Russia's Antitrust Watchdog Finds Wildberries and Ozon Collectively Dominant With 80% of Online Retail

Russia's Federal Antimonopoly Service (FAS) has recognised e-commerce giants Wildberries and Ozon as holding a collective dominant position in Russia's online retail market — a status that allows stricter antitrust regulation measures to be applied to both platforms. The service's head, Maksim Shaskolsky, announced the finding on 24 January, saying the regulator had completed its analysis of the state of competition in the sector in December and established that the two marketplaces together occupy around 80% of the market. At the same time, under the moratorium on inspections of IT companies, the FAS is counting on the voluntary elimination of violations rather than enforcement raids.

"In December we completed the analysis of the state of competition in this market and, naturally, established the collective dominant position of Wildberries and Ozon — together they occupy about 80% of the market. Yes, resolution No. 448 is now in force, and in order to rule out negative consequences going forward we are carrying out work with the companies on the voluntary elimination of violations — studying their practices, sending letters, holding meetings. The result of this joint work should be the voluntary elimination of violations," Shaskolsky said at a meeting with representatives of the NP OKYUR association, marketplaces and rights holders, Interfax reported.

Complaints from sellers and consumers

According to Shaskolsky, the service constantly receives a fairly large number of complaints from consumers and from small and medium-sized businesses about how the marketplaces operate. Most often the grievances concern:

• inflated logistics costs;
• the imposition of unfavourable terms;
• the charging of fines.

The FAS has repeatedly argued that marketplaces should be excluded from government resolution No. 448, adopted in 2022, which introduces a moratorium — running until the end of 2024 — on scheduled inspections of Russian organisations operating in information technology.

The fifth antimonopoly package and new criteria

Last year Russia adopted the so-called fifth antimonopoly package, which among other things gives the FAS the authority to determine dominant position among online trade aggregators and introduces the concept of a "network effect". The law sets the following criteria for a dominant position of online trade aggregators:

1. revenue for the last calendar year exceeding 2 billion roubles;
2. a share of transactions on a given commodity market of more than 35% of the total value of transactions;
3. the ability to eliminate other economic entities from the commodity market or to make their access to it difficult.

Deputy Industry and Trade Minister Viktor Yevtukhov told Interfax that, given the market's rapid development and the growing number of problematic issues between marketplaces and their counterparties, the ministry has repeatedly stressed the expediency of additional state regulation of the e-commerce segment. He added that the ministry supports the development of deputies' bill No. 445923-8, now being reviewed by the government, which concerns the formation of rules for marketplaces and for the electronic commerce market as a whole.

A market worth 3.5 trillion roubles

"Online stores and aggregators are increasingly in demand among both buyers and entrepreneurs, because marketplaces and online retail create conveniences that are hard to give up. The number of registered sellers on Russian marketplaces today exceeds 1.2 million people, and 80% of those working in e-commerce are small and medium-sized entrepreneurs," the ministry's press service quoted Yevtukhov as saying.

Earlier the same week Yevtukhov told journalists that the annual turnover of electronic commerce in Russia in monetary terms was expected to reach about 3.5 trillion roubles in 2023, based on data through the third quarter — 40% more than the 2022 figure. "In total retail turnover this is still not much — around 7.5% of the market. For comparison, total trade turnover in monetary terms in 2023 is roughly 46 trillion roubles," the deputy minister added.

The scale of the largest platform was underlined in updated data carried by Interfax: Ozon increased its turnover 2.1-fold in 2023, to 1.7 trillion roubles. The recognition of collective dominance will allow stricter antitrust regulation measures to be applied to Wildberries and Ozon, while the FAS itself, under the inspection moratorium, expects the result of its joint work with the companies to be the voluntary elimination of violations.