To Counter Sanctions Pressure, We Need a Flexible Antitrust Agency That is Independent of the Government

To Counter Sanctions Pressure, We Need a Flexible Antitrust Agency That is Independent of the Government
Photo: ВШЭ 24.04.2024 1192

The International BRICS Competition Law and Policy Centre together with the Joint Department with the Federal Anti-Monopoly Service, Faculty of Law, HSE University, held a roundtable themed “What is the Demand for Competition Policy Today?”. Participants included practicing lawyers, representatives of business and professional associations, students and researchers from HSE and other Moscow universities. The experts discussed what the public demand for competition policy looks like today and how it should be changed. The roundtable featured two keynote speakers and four commentators. 

Nelli Galimkhanova, Head of the Joint Department with the Federal Anti-Monopoly Service, Faculty of Law, HSE University, Deputy Head of the Federal Antimonopoly Service of Russia, moderator of the discussion, noted that covid restrictions created conditions for the rapid growth of digital services and platforms, the introduction of digital technologies became a condition for business survival. It seemed that the world was moving towards greater globalization, but the geopolitical challenges of 2022 led to a new shock: global production chains broke down and the market structure changed. In his address to the Federal Assembly, the President of Russia outlined three tasks: human resources development, technological development and increasing labor productivity. In fact, competition is aimed at solving all three global tasks. 

Svetlana Avdasheva, Prof., Faculty of Economic Sciences, HSE University, noted that the role of competition policy in the conditions of sanctions pressure turned out to be very positive. For example, the parallel imports regime in many markets has become the most effective anti-crisis tool. In the dilemma of protection of the results of intellectual activity, the balance is shifting towards the benefits of lower protection and greater competition. In the context of re-globalization, the target markets for Russian exports and the rules of competition policy are changing. The markets of China and India have higher demand for raw materials, and in many markets prices are higher than in Europe. The key feature of Russian antimonopoly policy is that it is designed to solve the task of preventing the transmission of world prices to domestic Russian markets, i.e. to fight high prices of exporters. Svetlana emphasized that Russia's policy of developing international competition rules within the BRICS framework is becoming increasingly important.

“This direction needs to be strengthened, as the global market for Russia has shifted again towards the BRICS, and now such initiatives are extremely relevant and expected.”

Alexey Ivanov, Director of the BRICS Competition Law and Policy Centre, Deputy Head of the Joint Department with the Federal Anti-Monopoly Service, Faculty of Law, HSE University, supported Svetlana Avdasheva, specifying:

“The BRICS Centre is working with partners from the Global South, and we are convinced that it is very important to form competition rules. It is necessary to develop a pro-competitive policy in the markets which we have entered with our energy resources, otherwise we will lose out in the global economy.”

In his report “Reconstitutionalization of Antimonopoly Law” Alexey noted that the principle of competition protection is explicitly enshrined in the Russian Constitution in the section on the foundations of the constitutional order. This constitutional request for an active competition policy should be realized in legislation acts and public administration measures.  

The main value proposition of antitrust is to stimulate human creative and entrepreneurial activity, and this is what should be emphasized in anti-crisis management. At the same time, antitrust policy has a huge anti-sanctions potential. Today Russia resists sanctions by concentrating resources, but this makes the economic system less resilient and increases its vulnerability, while a dispersed, more distributed system becomes more adaptive and better resists sanctions pressure. 

To unlock the anti-crisis potential of antimonopoly policy, Alexey proposed three blocks of legal changes, including turning the antimonopoly regulator into an independent body outside the Government on the model of the Central Bank, which, in turn, is also one of the antimonopoly regulators. 

It is time to stop perceiving anti-trust as a kind of control and supervisory activity, Alexey is sure. Competitive policy is aimed at expanding the bottlenecks in the economy and managing systemic risks, and in the context of anti-crisis policy it should be used even more actively. 

