DOI: 10.32609/j.ruje.10.117650

Authors: Andrey E. Shastitko, Olga A. Markova, Anton N. Morozov

Abstract: Platform pricing may be connected to antitrust risks, which a company can face under excessive or predatory price scrutiny when the platform is recognized as dominant in the market. Since Federal Antitrust Service of Russia (FAS Russia) prefers price-cost comparison when studying excessive or predatory pricing, we suggest using tariff regulation approaches when analyzing platform prices and calculating long-run average incremental costs (LRAIC). By using this approach one can reduce the risks of simultaneously perceiving platform prices for functionally different consumer groups as predatory and excessive. Having identified antitrust risks of platforms changing their prices (both downward and upward), we show that price increase within the inflation rate may be preferable from the point of view of possible antitrust risks and the transaction costs of interactions with the antitrust authority. However, this method of antitrust compliance could potentially conflict with the company’s long-term development goals as a platform.

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DOI: 10.32609/j.ruje.8.82144

Authors: Andrey E. Shastitko, Olga A. Markova, Anton N. Morozov

Abstract: Could identical goods sold by the same company on the same territory and at the same time be attributed to different product markets? In our paper we take a closer look at the case of the wrought-steel wheel industry, which became the subject of an antitrust investigation initiated by the FAS Russia in 2020. During a shortage, one of the largest wrought-steel wheel producers sold small batches of wheels to minor buyers at relatively high prices compared to the industry average. FAS Russia assumed this price difference to be evidence for abuse of market power. In contrast to FAS Russia’s conclusions, we suggest that wrought-steel wheels sold to major and minor buyers constitute at least two separate markets. To test this hypothesis, we define a relevant product market employing a price correlation analysis. To conduct robustness check we also provide a stationarity test on the log price ratio and a cointegration test which fall within the results of correlation analysis. As consumers actually did engage in side transactions, the revealed price difference is not related to price discrimination. We explain this price difference using the new institutional economics, assuming that goods sold to a large buyer do possess special transaction characteristics which do not meet the characteristics of the batches consumed by minor buyers. Another explanation is differences in bargaining power between large and minor buyers. Our result shows that there can be identified at least two wrought-steel wheel product markets: one with Russian Railways as the main buyer and the second one with smaller undertakings.

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DOI: 10.32609/j.ruje.6.51303

Authors: Geeta Gouri

Abstract: The objectives of competition policy and the application of competition law need defining and redefining along with changing structures of the economy and the maturing of the competition authority. Market structures associated with digital technology and globalization are often not in consonance with the prevalent law framed in economic analysis of traditional product markets. Antitrust interventions by the competition authorities are caught in a bind as was the case with the Competition Commission of India and the Competition Act, 2002. The emphasis on monopolistic competition, or on oligopolistic markets, as anti-competitive, which marked the earlier days of implementation of competition laws, is at variance with the prevalent monopolistic structures of platform markets or technology firms and the market for ideas. Competition authorities are grappling with identifying anti-competitive activities of these markets which tip towards monopolistic structures. In the process there has been a churning of possible diverse antitrust abuses and, as competition law grapples to incorporate these new market structures, there is another churn that is slowly emerging as a major concern — that of convergence of competition policy and public interest. This is an area in antitrust literature which is yet to receive sufficient attention. The core of antitrust intervention — that competition benefits consumers — is undisputed and perhaps axiomatic but what is not axiomatic is that monopolistic market structures can also lead to enhancing public welfare. Emergent trends towards monopolistic markets suggest a rethink of competition policy and law and their convergence for public interest. The focus of this article is on the importance of convergence of competition policy, competition law and public interest in new and emergent markets. It raises questions: Is there convergence or divergence between policy and law and public interest? What is public interest? Do consumers represent public interest and, if so, which set of consumers? Are innovation and technological development, which are part of public interest, also in the ambit of competition policy or are they in the realm of competition law? This is another question which has become acute in recent times. In India and the BRICS group, where usage of internet on smart phones is high, the convergence between competition policy, law and public interest suggests antitrust intervention is guided by public interest.

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DOI: 10.32609/j.ruje.63.51277

Authors: Svetlana B. Avdasheva, Svetlana V. Golovanova

Abstract: A judicial review of the infringement decisions of the competition authority substantially affects the standard of evidence in competition enforcement as well as the structure of cases that the competition authority takes. Enforcement against concerted practice in Russia represents a case-study of interaction between commercial courts of first instance, the Highest Court, the competition authority as enforcer, market participants and the legislator to influence the standards of liability under investigation of concerted practice. We examine the judicial review of infringement decisions on concerted practice and track the evolution of legal definition and sufficiency of evidence in such cases. We show, first, that in Russian enforcement, the ability of the Highest Court to influence the criteria of first instance courts is limited (in contrast to the ability of the first instance court to influence the strategy of enforcement by the competition authority). Second, the increase in the burden of proof motivates the competition authority to refrain from an investigation of concerted practice, in accordance with the prediction of the model of the selection of enforcement target by reputation-maximizing authority.

