Competition Law and Policy in Kazakhstan 2016

2016 Конкурентное право и политика вКазахстане иполитика право Конкурентное Конкурентное право и политика в Казахстане Экспертный обзор A Peer Review Peer A and Policy in Kazakhstan in Policy and Competition Law Competition Competition Law and Policy in Kazakhstan 2016 COMPETITION LAW AND POLICY IN KAZAKHSTAN A Peer Review -- 2016 -- ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT About the OECD The OECD is a forum in which governments compare and exchange policy experiences, identify good practices in light of emerging challenges, and promote decisions and recommendations to produce better policies for better lives. The OECD’s mission is to promote policies that improve economic and social well-being of people around the world. Find out more at www.oecd.org. This report is published on the responsibility of the Secretary- General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. The OECD has two official languages: English and French. The English version of this report is the only official one. © OECD 2016 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to [email protected]. Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Centre (CCC) at [email protected] or the Centre français d’exploitation du droit de copie (CFC) [email protected]. 3 FOREWORD For many years, OECD competition law and policy peer reviews have proved to be a valuable tool for countries, whether OECD members or not, to reform, strengthen, and improve their competition frameworks. A peer review is a two stage process: first a report on the current state of Kazakhstan’s competition framework and its enforcement practice; and second a peer review based on the report. Kazakhstan underwent its peer review at the OECD Global Forum on Competition in 2015 which was attended by almost 90 delegations from around the world. This report assesses the development and application of competition law and policy in Kazakhstan on the basis of the 2008 Laws “On Competition” and “On Natural Monopolies and Regulated Markets”, with a focus on activities between 2010 and 2014. The report concludes that Kazakhstan has a competition regime that is in many enforcement areas based on sound principles but is in need of moving from a rather prescriptive application to a more effects based enforcement. Enforcement should tackle the underlying causes of competition problems and should not focus on imposing pricing controls. The recommendations in the report focus inter alia on: Cartel enforcement and the need for better detection instruments and a stricter standard of proof; Abuse of dominance proceedings where the focus should shift from price control to abusive practices that foreclose markets and erect barriers to entry; Advocacy and action by the competition authority against anticompetitive acts by state bodies and regulators and encourages the competition authority to continue its good work; Rule of law needs to be strictly applied by granting the right to be heard, providing access to file and increasing transparency and publishing decisions; and, COMPETITION LAW AND POLICY IN KAZAKHSTAN © OECD 2016 4 Institutional design and the need for a truly independent enforcement authority. The report’s analysis and recommendations are very timely. Kazakhstan introduced in 2015 an action plan for economic development, “100 Concrete Steps”, that envisages many institutional reforms, including reform of both the competition law and the authority to align them better with OECD standards and best practices. In addition, in 2014, Kazakhstan became member of the Eurasian Economic Union, requiring it to align its competition law with the EAEU standards. This report was undertaken at the request of the government of Kazakhstan. The lead reviewers were Mr Robledo de Castillo and Mr Garcia Pineda, Colombia; Mr Juhani Jokinen, Finland; Mr Bogdan Chiritoiu, Romania; and Lord David Currie, United Kingdom. The report was prepared by Alexey Ivanov working as a consultant for the OECD Secretariat, with the support of Lynn Robertson and Sabine Zigelski of the OECD Secretariat. COMPETITION LAW AND POLICY IN KAZAKHSTAN © OECD 2016 5 TABLE OF CONTENTS Executive Summary .................................................................................. 7 1. History and foundations ................................................................. 10 1.1. Economic and political context ................................................ 10 1.2. Institutional and legislative history .......................................... 15 2. Substantive Issues: Content of the Competition Law .................... 21 2.1. Restrictive agreements and concerted practices ....................... 22 2.2. Dominance and Monopolisation ............................................... 39 2.3. Concentration Control .............................................................. 55 2.4. Unfair Competition ................................................................... 62 2.5. Consumer protection ................................................................ 65 3. Public Actors Restricting Competition .......................................... 67 3.1. Anti-competitive acts by public authorities .............................. 67 3.2. Competition impact assessment, de-monopolisation and advocacy ............................................................................ 71 4. Institutional issues: Enforcement Structure and Practices ............. 75 4.1. Competition policy institutions ................................................ 75 4.2. Competition law enforcement .................................................. 78 4.3. International Issues ................................................................... 83 5. Limits of Competition Policy: Exemptions and Special Regulatory Regimes ....................................................................... 88 5.1. Economy-wide Exemptions and Special Treatment ................. 88 5.2. State Monopolies ...................................................................... 90 5.3. Natural Monopolies .................................................................. 91 5.4. Regulated markets .................................................................... 99 6. Conclusions and Recommendations ................................................ 102 6.1. Strengths and Weaknesses of the Kazakhstan Competition Law Regime ............................................................................ 102 6.2. Policy Options for Consideration ........................................... 108 COMPETITION LAW AND POLICY IN KAZAKHSTAN © OECD 2016 6 Tables Table 1. Enforcement Statistics – Restrictive Agreements and Practices ..................................................... 34 Table 2. Market Studies Statistics ...................................................... 42 Table 3. Enforcement Statistics – Abuse of Dominance .................... 52 Table 4. Enforcement Statistics – Unfair Competition ....................... 65 Table 5. Enforcement Statistics – Anticompetitive Acts of the State Bodies ................................................................ 69 Table 6. Budget and Staff Statistics of KREMZK and the Agency on Protection of Competition (a previous authority) ............ 78 Table 7. Enforcement Statistics – Fines and Confiscated Income ...... 81 Boxes Box 1. Anti-competitive Agreements – Recent Practice .................. 26 Box 2. Parallel Increase in Prices – Recent Practice ........................ 28 Box 3. Market Analysis and Enrolment in the Register of Dominant Market Subjects and Monopolies – Recent Practice ............ 45 Box 4. Infringement on Consumer Interests by Dominant Enterprises – Recent Practice ..................................................................... 48 Box 5. Monopolistically High Pricing – Recent Practice ................ 51 Box 6. Groundless Refusal to Deal – Recent Practice ..................... 54 Box 7. Platinum Train Services ....................................................... 59 Box 8. Tying of Unrelated Goods as a Form of Unfair Competition – Recent Practice ..................................................................... 63 Box 9. An Attempted Boycott as a Form of Unfair Competition .... 64 Box 10. Anti-competitive Actions of the Economic Regulator – Recent Practice ..................................................................... 70 Box 11. Anti-competitive Acts of the Ministry of Oil and Gas ......... 71 COMPETITION LAW AND POLICY IN KAZAKHSTAN © OECD 2016 7 EXECUTIVE SUMMARY Kazakhstan is still in a process of transition from a centrally planned economy to a market economy. The competition law and institutions are subject to continued legislative and institutional changes reflecting Kazakhstan’s efforts to tackle

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