Antimonopoly Regulation of IT Companies and Digital Platforms in Russia

 

February 19, 2025

BRACE Law Firm ©

 

The state’s task is to ensure fair competition and to prevent and suppress monopolistic activities. To achieve this, the legislator grants the antimonopoly authorities the power to monitor compliance with antimonopoly legislation.

Under the conditions of sanctions pressure and the state policy of transitioning to Russian software, the development of the IT sector has become a priority area of economic policy. To support the industry, the Russian Government established various measures. One such measure was the introduction of a moratorium on inspections of IT companies in 2022. While the moratorium was initially intended to last for three years, the document was amended two years later. The Federal Antimonopoly Service initiated these amendments, reporting that the antimonopoly authorities received a large number of complaints from small and medium-sized businesses regarding violations by digital giants.

This article examines how and in what cases antimonopoly control over IT companies is exercised, as well as how to minimize the risks of legislative violations.

What Does Antimonopoly Control Include?

Antimonopoly control refers to activities aimed at analyzing and assessing the compliance of the activities of economic entities and state authorities with the requirements of antimonopoly legislation.

The Federal Antimonopoly Service (the "FAS Russia") and its territorial bodies exercise this control both on their own initiative within the scope of their granted powers and upon applications from economic entities and citizens whose rights have been violated or face a threat of such violation.

The primary regulatory act governing the procedure for conducting antimonopoly control is Federal Law No. 135-FZ dated July 26, 2006 On the Protection of Competition (the "Law on Protection of Competition" or the "135-FZ"). Additionally, when carrying out control activities, the provisions of Federal Law No. 294-FZ dated December 26, 2008, On the Protection of the Rights of Legal Entities and Individual Entrepreneurs in the Exercise of State Control (Supervision) and Municipal Control (the "Law on the Protection of the Rights of Legal Entities") apply to the extent they do not conflict with the Law on Protection of Competition.

Antimonopoly control may be exercised through scheduled and unscheduled inspections, the review of petitions and notifications regarding major transactions that may affect the state of competition, and the review of information concerning violations of antimonopoly legislation.

The features of conducting such control regarding companies operating in the information technology sector are discussed below.

Moratorium and Features of Antimonopoly Inspections of IT Companies

Scheduled and unscheduled inspections are traditionally the most common form of antimonopoly control.

Pursuant to Article 26.4 of the Law on the Protection of the Rights of Legal Entities, a moratorium on scheduled inspections, including control over compliance with antimonopoly legislation, has been established until December 31, 2025, for companies operating in the field of information technology that have received state accreditation (the "accredited IT companies"). Preventive measures such as consulting, informing, and self-examination are not prohibited.

Decree of the Government of the Russian Federation No. 448 dated March 24, 2022 (the "Decree No. 448") also established a ban on conducting unscheduled inspections regarding accredited IT companies until the end of 2024. The condition for exemption from inspections is the possession of state accreditation as an organization operating in the field of information technology. The procedure for conducting accreditation is regulated by Decree of the Government of the Russian Federation No. 1729 dated September 30, 2022 (the "Decree No. 1729").

The mandatory requirements for obtaining accreditation are:

• The primary type of activity corresponds to the OKPD 2 codes specified in Decree No. 1729; in some cases, the primary types of activity must be accompanied by additional ones.
• The average salary of employees is at least the average for the country or the constituent entity of the Russian Federation where the company is registered.
• Income from IT activities accounts for more than 30% of all income. The list of types of activities for which income is calculated was approved by Order of the Ministry of Digital Development of Russia No. 449 dated May 11, 2023 and differs from the OKPD 2 codes specified in Decree No. 1729.
• Information about the IT activities performed is posted on the organization's official website in Russian.
• Consent to disclose tax secrets has been submitted to the tax authority.

Organizations that hold rights to software included in the Register of Russian Software, as well as organizations included in the Register of Startups, may obtain accreditation under a simplified procedure without meeting some of these requirements.

The Ministry of Digital Development of Russia conducts the accreditation. Applications for accreditation can be submitted through the State Services Portal. The register of accredited companies is located on the Unified Portal of State and Municipal Services (Functions).

Starting March 28, 2024, amendments to Decree No. 448 came into force, partially canceling the moratorium on unscheduled inspections. The FAS Russia and its territorial bodies will conduct these inspections. The grounds and procedure for conducting unscheduled inspections at present are discussed below.

