OREANDA-NEWS. December 25, 2009. The meeting of the Expert Council of the Federal Antimonopoly Service (FAS Russia) on Developing Competition in Information Technologies was devoted to identifying problems in the IT industry and devising proposals to resolve them, reported the press-centre of FAS Russia.

The discussion focused on the two blocks of issues. The first was about development of the IT industry; in particular, speakers talked about Russian and foreign experience of cooperation between the state and business towards IT development, some aspects of the antimonopoly regulation in the IT industry in Russia and abroad, including the European Union, and the forms and means of support to the IT-industry.

The second part of the meeting concentrated on various aspects of Internet activities. Participants discussed state regulation of the Internet in Europe, the situation in the Internet access market in Russia and the problem of Internet piracy.

Rich Russian and foreign-based experiences of the members of the Expert Council enabled discussing the above issues with due consideration of many important aspects. Presentations were given by representatives of "RUSSOFT" Non-Commercial Partnership, "Consultant Plus" CJSC, "I-Techo" CJSC, "Microsoft Rus" Ltd., "Google" Ltd., З "Intel" CJSC, an international law firm "N?RR STIEFENHOFER LUTZ" and representatives of FAS Russia. Members of the Expert Council and invited stakeholders joined the discussions.

Support measures for the IT sector are used on the global scale and become especially important in the crisis times. Such measures were applied by the governments of the USA, the EU countries, China, Australia, Brazil, Taiwan, Turkey, Vietnam and others. In the first place support was provided in such areas as developing broadband access, implementing IT-technologies in education and providing government services with a use of the Internet.

In the time of the crisis G-20 countries are investing over US3.2 billion in IT development and every government's plan must include increasing investments in broadband Internet access and the IT sector (which creates jobs, stimulates demand and facilitates transition to the knowledge economy).

In some countries government support to the IT sector generated positive results for the economy in general. For instance, in 1998 Taiwan invested more than US10 billion in the industry. It resulted in developing Taiwan as a recognized leader of the IT-industry and a global innovation centre, and creating jobs with high added value.

Measures of state support in China reached around US570 billion, of which 30% were allocated to "smart railways", 40 billion - to broadband access, tax privileges, payments and compensations for purchasing modern PCs by individuals and organizations. Australia uses a system of tax deductions for buying computers by small and medium companies as well as educational institutions.

In Vietnam the stimulation package was around US1 billion with announced 24 billion as forthcoming measures. The government put forward a reduced VAT for the IT products (5%) and abolished duties, it also subsidies credit interest rates for priority areas of operation in order to enhance competitive ability, stimulate economic growth and create jobs.

In February 2009, the USA passed a special law - American Recovery and Reinvestment Act, providing for US787 billion assistance. To stimulate consumer demand and support small and medium business, the government applies tax deductions and accelerated amortization; 6-9 billion dollars are allocated for developing broadband access, 70 billion dollars - for education, and 50 billion - for "Smart Grid" (energy system development).

The EU recovery plan provides for 260 billion dollars; partly for demand stimulation and partly for "smart investments" (including education, infrastructure and energy industry, research and development and innovations).

Experts point out that in many countries support to this area should be directed and is directed by the country leaders. In Russia IT support is offered at the highest political level - by the President and by the Chairman of the Government of the Russian Federation. The emerging questions concern specific forms and methods of support as well as engaged organizations and agencies.

In general the Council's proposals towards developing the IT industry are consistent with the global experience. Specific features relate to certain fields that can facilitate competitive ability of the Russian companies and specialists, for example, in programming. Speakers representing IT firms drew attention to several unfavourable conditions of their work. For instance, in a number of incidents obstacles were created in Russia for Russian IT companies trying to deliver products for export so they are forced to form legal entities outside Russia to supply their products abroad, including the CIS countries. Although the global trend is to reduce taxes, examples were given of increasing taxes in Russia in the IT sector.

