, continued Deputy Head of FAS.

In the speaker’s opinion, big volumes of information and special methods of their processing require additional incentives for collaboration between market participants, especially cooperation, the purposes of which include competition restriction through anticompetitive agreements.

“Participating in cartels and maintaining the rules set by cartels becomes more beneficial then surrender to the regulator”, emphasized Andrey Tsyganov.

He also touches the theme of block chains and smart contracts. Andrey Tsyganov reported that “in the modern digital world it is hard to find more favourable conditions for conspiracy and concealing actions, when participants becomes not simply anonymous but pseudo-anonymous, and all their actions are protected cryptographically”.

Summing up, Deputy Head of FAS pointed out:

“Challenges do exist and it is necessary to respond to them. In the context of the digital epoch when information is encoded and self-destructing, I do not much believe that in the near future the leniency programme will be actively developed. Simply because, in my opinion, under modern digital technologies incentives to stay in a cartel are stronger than the incentives to leave it. Relationship based on participants’ trust and bound with smart contracts, limit the incentives to exit cartels. This is one side of a medal. Another side is that the antimonopoly body has increasingly fewer possibilities to promptly expose violations and effectively react to cartels. Unless the regulators undertake decisive and serious actions to change the tools helping them to expose cartels”.

Moving to the means and methods of antimonopoly reaction to the changing digital environment, Andrey Tsyganov said:

“If the staff of the antimonopoly authority are sound on economics, but understand nothing in programming and cryptology, we will be forced to hire such specialists and form the relevant units at FAS. Outsourcing such type of services is complicated but also possible.”

He added: “Antimonopoly bodies all over the world follow different paths. Some agencies establish specialized units that deal with the “digital”, others hire contractors. FAS is also undergoing changes in order to focus our efforts on exposing violations of the antimonopoly law in the digital world”.

Another aspect covered by Andrey Tsyganov, was also associated with horizontal restrictive agreements and remedies used by the antimonopoly body.

“The question is about modernizing our approaches to economic market analysis. If it is difficult for the competition authority to collect direct evidence of a cartel and people are less willing to report a cartel to the antimonopoly body, it means we must actively employ indirect evidence. To this purpose, it is necessary to analyze markets, perform screenings, using the same algorithms and programs quickly review changes in the actions of market participants that stand out from the economically reasonable behaviour, and pay attention to it. We are aware that some sectors are more vulnerable for developing cartels. It is likely that cartels are more sustainable on the markets of standard goods with high entry barriers and rarely changing range of participants. It is these markets that the antimonopoly bodies should focus on to avoid wasting its resources and to make sure that the “digital cat” runs in those corners where it should run to definitely catch the “digital mouth”, concluded Deputy Head of FAS.