THE FAS RUSSIA IS DEVELOPING NEW APPROACHES TO THE ASSESSMENT OF TRANSACTIONS OF ECONOMIC CONCENTRATION

On the second day of the OECD Global Forum on Competition, a session "Economic analysis in merger investigations: quantitative analysis" was held

The session was attended by Andrey Tsyganov, Deputy Head of the FAS Russia, and Denis Gavrilov, member of the General Council of the Association of Antimonopoly Experts, Counsel of Egorov Puginsky Afanasiev & Partners.

During his speech, Denis Gavrilov focused on key principles of market analysis as part of the competition authority's analysis of mergers. Among them, the speaker also referred to the principles of equal importance of ex-post, as well as ex-ante assessment of the effects on competition.

The speaker also noted that each type of merger (horizontal, vertical and conglomerate) requires a specific analysis, since they can affect competition in different ways. He stressed that the obtained data about market shares should be used as a starting point for analysis, but not as the only source of data for decision- making.

During his speech, Denis Gavrilov compared the positive and negative consequences of the merger for making a balanced decision taking into account all factors and noted that it is important when considering mergers to use a broad range of information sources that can be requested from the merger parties, as well as third parties (competitors, consumers, and etc.).

In addition, Denis Gavrilov pointed out the Bayer/Monsanto merger, which was conditionally approved by the FAS Russia with remedies for Bayer AG aimed at creating conditions for the development of potential competition from Russian companies in the field of selection and digital agriculture, and stressed that this merger became one of the most significant global transactions, in respect of which the FAS Russia applied a modern approach to the assessment of economic concentration transactions.

The speaker also noted the draft guidelines on the control of mergers and acquisitions developed by the FAS Russia jointly with the Association of Antimonopoly Experts, emphasizing the content in the text of best practices, including the developed approaches to quantitative and qualitative analysis of such transactions by the regulator.

"Considering that technological transformations, including digitalization around the world, have become the key to understanding the competitive dynamics in the agricultural sector, the FAS Russia applied new methodological approaches developed in cooperation with reputable scientific institutions to identify potential anticompetitive consequences of the merger both in Russia and in the global markets. We conducted a detailed analysis of the factors of agricultural production related to the transaction, including integrated agro-technological solutions for emerging markets, which were recently formed in the process of the ongoing systemic technological and business transformations in the agricultural sector", - said Andrey Tsyganov.

"The FAS Russia, having analyzed the impact of combining the latest biotechnologies, big data and platform solutions in the field of agricultural production on the companies` potential strengthening of market power in the relevant product markets, came to the conclusion that such a merger creates significant risks for the state of competition in these markets. At the same time, the FAS took into account the need to reduce the dependence of the domestic market on foreign selection and genetic materials, associated agro-technological solutions to develop competition among Russian agricultural enterprises. In this regard, the FAS Russia has approved the merger with the issuance of a remedy containing the necessary behavioral requirements", - the speaker said.

"In case the FAS Russia agreed with the "arithmetical" approach proposed by parties of the transaction of summing the company shares in certain markets, the Competition Authority would have to approve this global transaction without issuing any remedies, as total shares of the combined company on relevant markets of seeds and crop protection agents does not exceed the volumes established by the Russian antimonopoly legislation", - concluded Andrey Tsyganov.

Session moderator Herbert Fung, Director (Business and Economics) at Competition and Consumer Commission of Singapore, noted that despite the fact that the session is devoted to quantitative analysis when considering mergers, competition authorities need to remember the importance of an integrated approach, taking into account both quantitative and qualitative indicators, based on the experience of the FAS Russia.

Speakers of the session also included representatives of the competition authorities of Taiwan, Hungary and Romania.