According to Anatoly Golomolzin, Deputy Head of FAS Russia, the competition authority registers considerable number of antimonopoly violations, which confirms such problems. Other countries throughout the world provide various cybernation support measures, particularly, for the population; in Russia the Programme "Computer to Each Home" was implemented with antimonopoly violations and in the end was closed as ineffective. There are incidents of unequal conditions for allocating radio-frequency spectrum for the companies operating in the field of information-and-communication technologies. For years small as well as large companies are denied frequency allocation, and, therefore, are unable to implement eagerly sought, efficient high-technology projects.

Support to small and medium companies in the IT sector was a matter of a separate discussion. Anatoly Golomolzin reminded that support measures to small and medium business are already being implemented in state procurement. The draft law on specific features of procurement for the needs of state corporations and natural monopolies is under discussion. FAS Russia believes that small and medium business should be engaged in procurement for the needs of state corporations and natural monopolies. Anatoly Golomolzin also pointed out that the leading global corporations provide support to small business in their countries and large companies in Russia should also adopt such practices.

The Expert Council decided to consider the issue separately at one of the forthcoming meetings, engaging representatives of other agencies and organizations, particularly, the Russian Ministry of Economic Development and "OPORA Rossii".

Discussing development of the IT-markets, participants stated that the antimonopoly norms are fully applicable to this area and in this aspect there is no difference between Russian and foreign enforcement practices. At the same time, specific nature of those markets to a considerable extent depends on possession of knowledge by individuals or companies and circulation of such specific knowledge requires special methods of protection (remedies).

In this context, internet piracy creates a serious problem. The Expert Council discussed application of criminal norms and standards by the law enforcement bodies and the FAS Russia's practice of preventing and suppressing unfair competition.

The Expert Council also discussed government involvement in Internet development, in particular, government regulation. For instance, EU experience proves the benefits of minimum government intervention in the terms of content, with priority given to recommendations and advisory measures. At the same time, considerable attention is paid to provision of Internet access. These services are considered in the context of a universal right of the population for information, and in many countries they are classified as universal (publicly available) services. In Russia only collective access to the Internet is classified as universal services, and in general there are many problems related to Internet access.

The Deputy Head of the FAS Russia's Department on Transport and Communication Dmitry Routenberg reported on the situation in the market of Internet access services. He gave a general assessment of the situation and focused in the issues of digital inequality between regions and price differentiation. Applying antimonopoly norms and standards helped reducing prices for these services, in some incidents by up to 10 times. Dmitry Routenberg also informed that FAS Russia started an investigation on the market of trunk data-transfer traffic.

Market efficiency depends on a possibility to develop various compatible systems and technologies in the absence of technological barriers, particular, for open software. According to the participants, specific features of production and distribution of the products that are mainly based on knowledge should not only be taken into account in the methods of market analysis, but perhaps affect the whole philosophy of analysis of the new markets.

At one of its meetings, the Expert Council plans to discuss how specific features of IT products should be accounted for in market analysis. It is important for market analysis in general as well as for processing antimonopoly cases and exercising control over large-scale mergers and acquisitions.

Efficiency of the IT market is determined by complimentarily and compatibility of systems and technologies (the interoperability principle) and lack of technological barriers for implementing innovations and competing products. Those questions are being discussed, particularly, in relation to open software.

At one of the forthcoming meetings the Expert Council will discuss proposals about conditions of tenders for procurement microchips-based products, which would ensure fair competition for all bidders. The proposals are prepared by the Working Group formed at the previous Council meeting.

This time the Council decided to form a Working Group that would summarize ideas and proposals on development of the IT-sector. FAS Russia expects to receive this information by 25th December 2009, which then will be further generalized and at the beginning of 2010 forwarded to the Government of the Russian Federation.

The participants of the meeting emphasized a positive nature of the dialogue between FAS Russia and the expert community. The issues can be further discussed at joint events of the BRIC countries, which show intensive interest to information technologies, and at the sessions of the Interstate Council on Antimonopoly Policy (MSAP) of the CIS member-states.