Grounds and Procedure for Conducting Unscheduled Antimonopoly Inspections of IT Companies

According to Clause 2.2 of Decree No. 448 in the new edition, unscheduled inspections of accredited IT companies are conducted when there are signs of the following violations of antimonopoly legislation:

• Exercise of monopolistic activity by an economic entity owning a digital platform (Article 10.1 of the 135-FZ).
• Conclusion of agreements by economic entities that restrict competition (Article 11 of the 135-FZ).
• Performance of concerted actions or conclusion of anti-competitive agreements by state authorities and local self-government bodies, or by organizations exercising the functions of these bodies (Article 16 of the 135-FZ).
• Non-compliance with antimonopoly requirements for tenders, requests for quotations of prices, and proposals (Article 17 of the 135-FZ).

We note that the cancellation of the moratorium primarily aimed to suppress violations of the ban on abusing a dominant position by digital platforms, as established by Article 10.1 of the Law on Protection of Competition. This provision was adopted in 2023 as part of the fifth antimonopoly package of amendments to the Law on Protection of Competition. We will consider the cases in which the control authority will appoint an inspection on this ground.

Pursuant to Clause 4.1 of Article 4 of the Law on Protection of Competition, a digital platform is defined as a program (set of programs) for electronic computing machines in information and telecommunications networks, including the Internet, which ensures the conclusion of transactions between sellers and buyers of certain goods.

Thus, the subjects of control under this provision are transactional platforms that ensure the sale of goods, works, and services on the Internet by concluding transactions between sellers and buyers; primarily marketplaces and aggregators. At the same time, as researchers of this issue point out, based on a literal interpretation of the law, the provisions of Article 10.1 of the Law on Protection of Competition do not apply to non-transactional digital platforms (for example, social networks) or other IT companies.

To recognize an abuse of a dominant position in the actions of a digital platform owner, it will be necessary to prove the combination of the following conditions:

• The presence of a network effect that makes it possible to exert a decisive influence on the conditions of commodity circulation in the commodity market or to hinder access to/remove other economic entities from the market. A network effect is understood as a property of a commodity market in which the consumer value of a digital platform changes depending on the change in the number of sellers and buyers concluding transactions through the digital platform.
• The share of transactions concluded between sellers and buyers through the digital platform exceeds 35% of the total volume of transactions in the relevant commodity market in value terms.
• Revenue for the last calendar year exceeds 2 billion rubles.

These criteria for determining a dominant position are more complex than the criteria for dominance in other markets, where the assessment is based on the share held in the commodity market. We note that the law enforcement practice for such control has not yet been formed. Before the introduction of the special provision, antimonopoly authorities qualified the actions of digital platform owners under Article 10 of the Law on Protection of Competition, i.e., as a violation of the general ban, but the criteria for recognizing a dominant position were similar. We illustrate this with an example from practice.

In Case No. A40-228362/2020, the FAS Russia recognized the actions of Apple Inc. as an abuse of a dominant position in the mobile device market, manifested in the introduction of restrictions on the installation of competitors' software on mobile devices to promote its own competing application. The decision was based on an analytical report from the antimonopoly authority, which stated that the market for distributing applications for mobile devices is characterized by network effects, i.e., an increase in the consumer value of a product due to an increase in the number of its buyers. The company was issued an order to eliminate the violation and was fined for committing an administrative offense provided for by Part 2 of Article 14.31 of the CAO RF in the amount of 906,299,392 rubles. The company failed to challenge the decision, order, and the fine in courts, including the Supreme Court of the Russian Federation.

An inspection is carried out on the basis of an order from the head of the antimonopoly authority. Notification of an unscheduled inspection regarding an abuse of a dominant position is provided at least 24 hours before its commencement by any available means. Notification of the start of an inspection on other grounds is not carried out (Part 14 of Article 25.1 of the 135-FZ). Prior coordination of an unscheduled inspection with the prosecutor’s office is not provided for by the provisions of the law.

The period for conducting an unscheduled inspection is no more than one month. In exceptional cases, it may be extended by the head of the antimonopoly authority for another two months.

An unscheduled inspection can be documentary or on-site.

A documentary inspection is conducted at the location of the antimonopoly authority. The subject of such an inspection includes documents at the disposal of the control authority, acts of previous inspections, materials of cases concerning violations of antimonopoly legislation and administrative offenses, as well as documents received from the inspected person.

An on-site inspection is conducted at the location of the inspected person. An on-site inspection is conducted if, during a documentary inspection, it is not possible to:

• Verify the completeness and accuracy of the information contained in the documents of the inspected person at the disposal of the antimonopoly authority.
• Assess the compliance of the activities of the inspected person with the requirements of antimonopoly legislation without conducting the relevant control measure.

