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IT developers are asking for immunity during a pandemic

07.04.2020
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The business community hopes to pause discussion of the antitrust initiative announced earlier this year.


Some participants of the market did not welcome the revised version of the bill on the distribution of antitrust rules in the Russian IT industry. They have since asked the Ministry of Communications, to take into account the situation in the economy, and thus to postpone the consideration of the document for at least a year. 


Russian IT developers turned to Communications Minister Maksut Shadaev with a request to suspend discussion of amendments to the Law on Protection of Competition proposed by the Federal Antimonopoly Service (FAS) for at least a year. The letter of March 31 was signed by the Association of Computer and Information Technology Enterprises, the Association of Software Product Developers, "Domestic Software" and "Russoft".


The appeal was a reaction to the revised version of the bill, which the FAS sent to the association on March 31, asking for comments and suggestions to be submitted no later than April 1, according to the Association of Software Product Developers. The Federal Antimonopoly Service did not discuss this edition with the industry, immediately posting it on regulation.gov.ru, says Nikolai Komlev, director of the Association of Computer and Information Technology Enterprises.


According to Mr Komlev, the project has mustered more than 30 negative reviews from industry participants and not a single positive one, but none of them was taken into account in the new version.


FAS wants to extend new rules of antitrust regulation to IT developers, including, for example, prohibitions on anticompetitive agreements and abuse of a dominant position in the market for goods manufactured using the results of intellectual activity. According to IT developers, the adoption of the document "will entail significant business costs and loss of revenue due to the launch of the compulsory licensing mechanism", which seems to the industry particularly untimely "given the sharp changes in the economy due to the global pandemic".


The introduction of new standards will bring nothing but increasing administrative pressure on the IT industry, Nikolai Komlev believes, noting that "the FAS's desire to ban a number of actively practised business models directly permitted by the Civil Code will inevitably cause a decrease in the pace of socio-economic development due to a decrease in the tax base caused by a drop in the IT market." Existing market mechanisms are enough to protect the IT sector from monopoly dominance, the ARPP added.


Furthermore, comments on the bill were made by the Government Analytical Center, noting the "lack of economic feasibility" of the initiative. According to them, it is essential to correctly determine the boundaries of the markets in order to "exclude the possibility of a priori recognition of the monopoly position of a company that owns the rights to the results of intellectual activity," which causes significant business concerns, says Tatyana Radchenko, deputy head of the Analytical Center.


FAS press service disagrees with critics by explaining that the bill does not contain proposals to launch a compulsory licensing mechanism, noting that the essence of the proposed changes is to prevent abuse of rights that could lead to limited competition.


Besides, the director of the HSE-Skolkovo Institute for Law and Development and the BRICS Competition Law and Policy Research Centre Alexey Ivanov states that there is no antitrust immunity for intellectual property rights in any other 'more or less' developed economy in the world except for Russia. He expressed concern that "part of the Russian IT business holds on to these immunities from misunderstanding how antitrust law works". He continued by stating that "Antitrust immunities are not applied word for word in Russia". Furthermore, Mr Alexey Ivanov recalled cases where the FAS specifically by antitrust measures has limited the abuse of Google against Yandex and Microsoft against Kaspersky Lab. In these cases, both Google and Microsoft have tried to refer precisely to antitrust immunities, since the matter concerned the use of computer programs, in order to avoid scrutiny. Alexey Ivanov stated that; - "... if the FAS applied the immunities written in the law literally, then neither Yandex nor Kaspersky Lab would have received protection". In a pandemic, Mr Ivanov is sure, digital platforms will sharply increase its market power, and it would be worth considering the strengthening of antitrust control over them as an anti-crisis measure.