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Shastitko A.

Shastitko A.
Director of the Centre for Competition and Economic Regulation Studies, Head of the Department of Competitive and Industrial Policy, Doctor of economic science, professor

Ex ante merger control in Russia: changes of efficiency if antitrust legislation

Abstract. Law «On protection of competition** adopted in 2006, changed the procedure of ex ante merger control in Russia substantially. Positive impact of the changes in law on economic efficiency seems to be at least twice as annual budget of Federal Antitrust Service. The treatment of group of economic entities as economic firm was apprehended by Russian business. At the same time ex ante merger control still suffer from path-dependency: the most striking is the system of behavioral remedies containing the elements of price regulation.

Competition policy: composition, structure, system

The article presents the basic parts of competition policy — protective and active competition policy, as well as competition advocating. Protective competition policy explains the content of the «hard antitrust core» and suppression of unfair competition. The article studies directions of active compe¬tition policy such as the development of competition in industries with a natural monopoly element, competition rules in the market with a state as a buyer, the decrease of redundant barriers for enter¬ing and leaving the market. Variants of correlation and interaction among instruments of protective and active competition policies taking into account differences in tough and soft force are shown in the article.


Trading in durable goods: a set of objects and limits of antitrust

This article reveals the reason for specific way of competition law enforcement in markets defined within the context of interrelation between the main and derivative products. Identifying particularities of grounds for aftermarkets definition we provide systematization of various types of interrelations between main product and derivative product taking into account possible cases for two related markets and single one in product boundaries; competition and monopolization of single market, both markets or one of them. The set of competition restrictions problems within the «main product — derivative (supplementary) product» relationship is defined on the basis of studies in the New Institutional Economic theory taking into account the contracting between producers (sellers) and buyers of products mentioned. It is explained significance of such aspects of interrelations between buyers and sellers of complex durable goods as fundamental transformation, switching cost, hold up, contracts incompleteness. Based on lessons learned from «Kodak» and some other cases the issue of limits for efficient antitrust enforcement is discussed. The problem of excessive antitrust enforcement as an substitute of contracts design by private actors demonstrate the risk of crowding out of private ordering of contracts by public ones. The article shows some signs of specific vector of Russian antimonopoly law enforcement related to aftermarkets issues. It is discussed particular case of product boundaries definition of market (stripes for tests to check quantity of sugar in blood) and wider classification of interrelations between the main and derivative products taking into account not only individual market dominance but also collective market dominance.

Antitrust Law Enforcement in Aftermarkets: for Product Boundaries Estimates to Competition Advocacy

This article brings out and summarizes approaches to definition of market product boundaries for the purpose of antitrust law enforcement in accordance with the relationship between the main and derivative products. Following factors are discussed: price of the derivate product in absolute terms and in comparison with the main product price; probability of the derivative product sale to consumer under period of the main product use; the main product buyers structure; information on durables post-sale service conditions availability. It is shown applicability of transaction cost economics approach to discuss issues relating antitrust and contracting using such transaction features as bounded rationality, opportunistic behavior and assets specificity. The reasons to mitigate the mode of antitrust enforcement in aftermarkets are exposed: research and development expenditures, reputation effects for the main product producer who controls aftermarket, increasing return to scale in aftermarket.,The article provides the assessment of the results of Russian antimonopoly policy and competition advocacy in related markets characterized by «main product-derivative product» relationship. Special attention is devoted to compliance practices of manufacturers and dealers in auto industry from the perspective of competition support in aftermarkets. The article offers policy implications for the antitrust law enforcement in aftermarkets in Russia.

Two-sided markets: the subject matter specification

Pricing and investment strategies on two-sided markets are significantly affected by the presence of cross-network effects between the two sides of the platform. In order to maximize profit platform internalizes positive externalities and expands the scale of transactions by making decisions about the level and structure of prices for different groups of consumers. Adjusting the structure of rates, established by platform for various parties, can be considered as a mechanism to internalize crossnetwork effect. The concept of two-sided markets drew attention to the problem of using the traditional one-sided logic on two-sided market, but the problem may also be in too broad interpretation of the two-sided markets concept and the use of two-sided logic in the traditional one-sided markets. Two-sided markets features impose certain restrictions and require new approaches in terms of economic analysis for the purposes of the application of antitrust laws. The paper is carried out to compare different approaches to defining the platform as an object of study, as well as an attempt to relate the concept of two-sided markets with traditional concepts of the theory of externalities and third degree price discrimination.

Priorities for competition policy in Russia until 2030

Setting out the long-term priorities of competition policy, it’s impossible today to discuss them in isolation from industrial policy. New industrial policy is brought to the forefront, and competition values are its central element. In this context the article offers six major trends for competition policy up to the year 2030: a shift to «smart» antitrust regulation, developing competition with the use of IPR, lowering entry barriers, modernizing the regulation of natural monopolies, developing competition in public procurement and the auctioning off of state property, and developing competition on a regional level. Part of these trends are explained through specific measures, while part of them are left up for discussion. A set of short-term measures are proposed as well.

Structural Alternatives of the Method of Comparable Markets in Implementing Antitrust Law

The basic idea of using comparable markets for antitrust analysis is discussed. The structural alternatives of the method are presented, including the «before-and-after», «yardstick» and «benchmark » variations, as well as a synthetic method, combining traits of the first three. A link is established between the requirements for the applied method of analyzing comparable markets, the criteria used to determine them and the research objectives — establishing the fact if an excessive or predatory price has been set and estimating the harm from an anticompetitive practice. International practice in applying the method of comparable markets in antitrust is analyzed based on cases from the EU, separate EU countries and the South-African Republic.

Price Parallelism on Mobile Communication Markets: Three Interpretations

Price parallelism in itself is not a violation of antitrust law. However, in the mobile communication market, it is complemented by features of product characteristics and industry regulation in such a way that, as a result, it often attracts the attention of antitrust authorities as a sign of concerted actions (or agreements) restricting competition. The article shows that the existing norms in the law that describe the criteria for classifying concerted actions are based on economic models that often do not take into account some real features of the market and of the sellers and buyers. As a result, the same observable practices may have alternative interpretations that do not imply any kind of coordination between market participants. The article offers three such alternative interpretations: through the discrepancy between the expected and actual volume of service consumption, from the standpoint of the «new theory of consumer demand» and from the behavioral economics standpoint. To make a decision about the existence of a violation, these hypotheses concerning the causes of parallel behavior must be disproved with a sufficient degree of accuracy, otherwise there is a high risk of law enforcement errors.