BRICS+ Discusses New Antitrust Policies
What are the main notions of the digital economy? Why will a nature-inspired approach help regulate network platforms more efficiently? What could a hypothetical merger between Elon Musk's business empire and the Chinese IT giant ByteDance lead to? These and other issues were discussed in Rio de Janeiro at the BRICS+ Digital Competition Forum, which was held by the BRICS Competition Law and Policy Centre, the FGV Sao Paulo Law School and the Administrative Council for Economic Defense of Brazil (CADE).
Representatives of antimonopoly agencies, as well as experts and researchers from around the world, discussed challenges and the latest practices in the field of ensuring competition in digital markets.
On the first day of the forum, the 6th meeting of the BRICS Working Group for Research of Competition Issues in Digital Markets took place. The latest issues of the joint project on antirust regulation of digital ecosystems of the BRICS Competition Law and Policy Centre and the International Institute for Applied Systems Analysis (IIASA) were also presented at the event.
On the second day of the forum, a seminar reflecting on the previously presented concept of antirust regulation of digital ecosystems was held. In addition, a strategic case study session took place in which a hypothetical merger between two digital systems was simulated to discuss the potential and possibilities of interaction between the antimonopoly agencies of BRICS+ countries. The forum ended with the presentation of the book ‘Digital Ecosystems: Brazil’s Perspective’ by the CyberBRICS research group.
Representatives of BRICS partner countries and candidate countries Argentina, Egypt, Kazakhstan, Uzbekistan took part in the event.
The Main Notions of the Digital Economy
In his welcoming speech, Alexey Ivanov, Director of the International BRICS Competition Law and Policy Centre, noted that Brazil is a dynamically developing country that is ‘constantly reinventing’ itself. The digital economy also has similar qualities, so antimonopoly authorities should also develop more flexible tools suitable for the digital age and adapt to conditions of permanent crisis, he noted.
The meeting of the BRICS Working Group on Information and Communication Technologies and High-Performance Computing Systems was moderated by Ricardo Medeiros de Castro, Administrative Council for Economic Defense of the Federative Republic of Brazil (CADE). HSE Professor Svetlana Golovanova and Associate Professor Eduardo Pontual Ribeiro of the Federal University of Rio de Janeiro (UFRJ) presented a study of multilateral (ie providing the possibility of direct interaction between two or more users or groups of users) platforms and the experience of BRICS member countries in their regulation.
Nicolo Zingales, Professor at the FGV School of Law, delivered a large-scale report on digital markets prepared by CADE with the participation of the BRICS competition authorities. The central idea of the report was the need to form a common terminological apparatus for regulators of BRICS countries. It is necessary to agree on the definition of such basic notions of the digital economy as ‘digital platform’, ‘aggregator’, and ‘digital ecosystems’.
Representatives of the BRICS competition authorities spoke about notable antitrust cases in the digital markets of their countries. Shri Rajinder Kumar, Director of Economics, Competition Commission of India, mentioned two recent cases of the committee against Google. First, the company was fined for using its dominant position in the Android OS device market. Then, it was fined for banning the use of third-party payment systems in the Play Store. In both cases, Google's fines amounted to more than $ 100 million.
Itumeleng Lesofe, Senior Legal Analyst at the Competition Commission of South Africa, expressed support for the development of common terminology for a joint regulatory approach to digital markets. He stressed the importance of research that helps to see the big picture. Thus, the ‘Research of the Online Platform Market’ conducted by the Competition Commission of South Africa showed how Google affects different areas of the country's economy. In particular, they found out that Google Search plays an important role in directing consumers to various platforms and thus affects platform competition.
Andrey Tsyganov, Deputy Head of the FAS Russia, said that the BRICS markets need common antitrust principles. Antimonopoly regulators in BRICS countries should develop unified models of interaction between market participants to protect competition.
Andrey Tsyganov, Deputy Head of the FAS Russia
‘Within the CIS and BRICS, companies can already disclose information on mergers and acquisitions. We could consider the possibility of developing model principles of interaction between market participants in BRICS countries in order to protect competition.’
