Amendments to Antitrust Law Proposed by Sayat Zholshy & Partners

Amendments to Antitrust Law Proposed by Sayat Zholshy & Partners

SZP partners Aidyn Bikebayev and Amir Begdesenov, as members of the working group organized by the Board of the Committee for Regulation of Natural Monopolies and Protection of Competition under the Kazakhstan Ministry of National Economy for consideration of competition issues, have drafted a law on amendments to antitrust law.

First of all, the draft law is intended to solve a conceptual problem arising from the erroneous charging of the antitrust authority with the objective to protect the rights and short-term interests of consumers, including, but not limited to, the control over pricing of market undertakings, while its main objective implies the protection of competition and the improvement of consumers’ wellbeing/interests.  Any other antibusiness objectives must be excluded from the competition law.

Secondly, the draft law excludes those provisions of antitrust law which unreasonably restrict entrepreneurial freedom and harm business:

1. From now on the fact of dominance will be acknowledged only subject to qualitative characteristics of the market instead of the previously applied ‘soviet’ static methods;
2. The maintenance of a state register of ‘dominants’ will be fully abolished due to its incompatibility with the principles of the free market and the OECD standards;
3. All anticompetitive agreements will be qualified only subject to the rule of reason generally accepted in the OECD countries;
4. The clause subject to which the fact of anticompetitive concerted practices may be acknowledged just on the basis of three pieces of circumstantial evidence will be excluded;
5. Criminal law measures will be applied only to the parties of cartel agreements as it is commonly accepted in the OECD countries, i.e. all other antitrust offences will be decriminalized, while tough and enormous monetary penalties will be introduced;
6. The forfeiture of monopolies’ income will be abolished since such income is received at the expense of consumers and it would be fair to return such income to consumers;
7. In qualifying the actions of a market undertaking as an abuse of its dominant position the antitrust authority will have to consider the concept of objective necessity which is widely accepted in the OECD countries;
8. From now on a competition limiting objective will be a mandatory element of the offence in the form of an anticompetitive agreement, as opposed to the previous methods of regulation which punished pro-competitive agreements; and
9. Not any escalation of prices will be recognized as price cartel, but only the price fixing aimed to limit competition, i.e. the currently applied ‘soviet’ rule banning speculation will be ultimately abolished.

Thirdly, the draft law improves the efficiency of combat against monopolistic activities and anticompetitive behaviour of government authorities, including, but not limited to, the following:

1)      The antitrust authority will report directly to the President of the state, and its executives will be appointed for a five-year period during which no one will have the authority to remove them, save for the cases when such executives are imposed criminal sentences.  This is absolutely necessary for the powerful lobby of monopolists could not remove the unwanted officers who fight against their abuses;

2)      The establishment of state-owned companies will be prohibited in the markets with private business in place, i.e. the Yellow Pages® Business Basics will become real and not declarative, as was the case;

3)      The personal application of antitrust law must be extended to foreigners, stateless persons, foreign commercial organisations without registration as legal entities, notaries and attorneys;

4)      When the antitrust authority can qualify one and the same action as monopolistic behaviour and unfair competition, it must place a priority on the first offence as the most dangerous type of offence subject to tougher sanctions ensuring that the offenders do not escape a fair punishment;

5)      The measures of administrative restraint must be separated from the measures of administrative liability to ensure that offenders do not escape fair punishment, as it happened before;

6)      Certain dangerous transactions of market undertakings must not enjoy the immunity from antitrust prosecution, as was the case; and

7)      The draft law introduces a turnover-based fine for consummation of economic concentration transactions, without the antitrust authority’s consent, which entail a considerable limitation of competition.

Fourthly, the draft law introduces dramatic changes to the chapter devoted to unfair competition which was one of the worst examples of the competition regulation worldwide.  Now the list of unfair competition practices is open-ended.  So far, this list includes only 14 practices of unfair competition, while internationally they amount to more than 400.

Besides, the proposed amendments are aimed to solve a number of other issues.  Should you have any comments, suggestions or ideas, please contact us at abegdesenov@szp.kz.

You may download the full version of the proposed amendments to antitrust law at: