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Russian ministry of economy negatively assessed proposed regulation of internet marketplace

This year Russian Federal Antitrust Service (FAS) has developed and proposed its fifth regulation packet for internet marketplace and digital environment in order to ensure health competition and good appropriate conditions for business development. But the Russian ministry of economy (MinCom) after duly review and analyse of proposed regulation has given it negative assessment.

According to MinCom, proposed regulation is unreasonable, provides excessive obligations, prohibitions and restrictions for natural persons and legal entities or creates all conditions for introduction of such obligations, prohibitions and restrictions and entails unreasonable expenditures for entrepreneurs and state budget. The certain and key definitions, contained in the draft, are unclear and can be interpreted broadly beyond the subject of regulation.

The draft regulation provides definition of digital platform – digital infrastructure placed in internet and exploited for organisation and providing of interaction between buyers and sellers, but current Russian law does not provide definition of such infrastructure, therefore under FAS draft it could include any electronic platform – electronic market, web-site of company-aggregator, web-site of online store, web-sites or platforms of touristic and insurance companies, or banks where it is organized interaction between buyers and sellers.

The proposed rules also lack definition of buyer. Whether it is end customer or wholesale seller. It is also not clear what is “organisation of interaction” – whether it is promotion, advertisement and purchase-sale. Under the definition of digital platform also fall informational resources and web-sites providing description of goods and services. There is no clear criterion to determine the scope of market and market share. It is also not clear how FAS would determine the impact market players; the draft does not provide necessary conditions or algorithms.

The lack of clear definitions in the draft entails inability to define the scope of FAS’s authority. The draft also provides quantitative criterion in order to define the market share – the revenues of digital platform, but it is not clear from the draft how to compute these revenues. The mandatory licensing for exploitation of intellectual property is already governed by Russian civil code; therefore additional regulation is not necessary. According to the draft the mandatory licensing is possible for any object of intellectual property.

What concerns the cross-border deals, the term for their consideration lasts from 3 to 5 years. Such term is excessive. It could cause the companies to refuse to conclude cross-border agreements and entail decreasing of foreign investments in Russian economy and vanishing particular product markets. It is also not clear what means “cross-border nature” of deal.