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Regular version of the site

Discussion in Almaty on How Best to Protect Competition in the Common Economic Space

Laboratory Head Alexey Ivanov gave a presentation analysing the concept of the exhaustion of proprietary rights in contemporary Russia, at the international conference "Protection of Competition and Exclusive Rights. Creating Environment for Free Sale of Products in the Territory of the Common Economic Space".

On October 30, an international conference organized by the Eurasian Economic Commission was held in Almaty, dedicated to issues related to the application, in the legislation of Belarus, Kazakhstan and Russia, of the provisions of the Model law 'On Competition', which was approved by decision of the Supreme Eurasian Economic Council taken on October 24, 2013, No. 50. A wide range of people were present at the meeting: key offices of the Eurasian Economic Council member-states, including the State Duma and the Council of Federation of the Federal Assembly of the RF, the National Assembly of Belarus, the Majilis and Senate of Kazakhstan, antimonopoly agencies, ministries of economic development and justice, copyright bodies, and also the Court of the Eurasian Economic Community, directors from international competition institutions, and representatives of academic circles and the business community.

The participants shared their experiences on how they had dealt with breaches of the rules on competition, and how they had gone about ensuring that there was a level playing field for all players in the goods markets of the three countries in the Common Economic Space. A separate discussion examined antitrust regulation of economic relations related to exclusive rights – regime of intellectual property exhaustion.

Alexey Ivanov's speech dealt with the vexed issue of the relationship between the regulations used to protect competition and those used to protect intellectual rights. A topical example in contemporary Russia of a clash of interests between major rights-holders, on the one hand, and consumers, on the other, is the problem of parallel imports. Since 2002, a ban has been in place in our country on importing original products made by a foreign producer in a way that bypasses the official sales channels. Companies focused on innovation make active use of foreign products in their everyday activities; in many cases they would be unable to function properly without them, and they could fall victim to unfair competition from importers.

Alexey told about the complex study carried out by the Skolkovo Foundation in conjunction with the Higher School of Economics in 2012. He said that most countries around the world tend to be guided by pragmatic considerations of socio-economic benefit, when they select and modify their exhaustion regimes. Alexey outlined a number of case studies in which parallel imports had successfully been legalized by individual countries in Europe and Asia.

The second part of the speech concerned a sociological study involving some Skolkovo companies and innovative start-ups from other development institutes.

54% of those surveyed asserted that their companies would stand to benefit if parallel imports were legalized. The ban on parallel imports is rendering Russian innovators less competitive in the global market: official distributors often find that it is not viable for them to supply lab equipment, reagents or other products in small consignments (often there is a requirement that only one copy of the product may be supplied). The prices for imported hi-tech goods among local dealers are sometimes unjustifiably high. The foreign manufacturer redirects all requests to the Russian distributor, whilst there are also methods of obtaining the product overseas and importing it independently, which are also, incidentally, fraught with difficulties.

The price may differ by a factor of several times (81% of those surveyed said they had no choice but to buy imported goods at overestimated prices).

The long time taken for supplies to be delivered (claimed by 76% of survey respondents) and the limited range of products available (65% of respondents) were two further indicated problems which reduce the efficiency of entrepreneurs' work and mean that the likelihood of a commercial project achieving success in the international market is virtually nil.

Alexey concluded by saying that the Russian innovation sector needed a change to the current system of rights exhaustion in Russia. The Laboratory, together with its key partner - the Federal Antimonopoly Service of Russia - has done a huge amount of work to try to convince lawmakers and the expert community of the need for reform of the system, but it must continue conducting new studies, and holding discussions with experts in the sector in the future. 

 Presentation "Parallel Imports in Innovation Sector" (in Russian) (PDF, 2.21 Мб)