When carrying out an inspection, employees of the antimonopoly authority have the right to:

• Unimpeded access to the premises (territory) of the inspected person upon presentation of a service ID and the order to conduct the inspection.
• Inspect territories and premises (except for the residence of the inspected person), documents, and objects.
• Obtain documents and information necessary for the inspection.
• Obtain explanations relevant to the case from individuals, heads of organizations, employees, and officials of state authorities.

The procedure for conducting control measures by the antimonopoly authority is regulated in Articles 25.2–25.4.1 of the Law on Protection of Competition. More details on the established rules, as well as the rights and obligations of the inspected person and antimonopoly authority employees, can be found in our separate article on this topic.

Based on the results of the inspection, an inspection report is drawn up in two copies, one of which is handed over or sent by registered mail with acknowledgement of receipt to the inspected person or their representative no later than the last day of the inspection period. Within 15 days of the date of receipt of the inspection report, the inspected person has the right to submit their written objections to the antimonopoly authority, which are attached to the inspection report.

If violations of antimonopoly legislation are identified during the control measures, an order is also issued specifying the necessary measures to eliminate the violations and the deadlines for their implementation, and proceedings for an administrative offense are initiated.

Antimonopoly Control over the Economic Concentration of IT Companies

As explained by the FAS Russia, another area of antimonopoly control is control over economic concentration. Economic concentration refers to transactions and other actions whose implementation affects the state of competition (Clause 21 of Article 4 of the 135-FZ). The main control tool used by the antimonopoly authority is the approval or prohibition of the relevant transaction (action).

Chapter 7 of the Law on Protection of Competition defines the types of transactions and actions subject to control:

• The creation and reorganization of commercial organizations.
• The conclusion of agreements on joint activities.
• The transfer of rights to shares (interests) without a transaction.
• The transfer of shares and interests into trust management, investment funds, or as collateral.
• The acquisition of rights that allow for determining the conditions of entrepreneurial activity.
• Transactions regarding foreign legal entities, including the procedure for calculating the volume of supplies to the territory of the Russian Federation.

These transactions and actions are controlled provided that the threshold values for asset value and (or) revenue volume established in the Law on Protection of Competition are exceeded.

Within 30 days of the date of receipt of a petition from an interested party, the antimonopoly authority must review it and make a decision:

• To grant the petition.
• To extend the period for reviewing the petition in cases where it is necessary to obtain additional information or perform other preliminary actions provided for by law.
• To grant the petition and simultaneously issue an order if the declared transaction or other action may lead to a restriction of competition.
• To refuse to grant the petition.

The applicant is notified of the decision in writing, specifying the reasons for its adoption.

No exceptions are provided for IT companies regarding the exercise of control over economic concentration. Certainly, not all cases of economic concentration control described in the law are applicable to the activities of IT companies or affect the interests of major players in this market. We illustrate this with examples from the antimonopoly authority's practice.

In Case No. IA/49913/20, the FAS Russia reviewed a petition from MLU, which controls "Yandex.Taxi", to approve a transaction to acquire the taxi aggregator "Vezet". The control authority decided to refuse the petition. The reason given was that the transaction could lead to a restriction of competition in the taxi aggregator market as a result of the emergence of a dominant position for MLU B.V.

In another case, the antimonopoly authority reviewed a petition from VK to acquire the news aggregator Ne" and the recommendation platform Zen, approving the transaction with an order. One of the requirements was to request and obtain user consent for the processing of personal data for each service separately.

Control during the Review of Information on Violations of Antitrust Legislation

State control may also be exercised within the framework of cases concerning violations of antimonopoly legislation. The procedure for their review is regulated by Chapter 9 of the Law on Protection of Competition.

Part 2 of Article 39 of the Law on Protection of Competition defines the grounds for initiating a case concerning a violation of antimonopoly legislation:

• Receipt of materials from state authorities indicating signs of a violation of antimonopoly legislation.
• An application from a legal entity or individual indicating signs of a violation of antimonopoly legislation.
• Discovery of signs of a violation of antimonopoly legislation by the antimonopoly authority.
• A media report indicating signs of a violation of antimonopoly legislation.
• The result of an inspection during which signs of a violation of antimonopoly legislation were identified.

At the same time, as researchers of this topic point out, the predominant grounds for initiating cases are not the results of inspections, but rather applications (statements, complaints) from legal entities and individuals. More details on the procedure can be found in our special article on this topic.

