“DIGITAL” VIOLATIONS: TOOLS CHANGE, THE NATURE IS THE SAME

Digitalization of economic processes transforms the way antimonopoly violations are committed

It was the focus of the discussions on digital antimonopoly violations at the Antimonopoly Club organized by the “Competition and Law” Journal.

Anti-competitive agreements, unlawful coordination of economic operations are increasingly often carried out with use of high technologies: special robots, price algorithms and other program modules. But violators have broader weaponry.

According to the moderator, a chief expert of the “Competition and Law” Journal Elena Sokolovskaya, digital violations can also include competition restriction by administrators of electronic trading sites (ETS), hacker attacks on procurement participants, ETS servers, for instance, DDoS-attacks.

Head of FAS Anti-Cartel Department Andrey Tenishev emphasized that so far the essence of antimonopoly violations is not changing, the methods of committing than and trances left in the object world are changing.

He pointed out that “yesterday, a cartel members used to do settings manually, while now special software is employed. In the near future we must seriously consider that in the modern, rapidly changing world cartel definition cannot remain a dogma and it is probable that tomorrow cartels that artificially shape consumer demand or illegally exchange big data will be as dangerous for the economy and price collusion and require per se ban”.

In view of Andrey Tenishev, it is still early to prove that the public danger of digital antimonopoly violations is higher that non-digital ones.

“We are studying this phenomenon. Although it is impossible to deny that the computerized form simplifies violations, and some of them can only be committed digitally”, added Head of FAS Anti-Cartel Department.

“Currently FAS is not planning an amendment to the Code of the Russian federation on Administrative Violations, to make antimonopoly violations with digital software an aggravating circumstance due to a higher public danger. We need to study this phenomenon carefully before regulating it. So far, our practice is insufficient in this area. An increased public danger of such actions is reflected in the existing turnover fines. Cartels become successful employing digital tools and gaining big income, so turnover fines will be much higher”, explained Andrey Tenishev, adding: “As for digital programs inherently harmful to competition, there should be a ban of this publically dangerous tool in the antimonopoly law, and introducing such programs in circulation and using them should be punished”.

Deputy Head of FAS Anti-Cartel Department, Anton Teslenko detailed the general concept of “Big Digital Cat” – an automated program for exposing and proving cartels.  As one of the main area of the regulator’s work, he mentioned expanding a list of information used for analysis for the compiled evidence base and the available databases.

In the context of exposing digital violations, an acute issue is still how to use information classified by law as secrecy of communications. “It is necessary to delineate “sensitive” information that is subject to state protection, for example, personal written communication between individuals, and other information, for instance, business correspondence between economic entities and especially  more automated  robot correspondence”, believes Anton Teslenko.

Fatima Konieva, Head of Digital Investigation Unit at FAS Anti-Cartel Department, outlined global experience of using screening programs to expose digital cartels: “At the moment such programs are used in Russia, South Korea, Brazil and the UK. The very first one was launched in South Korea. Overall, in spite of geographic distances, such software modules have common approaches to revealing suspicious market conduct and work principles. And it is normal because the legal nature of cartels is the same regardless of their location in the world”.

Andrey Tenishev added that unlike its foreign analogues, the Big Digital Cat will collect and register evidence.

He concluded that “investigating cartels FAS will also apply traditional methods to prove them. We must form a new area of academic research – antimonopoly forensics and elaborate scientific basis of searching and registering traces of cartel operations, modern methods of cartel investigations”.

Next, the audience discussed the rules of antimonopoly regulation of e-commerce. Olga Protchenko, a senior lawyer at Pepeliaev Group pointed out that developing e-commerce inevitably changes the conditions of distribution contracts: producers try to influence on-line reselling prices and monitor them with use of algorithms, include parity price conditions, ban online sale and advertising, use of third-party platforms, price comparison websites, practice geo-blocking and geo-discrimination. In her opinion, legal assessment of such practices is difficult because of absence of special regulation, specific FAS explanations and enforcement practice.