BALANCE OF ANTIMONOPOLY REGULATION: LAW ENFORCEMENT OR BUSINESS SUPPORT?

The admissibility of anticompetitive agreements, measures to stabilize the economy, peculiarities of work during a pandemic were discussed by representatives of competition authorities of different countries and industry experts at the online conference

On 17 December 2020, in the framework of the VI International Online Conference Antimonopoly Policy: Science, Practice, Education the session “Anticompetitive agreements in the period of the pandemic” was held.

“The pandemic has become a challenge for all of us – consumers, businesses, antimonopoly regulators, governments of different countries,” the moderator Andrey Tsyganov, Deputy Head of the FAS Russia said at his welcoming speech. - And in these circumstances, in order to support business and stabilize the economy, governments and competition authorities of different countries introduce certain exceptions and take temporary measures, allowing what is usually prohibited by law. Thus, in most jurisdictions, cartels are prohibited and traditionally considered as one of the most serious violations of competition rules. Now the situation has changed a bit”.

“Is a horizontal agreement between competitors acceptable if it allows avoiding a deficit? Where is the margin of acceptance for achieving socially necessary goals? What measures should the Antimonopoly regulator take to establish the necessary balance between law enforcement and business support in a crisis period,” Andrey Tsyganov invited the conference participants to a dialogue with such questions.

Andrey Tenishev, Head of the Anti-Cartel Department of the FAS Russia, noted the trend of decreasing cartel activity in 2020.

“At the end of the year, we can talk about a decrease in the number of identified anti-competitive agreements by almost 50% and a change of their structure: there are significantly fewer collusions at auctions, and a few more cartels in the commodity markets,” he said.

The speaker said that in a difficult economic period, the FAS Russia was largely focused on preventive control, and also spoke in favor of the need to expand the scope of such control and introduce reduced procedures:

“The pandemic has shown that often the result is needed ”here and now”. We issued warnings on the illegality of the planned actions, when, for example, manufacturers’ associations announced the upcoming price increase, and it worked – in many situations it was possible to prevent unjustified price increases,” Andrey Tenishev said.

Also, as one of the anti-crisis measures, the Head of the Anti-Cartel Department described the need for a reasonable relaxation of the anti-cartel regime. According to the speaker, the creation of “purchasing unions” in order to balance the interests of market participants will give the opportunity to small companies to unite against monopolies.

“At the same time, the law should introduce a number of restrictive conditions. First, it is compliance with restrictions on the market share of the union's members or on the total revenue of the union’s members, which must be established by the Government of the Russian Federation. Secondly, the union should be open with mandatory publication of information about such a union on a specially dedicated information resource,” Andrey Tenishev concluded.

Andrey Kartun, Deputy Minister of Antimonopoly regulation and trade of the Republic of Belarus in his report spoke about the specifics of the Authority’s work during the COVID-19 pandemic and the measures taken to curb speculative price growth. According to his speech, the main tasks of the MART are to ensure the availability and accessibility of socially significant goods for citizens, to exclude speculation and unjustified price increases, as well as attempts to artificially inflate them, and to support business.

“At the same time, carrying out quite active control and analytical work, we constantly communicate with business, including with retail chains and suppliers, we explain that our main task is not to regulate the market and not to punish, but to ensure stability in it, to exclude speculation,” Andrey Kartun said.

Alexey Sushkevich, Director of the Department of Antimonopoly Regulation of the Eurasian Economic Commission, focused on the features of the “Union” legislation, which allows for the possibility of concluding an agreement between competing companies in crisis conditions, subject to a number of conditions. Such conditions in the legislation include the receipt by consumers of a proportionate benefit, the inability to achieve socially significant goals in another way, and others.

Alexey Sushkevich also reported on the initiative monitoring conducted by the EEC of the markets of medical freezers (cabinets) intended for storing vaccines, gloves, masks, and wholesale of PCR tests. The results of the conducted monitoring showed that currently there are no threats to competition and the creation of shortages in these markets.

“Representatives of the legal business were very pleased that during the general lockdown, the FAS Russia very quickly refocused on the consideration of antimonopoly cases online. This format is quite convenient for the participants of the case, as they have reduced costs and more opportunities to present their position,” Ruslana Karimova, Senior Consultant at ALRUD law firm, said in her speech.

The speaker also noted the importance of the applied by the FAS Russia methods of “soft regulation” (admonitions, compliance) and the need to continue the close cooperation between the FAS Russia and the business community to discuss the concepts and mechanisms of regulation of “buying alliances” in order to balance the interests of small and medium business and the Antimonopoly regulator.

Luiz Augusto Hoffmann, Commissioner of CADE Brazil, noted that the pandemic has more affected the economy and health, and therefore the role of the state and competition authorities has increased:

“Rapid and effective measures are needed to ensure a competitive environment for further economic recovery. The OECD has published recommendations for competition authorities, according to which the requirements should not be weakened, but it is important to apply them pointwise, adhering to the principle of realism”.

“In our coordinate system, the concept of a “good cartel” does not exist,” Mr. Hoffmann said. At the same time, he gave an example of joint use of logistics infrastructure for uninterrupted delivery of medicines.

Dr. Pierre Horna, Legal Affairs Officer of the  Competition and Consumer Policies Branch, Division on Trade and Commodities of UNCTAD, noted that digitalization in the health sector has led to a number of cross-border problems:

“The coronavirus has led to consolidation in certain industries, and the emergence of a vaccine against a new coronavirus infection has also not passed without a trace. It is not excluded that the contemporary view of cartels – global, regional cartels may be developed”.

Mr. Horna also spoke about the analytical work carried out by the UNCTAD Secretariat on the impact of coronavirus on competition and small business.

Alexandra Ivanova, Expert of the Austrian Competition Authority, said that since the beginning of the pandemic, the Austrian Antimonopoly authority has been open and conducted a large number of consultations for the country's business community, as well as publicly provided information on the basics of law enforcement and recommendations for business. According to the speaker, Antimonopoly authorities need to draw conclusions from the current situation in order to apply this experience in the conditions of future crises.

Ms. Ivanova also noted the important role of the European competition network in the coordination of national authorities.

Kari Bjørkhaug, Director of Investigation of Department of investigation of the Norwegian Competition Authority, said that in Norway, antimonopoly requirements have been temporarily suspended for the transport sector. They do not apply to sea, air and land transport. Such measures are taken to avoid shortages of goods, especially those that are vital, and to ensure their uninterrupted delivery.

At the same time, the authority sent a warning to suppliers of goods and services, which informed that the abuse of the situation is unacceptable.

Ms. Bjørkhaug noted that in Norway, there is legislation on price policy as an instrument of price policy, but it is used only in exceptional situations.

In turn, Michele Pacillo, Official for International Relations of the Italian Competition Authority, shared his experience of cartel investigations and analysis of horizontal agreements. According to him, in the first stages of the pandemic in Italy, there were price spikes, examples of unfair advertising. As part of its powers to protect consumer rights, the Italian competition authority has stopped such actions, including by stopping the activities of fraudulent Internet resources.

As for Antimonopoly regulation, the authority has published an information guide for self-assessment of business risks of violations. Special attention was paid to the areas of food products and pharmaceuticals. The document also contained examples of cooperation between representatives of the business community, which in the current conditions are considered permissible.