WHO CAN BE CONSIDERED COMPETITORS? HOW TO STUDY CONSUMERS?
Numerous questions emerge for the regulator in the digital epoch, and FAS and the expert community must fund the answers to them
On 25 October 2019, the XI International Conference – “Antimonopoly Regulation in Russia” included a session on “X-files of market power in Russia. Refracting FAS enforcement practice”. Its participants discussed some pressing issues of market analysis; and searched answers to the questions as to what does the regulator consider market power and how the regulator’s positions are reflected in the actual business operations of companies.
Head of FAS Legal Department, Artem Molchanov explained why it is necessary to draft the fifth “digital” antimonopoly package.
He informed that in view of antimonopoly regulation, modern markets have dynamics, modality and network effects, which differ them from traditional markets.
“Digital economy changes the market structure and increases the role of platforms and information considerably, geographic market boundaries stop exist as such – global markets emerge, “breakthrough technologies” change the attitude to the traditional time interval of market research. Technologies shape new markets, of which we are not aware, and the situation becomes maximum unpredictable”, said Artem Molchanov.
He drew attention to changing the forms of monetization, which do not allow the regulator to determine market shares based on direct income, and to a high significance of cross network effects on the modern markets.
“Can we consider such markets based on the existing tools? How to catch network effects? How to implement them? - continuedHead of FAS Legal Department. “It is necessary to change the approach to defining market dominance. New criteria should include possessing platforms and presence of network effects that enable market entities to influence general goods circulation conditions in the markets”.
Head of FAS Department for Regulating Communications and Information Technologies, Elena Zaeva, outlined the risks caused by absence of legislatively formalized tools for calculating market shares.
She explained: “Until new tools are described, using which the antimonopoly body will assess the dominant market position of economic entities, the risks emerge rather for business than for the regulator because business cannot estimate in advance if it has the dominant position”.
“Digital platforms influence traditional physical markets. They can be considered as adjacent markets as we do now. They should be considered as a unified system, in view of the emerging relations. The currently-in-force No. 220 FAS Order does not allow us to do it. It would be more correct and honest to adopt the fifth antimonopoly package and accordingly adjust the existing regulatory by-laws that the regulator will use in its work”, added Elena Zaeva.
Head of FAS Industry Control Department Nelli Galimkhanova took the example of automotive market to describe transformation of the industrial sector.
“It concerns transformation of the entire industry. To compete, business and industry should digitalize their production segment and production-and-sales chains. The automotive industry is the most obvious example. Which aspects of the automotive market digitalization we see as consumers? The structure of car ownership has changed, it is not necessary now to own a car, we can use taxi, car-sharing and other systems. Digital companies are becoming active competitors and invest in electric and self-driving cars. They are new competitors in rivalry with industrial companies”, informed Nelli Galimkhanova.
The discussion also focused on defining the market power boundaries, market analysis without taking into account opinions of its players and reasonableness and the need to carry out independent surveys, the grounds to challenge decisions and actions of the antimonopoly body, and some others.