ANATOLY GOLOMOLZIN: FAS INVESTIGATIONS STABILIZED THE SITUATION WITH DIGITAL SET-TOP BOXES

FAS arrived to a conclusion that the trends on the market of digital set-top boxes is instrumental and terminated the processing

On 12 September, FAS terminated the antimonopoly case against “DNS Retail” Ltd., “Eldorado” Ltd. and “M.Video” Ltd.  

Deputy Head of FAS Anatoly Golomolzin pointed out: “Opening cases by FAS against chain stores had a “preventative effect” and was a stabilization factor, which made the transition to digital broadcasting sustainable and transparent”.

Under the plan forstage-by-stage switching of analogue TV broadcasting of mandatory public-access TV channels in Russian regions, analogue broadcasting shall be switched off in four stages: 11 February 2019 – 7 regions of the Russian Federation, 15 April – 20 regions, 3 June - 36 regions, and on 14 October - 21 regions).

Tver region was a pilot project where analogue broadcasting was switched off on 3 December 2018.

FAS inspection of large stores in the course of the pilot projects in the Tver region showed a growth of prices of particular brands of digital set-top boxes in December compared to July 2018. Sales prices for some set-top boxes in stores exceeded 30%.

Cases against “DNS Retail” Ltd., “Eldorado” Ltd. and “M.Video” Ltd. were opened upon elements of violating Clause 1 Part 1 Article 10 of the Federal Law “On Protection of Competition”: fixing monopolistically high price for digital set-top boxes.

The companies are the largest set-top box sellers in Russia: “DNS” stores are present in 561 towns, “M.Video” and “Eldorado” – more than 220 towns, and in many towns the chains have several stores.

Deputy Head of FAS explained: “The arguments of the respondents on justified dollar / Ruble exchange rate, an increase of lease payments and transport expenses have not been confirmed. The arguments on “panic demand” also were not taken into account, since switching off analogue broadcasting and the transition to the digital one is planned and it is public; under such circumstances natural demand increase is expected”.

At the same time, the arguments that the price fluctuations in December occurred due to promotions and other efforts to increase buyer loyalty (bonuses) that typically take place in summer.

FAS analyzed the current market environment and concluded that it had increased significantly by the end of December 2018.

In January 2019, after opening cases, prices for digital set-top boxes sold through chain stores, reduced on average by 10%. The scope of sales of digital set-top boxes in H1 1 2019 in comparison with the similar period in 2018 increased five-fold 5, and more than 50% of sales were digital set-top boxes in the low price segment up to 1000 RUB.

The assortment of digital set-top boxes has expanded considerably, by 1.5 times, and at the moment more than 200 models of digital set-top boxes are available in Russia. It is essential that the assortment is expanded mainly through the most popular price segment – up to 1000 RUB and from 1000 RUB to 1500 RUB.

Another stabilizing factor was sales of digital set-top boxes by “Russian Post”, which provided equipment in remote and hard-to-reach areas. The scope of sales by “Russian Post” in H1 2019 increased by three orders compared with the similar period in 2018, and more than 90% were digital set-top boxes that cost up to 1000 RUB. FAS analyzed prices for digital set-top boxes, the findings confirmed that that prices for digital set-top boxes sold by “Russian Post” are economically justified.

Anatoly Golomolzin emphasized: “We will continue our supervisory measures to make sure that the situation is stable. FAS and its regional Offices monitor prices for set-top boxes and inspections in retail stores.The monitoring will last till the end of 2019”.