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DOI: 10.32609/j.ruje.6.51250

Authors: Yannis Katsoulacos, Kalliopi Benetatou

Abstract: Parallel imports have been treated very differently in different countries. In the EU, competition law’s very strong (per se) prohibition of restrictions to parallel imports (PI) can be justified by traditional “public interest” concerns related to the EU’s objective to promote free trade and market integration. At the opposite extreme, we have had Russia’s Per Se prohibitions of PI, which can be potentially justified by the country’s industrial policy objectives of protecting its domestic industries. While there is no evidence of a shift in policy by the European Commission (EC) and the EU, there is evidence of a shift in policy in Russia away from the per se prohibition of PI and a recognition that “in some cases” PI should be considered legal. We consider this shift in Russian policy as a shift in the right direction, while we consider unjustified the continuation of EC policy of per se prohibition of restrictions to PI. Our analysis points towards a middle ground in which any question of whether restrictions of PI must be prohibited or not should be the subject of rule-of-reason investigations of the specific economic facts of each case and what these imply for welfare (and, specifically, consumer welfare).

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DOI: 10.32609/j.ruje.6.51143

Authors: Eduardo Pontual Ribeiro

Abstract: Antitrust remedies are a central part of the competition policy toolbox. Their actual use and design depends on interrelated factors such as the Antitrust Authority’s analytical capabilities, institutional design and bargaining power. Economics can contribute to the design of remedies, using a transaction cost, principal-agent incomplete contract framework, as remedies are generally drawn as an agreement between the Authority and parties under extensive information asymmetries. This provides a rationale for the principles and policies’ choices of the Brazilian Antitrust Authority, CADE, on remedies over the past decade. There has been a shift towards agreements instead of unilaterally imposed remedies, extensive use of trustees and communication by an Antitrust Remedies Guide to signal CADE’s policies.

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DOI: 10.32609/j.ruje.6.56362

Authors: Heng Ju, Ping Lin

Abstract: China has made significant achievements in enforcing its 2008 Anti-Monopoly Law (AML) during the past twelve years. We review the application of economics by the China’s competition law enforcers and courts in dealing with antitrust cases. We discuss selected cases to illustrate the application of the relevant theories of competition harms. While the use of economics in its AML enforcement is consistent with international best practice, China can benefit from further raising the deterrence effect of the AML, increasing enforcement resources, and enhancing its cost-effectiveness of its Fair Competition Review system.

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DOI: 10.32609/j.ruje.6.53904

Authors: Natalia S. Pavlova, Andrey E. Shastitko, Alexander A. Kurdin

Abstract: Digital antitrust is at the forefront of all expert discussions and is far from becoming an area of consensus among researchers. Moreover, the prescriptions for developed countries do not fit well the situation in developing countries, and namely in BRICS: where the violator of antitrust laws is based compared to national firms becomes an important factor that links competition and industrial policy. The article uses three recent cases from Russian antitrust policy in the digital sphere to illustrate typical patterns of platform conduct that lead not just to a restriction of competition that needs to be remedied by antitrust measures, but also to noteworthy distribution effects. The cases also illustrate the approach taken by the Russian competition authority to some typical problems that arise in digital markets, e.g. market definition, conduct interpretation, behavioral effects, and remedies. The analysis sheds light on the specifics of Russian antitrust policy in digital markets, as well as their interpretation in the context of competition policy in developing countries and the link between competition and industrial policies.

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DOI: 10.3897/j.ruje.4.27031

Authors: Andrey Shastitko, Claude Ménard, Natalia Pavlova

Abstract: This paper is about the challenges that antitrust authorities face when dealing with bilateral monopolies. The curse of antitrust refers to traps threatening the efficient applicability of antitrust policies in these situations. Standard theories diverge about the attainability of equilibrium under bilateral monopolies but share skepticism about its efficiency if it ever exists. We suggest a different approach, based on transaction cost theory. First, since bilateral monopolies often develop in the upper segment of value chains, misalignment between parties may generate negative externalities. Second, if parties reach an agreement, the impact of the governance mechanism implemented must be assessed beyond the usual parameters of prices and quantities. Indeed, the risk of negative externalities in the absence of appropriate governance increases dramatically when “critical transactions” are at stake. With vertical integration prohibited, second-best alternatives in which antitrust authorities leave room for innovative hybrid governance may allow internalizing externalities while avoiding high switching costs.

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