ANDREY TSARIKOVSKIY: DIGITAL ECONOMY – ECONOMY WITHOUT BORDERS

Digital platforms and aggregators have become big market players, cross-border commerce is expanding so reviewing competition policy and developing new regulatory approaches are especially pressing

On 20 November, Deputy Head of FAS Andrey Tsarikovskiy moderated a BRICS + session on “Studying competition problems on digital markets” at Skolkovo Innovation Centre. He suggested to discuss the trends of developing competition policy under growing digital economy and ways of adopting regulators to the new realities.

Deputy Chief Economist of Brazil’s Administrative Council for Economic Defence, Patricia Sakowski, outlined a Draft Report of BRICS antimonopoly bodies on digital economy that analyzes the modern challenges facing competition agencies. She shared some interim conclusions: “We are moving to competition between ecosystems so we have to forecast scenarios as to how these systems will behave”.

“Challenges facing us are truly massive and to overcome them cooperation of the international community and academia is necessary”, pointed out Patricia Sakowski.

Andrey Tsarikovskiy confirmed the necessity to collaborate with the research community: “The today’s issues facing antimonopoly bodies do require academic reconsideration”.

Head of FAS Department for Industry Control, Nelli Galimkhanova, analyzed digital markets in the b2b sector.

She said that “digital market is typically a “superstructure” of a particular tangible market. Digital technologies influence the power landscape on the market and raise a question whether the antimonopoly body should be involved or wait for cases? In my view, it is better to prevent violations”.

Nelli Galimkhanova described possible violations when digital technologies come to industries. For instance, companies can coordinate efforts by creating a common platform, which generates elements of a cartel or other anticompetitive agreements. Alternatively, a large company can invest in technological solutions and gain an even bigger market power, which helps it coordinate the entire market. A technological giant can enter an industry and form a single platform to impose its conditions upon market players.

Head of FAS Department for Industry Control stressed the importance of determining the goal of digital tools: to enhance resource efficiency, increase consumer well-being or restrict concentration. She summarized that “a model should be adapted to eliminate all this at the stage of platform development”.

“Considering mergers with intangible assets, defining markets becomes more difficult. Digital economy is economy without borders, a case-by-case approach is required: if consumers get benefits, a merger should be allowed”, stated Andrey Tsarikovskiy.

Then a representative of China’s State Administration for Market Regulation (SAMR) Di Syao described development of digital economy in China and enforcement. She said that “rapid market changes, the network effect, dual-sided or multi-sided markets, relying on algorithms and big data – all this creates difficulties for regulation”.

Andrey Tsarikovskiy agreed about the difficulties of defining the market: “Digital markets are very dynamic. We should shift away from the classical question as to “how the market has changed”: sometimes a merger creates a new market. We will have to study dynamic series, using the language of mathematics”.

Head of International Affairs at Japan Fair Trade Commission, Midzumoto Takakhisa, highlighted cases considered by the agency, for example, cases against Amazon and Rakuten.

Completing the event, Director of BRICS Antimonopoly Centre, Director of the Institute of Law and Development, higher School of Economics – Skolkovo, Alexei Ivanov called upon BRICS antimonopoly bodies to undertake radical measures to overcome inequality  causes by  development defects of the modern capitalist economy: “Digital monopolies invest colossal resources in one area – global users’ enslavement by tightening control over their attention and conduct, which should be in the focus of work of antimonopoly regulators today”.