December 6, 2023

Tullio Corradini

Trusted Legal Source

Main Developments in Competition Law and Policy 2022 – Kazakhstan

Main Developments in Competition Law and Policy 2022 – Kazakhstan

A year of setting up very important ambitions and flourishing development

The former 12 months was flourishing and fruitful for the advancement of competition law in Kazakhstan. According to the once-a-year report of the Company for the Security and Advancement of Competition of the Republic of Kazakhstan (the “Agency”) on the state of levels of competition and steps to limit monopolistic activity, there were many fantastic achievements: the adoption of a legislation on the advancement of competition, and the profitable managing of 10 circumstances about obstacles to the improvement of competitors.

But now it is time to make a summary for 2022. What has happened in one particular of Central Asia’s most progressive international locations this yr in conditions of opposition regulation?


Legislative trends and developments

This yr in Kazakhstan has been total of legislative amendments and initiatives connected to competition laws.

The Regulation on introducing amendments and additions to some legislative functions of the Republic of Kazakhstan on the growth of competition

Due to the fact the beginning of 2022, the competitiveness legislation experienced been amended by the Regulation dated January 3, 2022 “On introducing amendments and additions to some legislative functions of the Republic of Kazakhstan on the enhancement of competitiveness“.

The Regulation introduces the Vital Services Doctrine into Kazakhstani law for the initially time. According to the regulation, a critical capacity is a merchandise, an infrastructure object of a industry entity that occupies a dominant or monopoly posture, without the need of access to which other current market entities are unable to deliver and (or) market items on the applicable or connected solution marketplace. A product or service or infrastructure can be regarded as a key potential less than a blend of particular person problems: it is inappropriate or unachievable to duplicate a merchandise or infrastructure the owner reserves all legal rights to possession, use and disposal the operator has the potential to grant entry the unjustified refusal of the operator to supply access will have a unfavorable affect on opposition there is no way to accessibility as a result of trade buying and selling.

The introduction of the Critical Amenities Doctrine was just one of the key improvements for the duration of the dialogue of the draft Law. Historically and in European and US-American level of competition law, the Essential Facilities Doctrine has been employed to denationalize the spheres of pure monopolies. In the scenario of the use of the Necessary Facilities Doctrine in markets that are not connected to natural monopolies, the norm will become really corruptible and can be made use of in an unfair wrestle with competition.

In addition, the new legislation transformed the concept of unfair competitors, and for this reason the regulator’s solution to assessing the suitable steps of current market entities. If before the checklist of steps identified as unfair competitiveness consisted of 14 forms and was exhaustive, now the record is open. Unfair levels of competition is any action of a sector entity (group of individuals) or quite a few market entities (group of people) aimed at obtaining rewards in entrepreneurial things to do that are opposite to the legislation of the Republic of Kazakhstan, business enterprise techniques, the prerequisites of integrity, reasonableness and fairness and has induced or may well result in harm to other individuals market place entities – competition have possibly triggered or may lead to destruction to their organization track record. Thus, in accordance to the improvements, any actions of a sector entity that triggered or might lead to harm or harm to the business enterprise track record of opponents, even if they are not delivered for by the Entrepreneurial Code of the Republic of Kazakhstan, can be recognized by the regulator as unfair levels of competition.

Furthermore, the part of “comfortable regulation” stays and will keep on to be strengthened in Kazakhstan’s opposition policy. At this time, regulatory resources include recognize, warning, and . Timely detection of prospective antitrust violations is unquestionably useful for all functions: current market participants, for whom the chance of staying held liable is diminished, for the regulator and courts, the stress of investigating and reviewing situations is lowered. In buy to popularize level of competition law compliance, the Company provides for the improvement of Methodological recommendations for the enhancement and implementation of an internal act of levels of competition legislation compliance.

It should really be famous that not all programs of the regulator are mirrored in the new legislation. The last edition of the Law did not consist of, in distinct, provisions regulating the electronic financial state given that the wording proposed did not remedy the meant duties.


The Thought for the Security and Progress of Opposition in the Republic of Kazakhstan

In the center of summertime, the President of the Republic of Kazakhstan authorised by Decree No. 938 the Principle for the Protection and Growth of Competitiveness in the Republic of Kazakhstan for 2022-2026 (the “Concept”). As section of the Concept, the Company strategies, amongst other things, to perform on reforming the present techniques for obtaining the consent of the Company for mergers.

