Deep Transformations of Antitrust Regulation and the Careful Analysis They Require

Problems of controlling fundamentally new forms of market power and new types of economic competition were discussed at the conference "Antitrust Policy: Science, Practice, Education", which was held over December 6-7 at Skolkovo.

The conference was organised by the HSE-Skolkovo Institute for Law and Development together with FAS Russia at the Skolkovo site.

Chairman of the Board of Skolkovo, Igor Drozdov, opening the conference, stated that for several years, the Skolkovo Foundation, together with the Federal Antimonopoly Service of Russia and the HSE-Skolkovo Institute for Law and Development conducts in December a conference on antitrust regulation. The parties work closely in terms of collaborative expert work. The Skolkovo Foundation participated in the preparation of the Fifth Antimonopoly Package for the adaptation of Russian legislation to the digital economy. In addition, the experts therein act as coordinators of the working groups on competition within the framework of the Competence Centre for Normative Regulation, "Tsifri".

The Fifth Antimonopoly Package is called up to answer the existing regulatory challenges. Currently, technologies that use "big data" do not classify such assets as material assets, but rather as intellectual property, in respect of which antitrust legislation establishes immunities.

The head of FAS, Igor Artemyev, urged competition authorities on an international scale to develop new approaches to antitrust regulation: "an antitrust authority in the digital economy should understand where the market power comes from. If previously it came from companies that occupied a dominant position, now it is a variety of internet platforms and the related network effects they wield, because they strongly affect the adjacent markets".

The head of the Service stressed that competition authorities should foster global cooperation, because there exist completely new markets, where borders become diffused across the world. The head of the FAS noted that just a few years ago the list of the largest companies was led by four organisations, all of the commodity sector, yet now in 2018, the top five leaders of capitalism are digital companies (Google, Amazon, Apple, Facebook and Microsoft).

Changes in the economy have led to the development of amendments to the laws on protection of competition, and the Fifth Antimonopoly Package is indeed all about digital. "Now we are discussing it with all interested parties to develop completely new definitions in antitrust regulation, so that they have a positive effect on our economy. New approaches and definitions should be fixed with the strength of the law to back them up", Igor Artemyev said.

Thus, according to FAS, transactions involving economic concentration should be considered with the input of experts and be made public in nature, as many transactions affect the lives of citizens directly. The head of the FAS cited the Bayer and Monsanto deal as an example which was the first such deal in the field of antitrust regulation.

"In addition, we will introduce a scientific approach to the consideration of transactions, which will involve the most modern technologies and the best institutions of higher education" - Igor Artemyev. He noted that FAS turns to the HSE-Skokovo Institute for law and development as an expert body for decision-making.

Director of the Institute, Alexey Ivanov delivered the presentation: "Intellectual property rights and antitrust regulation - demystification the issue".

He noted that the UN estimates that a significant part of the world economy today is made up of rental income which is not based on useful productive activities. At the same time, monopolistic exploitation of intellectual property plays an important role in increasing the share of rental income.

The rental business model, in turn, creates incentives for increased economic concentration and winner-takes-all competition models. Rising economic rents also lead to a sharp rise in inequality around the world.

Unfortunately, according to Ivanov, "Russia has developed a model of regulation which contributes to the strengthening of these negative processes. Clear distortions in intellectual property protection make it almost impossible to balance the work of the important institution of IP, and lead to increasing rental economic behavior, reducing incentives for innovation and other productive activities. In Russia, in particular, any form of antitrust regulation of intellectual property rights is completely excluded, which is an absolute anomaly in the civilized world. We also do not have tools for compulsory licensing of intellectual property in the interests of competition and other public interests. At the same time, for example, in the United States several mechanisms of active use of compulsory licensing for public needs work effectively".

In the same vein, the ban on parallel imports, which is aimed exclusively at satisfying the interests of foreign rights holders and their distributors in Russia, hinders the economic development of the country. Such distortions, he said, need urgent correction and this is, above all, the task of the legislator.

"If we are serious about the knowledge economy, the digital economy as the basis of economic growth and development, we must rethink the current regulation and create conditions for a much more free dissemination of information, knowledge and technology. And the new antitrust regulation can play a key role in this issue", Alexey Ivanov summed up at the closing of the plenary session.

 

Reference material: fas.gov.ru