Andrey Shastitko, Head of Chair for Competition and Industrial Policy of the Department of Economics, Lomonosov Moscow State University, Director of the Centre for competition and economic regulation studies of the Russian presidential Academy of national economy and public administration (Ranepa), said that antitrust “has the gene of economic regulation sewn into it,” and there is always a great danger of completely “falling” into economic regulation while protecting the interests of the consumers. He is convinced that the FAS should take into account exactly the long-term effects of market participants' activities, and not focus on “populism in antitrust” when the emphasis is on short-term effects. “The antimonopoly service needs to build up competencies in terms of applied empirical analysis of markets. FAS has an absolute advantage in access to information, and it should be used.” Andrey supported Alexey Ivanov's proposal: 

“To unlock the potential of antimonopoly regulation in its anti-crisis form, it is very important to give the antimonopoly regulator an independent status.” 

Andrey Tsyganov, Leading Research Associate of Chair for Competition and Industrial Policy of the Department of Economics, Lomonosov Moscow State University, Deputy Head of the Federal Antimonopoly Service of Russia, described the areas that, in his opinion, could become growth points for the regulator. Firstly, it is necessary to increase prioritization, i.e. the competition authority should determine to a greater extent the priority areas of application of very limited resources. Proactivity is also important: in case of certain signals from the market, it is necessary to take antimonopoly response measures without waiting for complaints from citizens. It is necessary to use a wide range of “soft law” tools: mediation, support for socially responsible behavior of companies, advocacy, trade policies – everything that allows us to quickly solve problems without applying harsh sanctions. Andrey Tsyganov agreed with Andrey Shastitko on the need to develop analytical competencies: 

“We lack modern analytical tools; we need to develop our analytical base. Companies that work in the real sectors of the economy have long overtaken us in terms of analytical capabilities, work with large databases and data analysis technologies. We need to be able to order research work from expert centers to make it easier for analysts of competitive agencies to make decisions.”

Irina Filatova, Deputy of the State Duma of the Russian Federation, Member of the State Duma Committee on Protection of Competition, sharpened the discussion by describing the pressing problems with which participants of the marketplace ecosystem come to the committee: employees of retail outlets, logisticians, sellers, etc. file complaints about violation of their rights and unfair practices on the part of platforms. 

“Participants of economic activity are first of all people, small and medium-sized businesses. For them, the moratorium on antitrust inspections of IT companies has brought catastrophic consequences: unilateral changes to contracts, endless fines and penalties imposed by marketplaces, etc. – all of this is a heavy burden on people who do not understand how to protect their interests.”

Irina supported Alexey Ivanov's point that it is abnormal when most of the income of marketplaces is made up of fines. According to Wildberries' latest report, more than 70% of their net profit comes from penalties and fines collected from participants in the ecosystem. This is probably a subject for serious antitrust analysis. Irina also spoke about the current work in the Committee to consider a bill on regulating marketplaces and how this could strengthen the function of antitrust control.

Denis Gavrilov, Deputy Head of the Competition law branch of Kutafin Moscow State Law University, answering the question of the roundtable, noted that the demand for competition policy exists and it is definitely sustainable and stable. Antitrust is a unique tool of market law enforcement, which is very effectively transformed, developed and adapted to the needs, Gavrilov emphasized. He called for adapting antitrust law to the realities of digital markets, as successfully happened with the adoption of the fifth antitrust package, as well as developing soft law tools and completely eliminating antitrust immunities for intellectual property. Competitive policy should also be developed within the Eurasian Economic Union (EAEU), which can become a platform for cooperation in this direction. Common markets cannot exist without antimonopoly rules, and in this sense the demand for competition policy today is enormous, Gavrilov is convinced.

Alexey Sushkevich, Director of the Department for Antitrust Regulation, Eurasian Economic Commission (EEC), said that according to their analysis, the dynamics of competition in the EAEU countries as a whole has increased over the period of the association's operation, as noted by all market participants interviewed by the Commission. There are fewer and fewer ordinary complaints about classic forms of antitrust law violations. In this regard, the role of antitrust regulation in the establishment of a competitive market can be assessed as very high. “But the next step, Alexey Ivanov suggests, should be a transition from routine and petty market regulation to competition in the sense of protecting values, as formulated in the Constitution.”  This requires a different institutional design of antitrust regulation and perhaps other approaches. This is an important conversation for the future, and the Commission stands ready to engage in it. 

Closing the roundtable, Nelli Galimkhanova noted that this was the first round table in a series of similar discussions organized by the the Joint Department with the Federal Anti-Monopoly Service, Faculty of Law, HSE University and announced the next, more focused session dedicated to the problem of marketplaces.

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