To start with of all, it was pointed out that there is a continued high degree of condition participation in the overall economy of Kazakhstan, the dominance of organizations with state participation in the most significant sectors of the overall economy.

It also implies the existence of complications involved with the asymmetry of information and facts – a scenario the place the provider of the items understands additional about its traits, as well as about the available delivers on the industry, than the buyer. As a consequence, asymmetric facts creates limitations to the reorientation of desire: it restrictions the ailments for entry into the applicable item market place for new individuals, as very well as the skill of consumers to look for for much more successful presents. The housing and communal products and services marketplaces can serve as an instance. In addition, the asymmetry of facts creates the conditions for the manifestation of unfair trade pricing practices centered on the evaluation of shopper behaviour and forces them to make an irrational preference.

In flip, the document outlines a eyesight for the improvement of the spheres of defense and the advancement of competitiveness. The Republic of Kazakhstan is centered on the transition from the punitive concentrate of the condition plan on the defense and development of competitiveness to the development of a pro-aggressive atmosphere in the commodity marketplaces.


Sign-up for point out monopolies

On July 1, 2022, amendments to the Entrepreneurial Code arrived into power, giving for the creation of an establishment of a particular legislation to oversee condition monopolies. The Agency for the Protection and Development of Opposition of the Republic of Kazakhstan fashioned and authorised the initial state sign-up for topics of specific legislation and point out monopoly. This sign-up is made up of two sections, including 17 subjects of unique legislation and 17 subjects of condition monopoly. In accordance with the Entrepreneurial Code, public and personal operators approved to apply economic features, incorporated in the sign-up of topics of special regulation, are topic to level of competition regulation on the following 5 concepts: selling price regulation, prohibition to have interaction in other routines, prohibition of participation in other lawful entities, compensation for shed income to the enterprise, a grace period of time of 6 months to prepare sector members.

In accordance with paragraph 3 of Short article 193 of the Entrepreneurial Code, a point out organization, a joint-inventory business, a constrained legal responsibility partnership may perhaps be the matter of a specific legislation. At the very same time, the Agency, on an once-a-year foundation, will evaluate the functions of particular person topics of a exclusive regulation in buy to prepare proposals for the transfer to a competitive setting of things to do relevant to the subject of unique law. In this regard, the sign-up of topics of special regulation will be even more adjusted.


Investigations of the Agency for Protection and Progress of Competitors of Kazakhstan

The Agency carried out outstandingly. In 2022 a number of competitiveness law investigations considerably affected the industry.


Marketplace for aggregators

The agency, for example, investigated Yandex.Taxi for tariff location. According to the Company, Yandex. Taxi rates a fee of 17-20%, and also applies dynamic pricing – in lousy weather, as well as on holidays, visits are much more highly-priced supplied the greater demand from customers. It accused Yandex.Taxi of establishing a high monopoly selling price, is prohibited by Write-up 174 of the Entrepreneurial Code of Kazakhstan. According to paragraph 1 of Posting 175 of this Code, a higher monopoly rate of a products is the cost established by a sector entity that holds a dominant or monopoly place if this value exceeds the volume of costs and income necessary for the production and sale of this kind of items and the price fashioned in aggressive problems on the corresponding or similar commodity marketplace.

Whilst this investigation is still ongoing, in April 2022, Yandex.Taxi was fined by the Agency due to the actuality that the entity did not offer the Company with comprehensive info pertaining to its corporate construction (in keeping with the assessment of the company’s current market share) and the court docket reaffirmed the place of the Company.


Sector for freight transportation

A further investigation deals with KTZ – Freight Transportation. Since March, an investigation has been underway on the basis of abuse of a monopoly position in phrases of making use of diverse price ranges to equal agreements, specifically the concluded arrangement on the provision of exclusive tariff disorders for the transportation of products by railway in Kazakhstan. According to the Agency, KTZ – Freight Transportation supplies benefits to its consumers in a aggressive market, which leads to constrained opposition, offered that it occupies 95 for every cent of the industry.

There is no ultimate selection as to the investigation, but as in the Yandex.Taxi example, KTZ- Freight Transportation now experienced to pay back a fine in 2022 for not delivering information and facts to the Agency in a timely fashion. This determination was subsequently sustained by the attraction instance.

All in all, 2022 was extremely progressive through the lens of Kazakhstani levels of competition regulation and there is a hope that this inclination will be more strengthened.