The fifth antimonopoly package of amendments to the Federal Law “On Protection of Competition” has been adopted

The Law has introduced the definition of “network effects”. It is a special characteristic of a product market in which the consumer value of a computer program, that enables transactions between sellers and buyers of certain products (“digital platform”), depends on the number of such sellers and buyers.

In other words, the more buyers and sellers use a particular program to conduct transactions, the greater is the influence of this program right owner on the product market related to such program.

The introduction of these definitions is necessary to conduct a full analysis of the state of competition on the market to identify entities, in respect of which the new control mechanisms should be applied.

The Fifth antimonopoly package introduces the prohibitions of conducting monopolistic activities on digital markets if the following conditions are met (in aggregate):

• network effects are present;

• the share of transactions entered into by sellers and buyers by accessing the digital platform exceeds in monetary terms 35% of the total volume of transactions carried out on the relevant product market;

• the revenue of such entity exceeds RUB 2 billion for the last calendar year.

The above-mentioned regulation will protect market participants and consumers from the abuse of market power by digital platforms.

The Law has introduced a new condition for merger control – now companies will have to obtain the approval of the Federal Antimonopoly Service for transactions exceeding RUB 7 billion.

Such innovation will allow the authority to consider the real value of the company operating in the digital market (e.g., start-ups), since the current criteria of the book value of assets of the group of persons and turnover do not always reflect the actual situation.

The Law is also aimed at expanding the institution of expert review. It introduces the opportunity of appointing and conducting expert examinations as part of:

• consideration of applications for granting approval for a transaction or other action subject to merger control review;

• consideration of a case on breach of antimonopoly legislation;

• control over performance of prescriptions issued on the results of merger control transactions consideration.

Under the Law, the results of the examination will have a special evidentiary value, which will qualitatively distinguish such evidence from reports prepared at the initiative of the parties to the transaction.

The Fifth antimonopoly package introduces a new mechanism – opinion on circumstances of an application, which is to be sent by the antimonopoly authority to the parties to a transaction if, upon consideration of the merger control application, the authority concludes that the transaction will or may result in restriction of competition.

This document shall contain provisions on factual and other circumstances established by the antitrust authority, as well as proposed conditions that may be established by the antitrust authority to avoid the potential restriction of competition on the relevant product market.

Such amendment will allow the parties to a transaction to familiarize with preliminary conclusions of the authority and to provide explanations. The Law also provides for an opportunity to organize an in-person consideration of the application in case the opinion on circumstances of the application is adopted.

These mechanisms will ensure the effectiveness of merger control regulation.

The Law introduces a provision on the right of an entity holding a dominant position to provide the evidence that its actions may be recognized as admissible in the following cases (1) economically or technologically unjustified reduction or termination of production of goods, (2) establishment of discriminatory conditions, (3) creation of obstacles to access or exit the market for other entities, (4) price manipulation on the wholesale and (or) retail electricity (capacity) markets.