BRICS Antimonopoly Authorities to Join Forces in Regulating Grain Markets

© HSE University

More than 70% to 80% of the calories we consume are derived from grain products. However, the global grain market today is dominated by a small group of traders. The HSE International BRICS Competition Law and Policy Centre has proposed establishing an intergovernmental BRICS platform on fair competition to serve as a new mechanism for coordinating the efforts of antimonopoly authorities in regulating global markets. This topic was discussed at an international seminar in Cairo.

The BRICS Competition Law and Policy Centre at HSE University (the BRICS Centre) has launched a series of seminars on global food value chains. The inaugural seminar, centred on grain trade, was held in Egypt, organised jointly with the Egyptian Competition Authority, with support from UNCTAD (United Nations Conference on Trade and Development).

The expert discussion was attended by the competition authorities and leading researchers from BRICS countries, Europe, and the United States, as well as representatives from international organisations such as FAO (Food and Agriculture Organisation of the United Nations) and COMESA (Common Market for Eastern and Southern Africa).

From left to right: Andrey Tsyganov, Mahmoud Momtaz, Alexey Ivanov, Teresa Moreira

© HSE University

Day 2 of the seminar featured a meeting of the BRICS Working Group for the Research of Competition Issues in Food Markets, co-chaired by the FAS of Russia and the Competition Commission of South Africa. Egypt hosted the meeting as its inaugural event after joining BRICS as a new member.

Fostering fair competition in the food market is among the foremost challenges for Egypt and the wider region, according to Mahmoud Momtaz, President of the Egyptian Competition Authority. The country relies on grain imports and therefore needs a competitive global market; however, a few major players currently dominate the grain trade worldwide. He believes that the mechanisms of multilateral cooperation among countries—both consumers and producers of grain—require significant institutional upgrades, while the BRICS format presents unique opportunities for implementing proactive antimonopoly policies.

Mahmoud Momtaz

Mahmoud Momtaz emphasised that the BRICS Centre's proposals aimed at regulating the global food market have already influenced the work of competition authorities. The innovative approach which views food markets through the lens of global food supply chains has already started reshaping the practices of antimonopoly authorities. According to Mahmoud Momtaz, inclusive cooperation formats such as the BRICS Working Group for Food Markets hold significant value for competition authorities in Egypt and other countries in the region.

On the sidelines of the seminar, the FAS of Russia and the Egyptian Competition Authority signed a memorandum of cooperation and understanding.

As one of its central topics, the discussion addressed concerns over market concentration in the food industry, with a specific focus on the Bunge-Viterra deal (a merger of two major grain traders - Ed.) This merger reflects the current state of affairs in the global market and underscores existing gaps in the agricultural sector’s antimonopoly regulation.

Dina Waked

A large portion of the global grain trade is currently controlled by four major companies—Archer Danels, Bunge, Cargills, and Louis Dreyfuss—collectively known as the ABCD companies. Dina Waked, Professor of Law at Sciences Po, France, pointed out that the concentration of power and the financialisation of the market benefiting these companies contribute to extreme price volatility. Consequently, both ends of the food supply chain suffer disadvantages: on one side, farmers and small producers, and on the other, consumers. When prices are high, consumers bear the burden, but if antimonopoly authorities decide to lower the prices, it's the farmers who face the repercussions. She emphasised that the regulator's responsibility is to stabilise prices and mitigate volatility.

Dina Waked explained that global deals like Bunge-Viterra heighten volatility, because the intermediary gains even more market power.

The seminar also featured a presentation and discussion of the book 'Global Food Value Chains and Competition Law,' published by Cambridge University Press, edited by Alexey Ivanov, Director of the BRICS Competition Law and Policy Centre, Ioannis Lianos, Professor at University College London, and Dennis Davis, Professor at University of Cape Town. An international team of researchers, led by the BRICS Centre, conducted the study for the book. The outcome of their work has been a new methodological approach to market analysis.

It is essential that antitrust regulators should use the methodology in reviewing global transactions, according to Teresa Moreira, Head of the Competition and Consumer Policies Branch at UNCTAD.

Teresa Moreira

She suggested that the new methodology should be subject to a careful and thoughtful study, and UNCTAD could offer its platform for discussion and exchange of expertise.

According to Alexey Ivanov, Director of the BRICS Centre, a new methodological approach is necessary for monitoring changes and detecting systemic risks in the food market.

Alexey Ivanov

Antimonopoly authorities, he elaborated, must conduct a comprehensive analysis of the value chain, considering all its components—from the situation of farmers to the impact on consumers—and evaluate its performance holistically. Instead, the authorities often focus on a single element while neglecting potential systemic disruptions across the entire chain.

The proposed methodology could help identify the entire range of connections linking players in global food markets, added Ioannis Lianos, Professor of Global Competition Law and Policy at University College London.

Ioannis Lianos

He explained that shifting from the classical theory of price to a more complex system analysis could lead to a better understanding and more efficient tracking of competitive interactions among companies in the global value chain.

Professor Eleanor Fox of New York University highlighted the urgency of addressing the challenge of antimonopoly regulation in food value chains.

Eleanor Fox

She warned that the time to act is right now. There is a need to redirect the international discussion towards the challenges in food markets, much like it has been done with the digital sphere. The critical aspects to address include combating cross-border cartels, overcoming obstacles to sharing information among antimonopoly authorities, and scrutinising global transactions. Multinational companies operate on a global scale, unlike antimonopoly regulators. The latter must, therefore, elevate their efforts and collaborate to collectively address this global power, she argued.

One of the key conclusions from the seminar was the imperative need to consolidate the efforts of the antimonopoly community. To make a significant impact on a global scale, a coordinated approach to addressing the concerns in the grain sector is essential.

Hardin Ratshisusu

Hardin Ratshisusu, Deputy Head of the Competition Commission of South Africa, maintains that the BRICS platform, now uniting a substantial portion of developing countries, offers precisely such an opportunity. He believes that the BRICS Centre should play a pivotal role in organising and coordinating these efforts.

Tembinkosi Bonakele

However, the consolidation of efforts among antimonopoly authorities can only be achieved through close collaboration with the expert community. Food security is not merely a matter of competition, but a multidimensional and complex issue. For efficient functioning, antimonopoly authorities require the assistance of researchers, as regulators themselves cannot and will never transform into research centres due to time and resource constraints, reminded Tembinkosi Bonakele, professor at Wits University and former Commissioner of the South African Competition Commission.

Alexey Ivanov remarked that numerous research groups and institutes are currently working to fill the orders from international organisations associated with the West. As part of the BRICS Centre’s work, it is possible to undertake research on competition law and policy with a specific focus on addressing the needs of the BRICS member countries. Collaborative efforts of regulators and joint research initiatives can help overcome the existing limitations associated with specific local characteristics. An example of successful joint efforts has been the collaboration of BRICS countries’ authorities within the framework of the Working Group for Food Markets regarding the Bayer-Monsanto deal.

Andrey Tsyganov

In conclusion, Andrey Tsyganov, Deputy Head of the Federal Antimonopoly Service of Russia, called on his colleagues to further develop the BRICS institutional architecture pertaining to the antimonopoly track. He highlighted the urgency of establishing an intergovernmental BRICS platform on fair competition, drawing upon the expertise of the BRICS Centre and the BRICS working groups for food and various other markets. This platform could serve as a new mechanism for coordinating the efforts of antimonopoly authorities aimed at regulating global markets.