FAS is up in arms against marketplaces: the case may end in a change of owner

The Federal Antimonopoly Service (FAS) has turned its attention to marketplaces. The regulator recognized Ozon and Wildberries as collective monopolists with a market share of 80%. What does this mean? Everyone is already accustomed to the fact that there are delivery points for goods purchased online literally on every corner. But now their number may decline sharply. We can say that companies have received a warning and now they will have to eliminate all possible violations in order to avoid sanctions. But why now? And why didn’t the FAS evaluate the companies individually and what consequences could the situation lead to for consumers? Dmitry Yanin, Chairman of the Board of the International Confederation of Consumer Societies (ConfOP), answered these and other questions from MK.

Marketplaces are a relatively new and not yet familiar tool for modern Russian trade. This is a marketplace that sells goods and services from different sellers over the Internet. That is, marketplaces are a kind of intermediaries (with the function of convenient delivery of goods) between sellers and buyers; they do not have their own products. In Russia, the first marketplace was Ozon, which was launched in 1997. According to INFOLine-Analytics, in the sales structure of marketplaces for the first nine months of 2023, the share of Wildberries was 49.7%, and Ozon – 32.5%. Today, Ozon operates more than 18 thousand pick-up points throughout the country; Wildberries has about 30 thousand pick-up points, most of which are managed by partners.

– Dmitry, why did the FAS accuse two companies of collective monopoly? Aren’t they competitors to each other?

-When two participants control the market, it is called duomonopoly. This is an unpleasant fact for the companies themselves, which means that if the moratorium on business inspections is lifted, any unfair practices of marketplaces will be severely punished. Any dubious actions with sellers or buyers will be the subject of investigation by the antimonopoly service and, accordingly, significant fines will be imposed for each violation. By the way, you can receive a turnover fine for violating antitrust laws. And the percentages from the marketplace turnover are huge amounts.

-What will companies do now to avoid possible punishment in the future?

-They will ask the FAS for specifics. They need to find out what exactly the FAS considers to be unfair actions. We need to understand the rules of the game. Is such an experiment as a paid return of a defective purchase considered legal, or a paid return, but not at the shipping price, but with a small percentage? Such stories may be of interest to the regulator. Marketplaces will have to fix this.

– FAS claims that two marketplaces occupy 80% of the market, and this is a monopoly. Why doesn’t the regulator evaluate companies individually?

– There is no talk about this yet. FAS does not separate these companies. For now, the regulator simply warns: “I noticed you, I included you in the list of monopolists, behave well.” It is unknown why the regulator does not provide figures for each marketplace. True, the companies themselves would hardly want to be divided in such a situation. The point is that none of the marketplaces wants to be among the leaders of such an anti-rating. The company’s task is to pretend that it does not have a dominant position, that it is not the first, but only the second. There is nothing good about being a leader in the eyes of antitrust officials. The first one always gets hit harder.

– The Federation Council is considering the possibility of reducing the distribution points of companies. What consequences can this lead to?

– Yes, companies can set a limit on the number of delivery points. Let’s say the regulator says “you should have no more than 200 points in this city.” It is clear that this will be inconvenient for consumers. But, on the other hand, if there is a demand for the services of the marketplace, nothing bad will happen. It is already clear that marketplaces will live longer than classic retail outlets and chain retailers. If the number of delivery points is reduced, the volume of goods delivered to each address will increase. The fight against marketplaces will lead to a transformation of their work: there will be fewer physical delivery points, but the number of couriers will increase. Yes, the number of trucks and cyclists who deliver goods will increase, yes, this will lead to a slight increase in delivery costs, but that’s where the problems end. The consumer will be willing to pay a little more to stay with marketplaces they trust. This is convenient: a person does not waste time traveling to the store, traffic jams, walking around the sales floor in search of the right product and standing in line at the cash register.

-There is an opinion that with its statements the FAS aims to clear the market for other players.

-When property rights lose their value, you can carry out a revolution in the market: either take someone and divide them, or confiscate them. I don’t think they will clear the market for a new player. It’s complicated. It’s easier to take and share. The scenario here is something like this. The companies will make an offer she cannot refuse. Approximately this situation happened in 2018 with the founder of the Magnit retail chain, Sergei Galitsky, who sold most of his shares to one of the largest financial structures in Russia and left the company.

-In the fall of last year, there were active conversations on the topic: “is there a trend towards nationalization in the Russian economy.” Government officials assure that there is no such threat, but businesses are expressing concerns. Does the story with marketplaces fit into this logic?

-Yes. The story with marketplaces may have such roots. Because a company is large, it can be bombarded with fines, inspections, and criminal cases. And then… If you want, fight while you can. Well, or give your business to whoever needs it, because this is generally good for the state. That’s why now absolutely all businessmen want to acquire an invisibility cap and not show off, and convince them that they are not the first and not the most delicious. It’s easier not to be seen, since there is a new trend in the country: “take away what you didn’t create.” And the story with marketplaces may also end, since there is a reason.

– Assess the consequences for Russian consumers.

– It is possible to reduce retail outlets, which will complicate logistics and also lead to a slight increase in the cost of delivering goods. But if everything goes according to the worst-case scenario, then these will be very big risks for business. As practice shows, a change of owner and the arrival of new managers often ends in a decrease in the quality of services and products.