Marketplaces Regulation Discussed at SPIEF-2024

Digital Markets
Marketplaces Regulation Discussed at SPIEF-2024
Photo: Roscongress 11.06.2024 953

On June 7, within the framework of the 27th St. Petersburg International Economic Forum (SPIEF), a session entitled "Marketplace Regulation: a Necessity or a New Stimulus for Development?"  was held. Experts discussed various ways of regulating relations between marketplace market participants.

The development of electronic commerce has a favorable impact on the formation of a common economic space, improvement of citizens' welfare and development of logistics infrastructure. At the same time, the relations between market participants are not easy. In March 2024, Senator Andrey Kutepov and political Party "United Russia" Deputy Vladimir Gutenev, Chairman of the Committee of the State Duma of the Federal Assembly of the Russian Federation on Industry and Trade, introduced a bill in the State Duma on state regulation of marketplaces. 

"The time has come to make the necessary adjustments, and they are quite mild, if we compare them with similar laws in other countries,"

Gutenev noted. 

Last year, marketplaces in Russia received the lion's share of their revenue from fines levied on entrepreneurs selling and providing delivery and storage services on these platforms. This business model of marketplaces resembles the business model of the state, which receives its income mainly from fiscal fees, commented Alexey Ivanov, Director of the BRICS Competition Law and Policy Centre

The key risk of monopolization of the market economy is seen precisely in the fact that market power begins to resemble too much simply power, depriving market agents of freedom of choice and autonomy, Ivanov believes. The main question of antitrust law today is how to preserve market principles in the relations of digital giants with entrepreneurs and consumers. The rapid growth of digital marketplaces raises this issue particularly acutely. 

"Probably the story with marketplaces is a good case study to test the effectiveness of antitrust law - whether it will be able to cope with its task or give way to some other regulatory mechanisms, as it was in other highly monopolized industries, from railways to telecom," 

said the Director of the BRICS Centre.

The e-commerce segment does not deny the very idea of regulation, but lawmakers need to understand the nature of marketplaces, emphasized Sergey Belyakov, Managing Director, Ozon. The requirements for marketplaces should be reasonable and free of contradictions. 

"The speed and quality of response from the player ensures not just the elimination of identified violations, but a significant reduction in the risk of their occurrence in the future, because we change behavior in order to once again not run into first a prescription and then, for example, a revolving penalty. This is a global practice, when the regulator's powers are very significant, and it uses them wisely in order not to restrain development, if it does not carry risks".

Vladislav Fedulov, Managing Director for Government Relations, Avito, in turn, noted that regulators need to distinguish between types of digital platforms - for example, Avito belongs to classifieds, not marketplaces. After the departure of foreign platforms, their place was taken by Russian ones, which meets the tasks that the state has set for business. 

"The state is helping us - in tax maneuvering, in some other legislative initiatives. You just don't kill us on the fly, don't break us in our attempt to develop," 

Fedulov asked.

Marketplaces also contribute to the development of small businesses. Today in Russia about 405 thousand small and medium-sized enterprises (SMEs) work with marketplaces, while in 2020 there were only 43 thousand of them, said Aleksandr Isayevich, General Director – Chairman of the Management Board, Russian Small and Medium Business Corporation. At the same time, difficulties in communication between small businesses and marketplaces are noted. 

"Last year we were addressed by about 350 entrepreneurs. Basically everyone is concerned about fines, the offer, which is constantly changing, negotiable fines and conditions that can be changed and applied retrospectively. It is time to standardize a number of aspects that entrepreneurs are concerned about."

Offline retailers also initially resisted the adoption of laws to regulate their activities. Now retailers themselves undertake to limit the maximum level of markups on socially important products and cooperate with the FAS in every possible way, said State Secretary – Deputy Minister of Industry and Trade of the Russian Federation Viktor Yevtukhov.

"Is it a problem if we divide marketplaces into significant ones upon reaching certain turnovers and the rest? Placing all the terms and conditions of a model contract in the public domain - is that a problem? Is it bad if counterparties will understand on what terms they will work. Is it a problem to revise the contract within a certain period of time, not once a year, but once every three months?" 