According to Andrey Tsyganov, this practice could also become widespread when interacting with economic operators in other states.
‘We will further strengthen our cooperation in the field of law enforcement, taking into account the recent successful experience in reviewing the merger of Bayer and Monsanto in 2018 and investigations into the anti-competitive practices of Apple and Booking in 2020,’ he added.
Eco-antitrust for BRICS
The complex nature of digital ecosystems reveals the need to adapt antimonopoly legislation to the realities of the new economy. Alexey Ivanov noted that many IT giants (Tencent, Microsoft, Alibaba, etc) define themselves as ecosystems and represent flexible, adaptive structures—phenomena which cannot be grasped using the logic and regulatory tools of the industrial era. An eco-antitrust method based on the analogy of digital and natural ecosystems can become a suitable regulatory mechanism.
Antitrust as an effective and adaptive tool appeared in response to the inability of regulators in the late 19th–early 20th centuries to grasp the nature of a new business: the first large Standard Oil trust, which eluded regulatory measures. Today, competition authorities in different countries similarly fail to grasp the nature of digital ecosystems. The activity of law enforcement officers is most often fragmentary and non-systemic in nature. It is necessary to develop a common approach to the regulation of competition, as has been achieved in the environmental and climate agenda.
Elena Rovenskaya, Programme Director of IIASA, presented the adaptation of the Lotka-Volterra interspecific competition model applied to digital ecosystems carried out as part of the eco-antitrust project. Digital platforms do not behave like machines; therefore, they should not be regulated mechanically, she stressed.
Case Study: Could Musk Buy ByteDance?
On the second day of the forum, the BRICS Antimonopoly Centre held a strategic case study session. The participants modelled a hypothetical merger between Elon Musk's business empire and the Chinese IT giant ByteDance. The participants were invited to discuss the potential and possibilities of cooperation between the antimonopoly authorities of BRICS+ countries on this transaction.
The meeting was moderated by Caio Mario da Silva Pereira Neto, Professor at FGV Sao Paulo Law School, and Eduardo Molan Gaban, Chair of the Brazilian Institute for Competition and Innovation.
Alexey Ivanov and Daria Kotova, expert at the BRICS Antimonopoly Centre, presented the case and stressed that ByteDance owns a variety of assets (including the popular TikTok short video service), so a deal would allow Elon Musk to gain access to the Chinese market and attract a promising young audience. In turn, the Chinese corporation would benefit from the deal as an opportunity to receive extensive investments. The merger would affect the interests of BRICS countries, especially given that India and Brazil provide a significant share of subscribers to Twitter, which was recently acquired by Musk and which he positions as a common digital urban space for free speech from around the world.
Gustavo Augusto Freitas de Lima, commissioner of CADE, noted that the proposed transaction addresses the important issue of personal data. For companies that own large amounts of data, it can be difficult for regulators to take large-scale measures. Mahmoud Momtaz, Chairman of the Egyptian Competition Authority, agreed with him, stressing that in such transactions, it is important to take into account whether the actions of the regulator will help maintain competitiveness and will not disrupt the development of innovation.
Tembinkosi Bonakele, Former Commissioner of the Competition Commission of South Africa, spoke about important conditions for successful international cooperation. He spoke about the experience of working at the International Competition Network (ICN), an association of antimonopoly authorities from various countries focused on improving law enforcement practices and developing proposals for aligning their antimonopoly legislation.
The representatives of competition protection agencies concluded that they would not allow Musk to expand his empire without fulfilling certain conditions on the part of the companies. The Twitter/ByteDance deal could only be negotiated using means that restore competition. ‘Our antimonopoly practices have demonstrated that BRICS+ agencies are ready for in-depth cooperation on global transactions. At the level of our governments, we must demand that digital monopolies comply with our conditions and must make decisions on global transactions in a consolidated and confident manner,’ concluded Alexey Ivanov.