Based on the results of the case review, the Commission of the antimonopoly authority adopts a decision on the presence or absence of a violation of antimonopoly legislation in the actions (omissions) of the company. If violations are found, an order will also be issued specifying specific actions to eliminate or suppress the violation within a specific timeframe. An order in a case concerning a violation of antimonopoly legislation must be executed within the timeframe established by it (Article 51 of the Law on Protection of Competition). This decision serves as a ground for initiating proceedings for an administrative offense.

We illustrate this with Case No. A40-91928/2022. The FAS Russia found that the rules related to the handling of user content on YouTube are non-transparent and non-objective. This leads to sudden blockages and the deletion of user accounts without warning or justification. The antimonopoly authority found the company guilty of abusing its dominant position in the video hosting services market. It issued an order to eliminate the violations and held the company administratively liable under Part 2 of Article 14.31 of the CAO RF, imposing a turnover-based fine exceeding 2 billion rubles. The company attempted to challenge the Service's decision and order, as well as the fine in court. However, the courts supported the antimonopoly authority.

If there are signs of an abuse of a dominant position, the antimonopoly authority issues a warning before initiating a case (Part 2 of Article 39.1 of Federal Law No. 135-FZ). The person to whom the warning is issued must consider it within the specified timeframe. The antimonopoly authority must be notified of the fulfillment of the warning no later than three days from the end of the period.

According to information posted on the FAS Russia website, in 2024, the Service identified signs of imposing unfavorable contract terms on sellers in the actions of the owner of the electronic trading platform Wildberries. In particular, it was established that the company's tariffs for logistics and storage services are subject to almost daily changes. The antimonopoly authority issued a warning about the need to amend the offer on the sale of goods and to cease practices that contain signs of a violation of antimonopoly legislation. The company complied with the issued warning.

In the event of failure to comply with a warning within the established timeframe, the antimonopoly authority must decide to initiate a case concerning a violation of antimonopoly legislation within 10 business days of the date of expiration of the period for complying with the warning.

Procedure for Challenging the Results of Antimonopoly Control

According to Part 1 of Article 52 of the Law on Protection of Competition, acts of the antimonopoly authority based on the results of control may be challenged in court, and acts of a territorial antimonopoly authority may also be challenged before the collegial body of the FAS Russia. At the same time, compliance with the pre-trial procedure is not mandatory before applying to court (Part 5 of Article 4 of the APC RF). The period for pre-trial appeal is one month from the date of the decision and (or) order of the antimonopoly authority (Part 6 of Article 23 of the Law on Protection of Competition).

Furthermore, as explained by the Supreme Court of the Russian Federation, an order from the antimonopoly authority to appoint an inspection and an order to initiate a case concerning a violation of antimonopoly legislation may also be challenged in court, but only regarding the presence of grounds that exclude the possibility of their issuance (for example, violation of the permissible frequency of inspections, appointment of an unscheduled inspection in the absence of established grounds, lack of necessary coordination, or expiration of the statute of limitations for reviewing the case).

Challenging in an arbitration court is carried out in accordance with the procedure provided for by Chapter 24 of the APC RF On the Consideration of Cases on Challenging Non-regulatory Legal Acts, Decisions, and Actions (Omissions) of State Authorities, Local Self-government Bodies, Other Bodies, and Organizations Vested by Federal Law with Separate State or Other Public Powers, and Officials.

The period for challenging is three months from the date of adoption of the antimonopoly authority’s act. If the acts were previously appealed to the collegial body of the FAS Russia, the period for judicial challenge is one month from the moment the decision of the collegial body enters into force.

For the court to grant the application, it will be necessary to prove the following circumstances in combination:

• Non-compliance of the challenged act, action (omission) with the law or another regulatory act.
• Violation of the rights and legitimate interests of the applicant in the sphere of entrepreneurial and other economic activity, or the illegal imposition of any obligations on the applicant, or the creation of other obstacles to the exercise of entrepreneurial and other economic activity.

Grounds for cancellation may include both the incorrect application of antimonopoly legislation provisions and procedural violations.

However, as the above analysis of law enforcement practice shows, cases involving the challenging of acts and actions (omissions) of antimonopoly authorities by IT companies are extremely complex, and in most cases, courts side with the control authority.

For instance, in Case No. A40-19473/2021, the antimonopoly authority recognized an abuse of a dominant position in the actions of the Booking in the market for services of aggregators of information on accommodation facilities. In its justification, it stated that the company imposed unfavorable contract terms on Russian hotels and hostels, according to which they could not set the price for their hotel services in other sales channels lower than on the "Booking" website. The company did not agree with the FAS Russia decision and appealed it in courts of three instances. However, the claims were denied.