Yevtukhov asked the panelists.

Maksim Ermolovich, Member of the Board (Minister) for Competition and Antimonopoly Regulation, Eurasian Economic Commission (EEC), agreed with the Deputy Head of the Ministry of Industry and Trade. The specific nature of marketplaces themselves as technology companies means that the regulation should be specific as well, he is convinced. The EEC is studying the work of marketplaces, but since most of these companies are from third countries, the Commission has no authority to regulate their activities. Nevertheless, the EEC is ready to provide a platform to coordinate the work of all national antitrust authorities to conduct investigations, the speaker emphasized.

Belarus is also introducing changes in the regulation of marketplaces. According to the Minister of Antimonopoly Regulation and Trade of the Republic of Belarus, Alexey Bogdanov, a new law on trade has been adopted in the country. The document introduces new concepts related to e-commerce and obliges marketplaces to respond to users' requests and inform them about their activities.

Not only the BRICS countries, but also Europe and the US are also asking how exactly to regulate digital markets. Often, digital markets develop on a winner-take-all basis, where one company attracts an increasing number of users and can become a monopoly as a result of fair competition. These are the kind of processes that regulators should pay attention to, says Alexandre Cordeiro Macedo, President, Brazilian Administrative Council for Economic Defense (CADE).

"The Brazilian competition law authorizes the regulator to take interim measures. At the beginning of a complaint review, we impose an injunction against anti-competitive practices, take interim measures and immediately stop the illegal behavior. And the terms of the settlement agreement with companies are always individual and very specific,"

he said.

On China's approach to regulating marketplaces spoke Pinjie Hu, Deputy Director-General, Department II of Anti-Monopoly Enforcement, State Administration for Market Regulation of the People's Republic of China (SAMR). E-commerce platforms are an important part of China's 56 trillion yuan (approx. $7.8 trillion) digital economy. Therefore, the most important task of the government is not to limit the development of innovation in this area. At the same time, there is no question of weakening the regulation of the digital environment - on the contrary, a stable basis is being created for "normalizing" the regulation of the digital economy so that it is perceived as a norm rather than an exceptional measure. 

"In addition, we need to reach the next level of regulatory efficiency - to strengthen cooperation in the field of state control over digital platforms,"

noted the SAMR representative.

Maksim Shaskolsky, Head, Federal Antimonopoly Service of the Russian Federation (FAS Russia), spoke about the mechanisms used by the FAS of Russia to regulate marketplaces. Among them are the Principles of interaction between participants in digital markets developed in 2022, which were signed by the largest digital companies in Russia, including the largest marketplaces. In addition, in 2023, the Fifth Antimonopoly Package came into force, which allowed the service to take measures to respond to the actions of marketplaces.

However, there is still a large number of complaints about the actions of marketplaces. According to the agency, this is due to the lack of special regulation. Therefore, the service considers it advisable to establish the rights and obligations of e-commerce participants at the regulatory level. 

"Only a few countries in the world, including Russia, have their own social networks, search engines, and marketplaces. This is a unique advantage of our consumers and entrepreneurs. Therefore, this work [on regulation] should be done in a balanced and careful manner, protecting the legitimate rights and interests of consumers, market participants and marketplaces themselves," 

emphasized the Head of the FAS. 

The 27th St. Petersburg International Economic Forum is set to take place on 5–8 June 2024 under the motto ‘The Formation of New Areas of Growth as the Cornerstone of a Multipolar World’. The Forum brought together leaders of major Russian and foreign companies, as well as representatives of government agencies and the political and scientific community.

The Forum participants paid particular attention to new opportunities for trade and economic cooperation between BRICS countries as part of the organization’s planned expansion. The experts noted that BRICS members already account for more than a third of the global economy. They discussed ways to build an independent system of international financial transactions, promising transport corridors, cooperation in the digital economy, and much more.

digital markets  Russia 

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