How Can IT Companies Reduce the Risks of Antimonopoly Violations?

Violations of antimonopoly legislation entail the imposition of very serious sanctions on a company. Therefore, in our view, the key way to minimize such risks is to organize internal control over behavior in the market.

At the end of 2021, the FAS Russia, together with participants in the information technology market, developed and approved the Principles of Interaction between Participants in Digital Markets (the "Principles of Interaction"). Major market participants such as Avito, AliExpress Russia, Wildberries, VK, Lamoda, Ozon, Russoft, Sber, Cyan, and Yandex joined them.

According to these Principles of Interaction, digital market participants should strive to ensure:

• The establishment of clear and transparent operating rules in the public domain.
• The establishment of a uniform procedure for reviewing user requests within a reasonable timeframe.
• Ensuring non-discriminatory treatment of services and the distribution of information, regardless of whether they belong to the platform, its affiliates, or other persons.
• The establishment of formulations in the terms of use that do not allow for excessively broad interpretation or unlimited discretion, which could lead to unjustified blocking, restriction of users, or termination of the contract.

We also recommend developing and implementing fair practices that promote non-discriminatory conditions for doing business.

In conclusion, we note the following:

• State antimonopoly control over IT companies is exercised during scheduled and unscheduled inspections; the review of petitions and notifications concerning transactions and other actions that may affect the state of competition; and the review by the antimonopoly authority of applications and materials indicating a violation of antimonopoly legislation.
• In recent years, there has been a reduction in the moratorium on conducting control measures regarding IT companies.
• To minimize the risks of adverse consequences, it is necessary to implement self-control mechanisms and fair practices.

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References

[1] FAS Russia website: https://fas.gov.ru/news/33158.

[2] Decree of the Government of the Russian Federation No. 448 dated March 24, 2022 On the Specifics of State Control (Supervision) and Municipal Control Regarding Accredited Organizations Operating in the Field of Information Technology and on Amending Certain Acts of the Government of the Russian Federation.

[3] Decree of the Government of the Russian Federation No. 1729 dated September 30, 2022 On Approving the Regulations on the State Accreditation of Russian Organizations Operating in the Field of Information Technology.

[4] The criteria are specified as of the date of writing the article.

[5] Order of the Ministry of Digital Development of Russia No. 449 dated May 11, 2023 On Approving the List of Types of Activities in the Field of Information Technology.

[6] Federal Law No. 301-FZ dated July 10, 2023 On Amending the Federal Law On the Protection of Competition.

[7] Egorova M.A. On Certain Aspects of Establishing a Dominant Position in Digital Markets in Russian Antimonopoly Legislation // Jurist, 2024, No. 8.

[8] Ruling of the Supreme Court of the Russian Federation No. 305-ES23-7838 dated June 8, 2023, in Case No. A40-228362/2020.

[9] BRACE Law Firm website: https://brace-lf.com/informaciya/konkurentnoe/proverka-antimonopol-nogo-organa-chto-delat-pri-proverke-fas.

[10] Clarification of the Federal Antimonopoly Service No. 19 dated June 11, 2021 On the Specifics of the Exercise of State Antimonopoly Control over Economic Concentration.

[11] FAS Russia Decision No. IA/49913/20 dated June 11, 2020.

[12] FAS Russia website: https://fas.gov.ru/news/32117.

[13] K.G. Koryakina State Antimonopoly Control as an Administrative and Legal Way to Ensure the Protection of Civil Rights of Economic Entities in the Sphere of Entrepreneurial Activity // Bulletin of Nizhny Novgorod University, 2020, No. 2.

[14] BRACE Law Firm website: https://brace-lf.com/informaciya/konkurentnoe/vozbuzhdenie-i-rassmotrenie-antimonopol-nykh-del.

[15] Resolution of the Arbitration Court of the Moscow District No. F05-14749/2023 dated July 13, 2023, in Case No. A40-91928/2022.

[16] FAS Russia website: https://fas.gov.ru/news/33200.

[17] Clause 51 of Resolution of the Plenum of the Supreme Court of the Russian Federation No. 2 dated March 4, 2021 On Certain Issues Arising in Connection with the Application of Antimonopoly Legislation by Courts.

[18] Ruling of the Supreme Court of the Russian Federation No. 305-ES22-10220 dated June 21, 2022, in Case No. A40-19473/2021.

[19] Approved by the Protocol of the meeting of the Expert Council under the FAS Russia for the development of competition in the field of information technology dated September 22, 2021.