Abuse of a dominant or monopolistic position in the consideration of administrative cases related to violations of antimonopoly legislation
According to Article 172 of the PC, a dominant or monopolistic position is recognized as the position of a market entity or several market entities in the relevant commodity market, which gives the market entity or several market entities the opportunity to control the relevant commodity market, including having a significant impact on the general conditions of circulation of goods.
At the same time, according to part two, the dominant position of a market entity is established in accordance with the Methodology for analyzing the state of competition in the commodity market, approved by the antimonopoly authority.
Subparagraph 2) Paragraph 2 of Article 218 of the Criminal Code establishes that the antimonopoly authority, in the presence of signs established by Article 174 of this Code, before conducting an investigation, analyzes the state of competition in commodity markets in order to identify the dominant or monopolistic position of the market entity.
A judicial analysis of this category of cases showed that the antimonopoly authority violated the requirements of the Competition Code and the Methodology for Analyzing and Assessing the competitive environment in the commodity market, approved by Order No. 741 of the Minister of National Economy dated November 30, 2015.
For example, in three disputes with the antimonopoly authority on the claims of JSC (No. 6001-22-00-6ap/211), LLP (No. 6001-22-00-6ap/2595), JSC (4794-22-00-4/344), the courts satisfied the claims due to the failure to analyze the state of competition in the relevant commodity markets before conducting investigations.
For example, according to the claim of JSC (No. 6001-22-00-6ap/211), in which the local courts refused to satisfy the requirements of the market entity to recognize as illegal the notification of signs of violation of legislation in the field of protection of competition, accepting the argument of the antimonopoly authority that the analysis is not required, since the company is included in the Register of Natural Resources monopolies for the production of thermal energy.
The SCAD of the Supreme Court, canceling the decisions of the lower courts, came to the conclusion that an analysis was necessary.
The analysis of the state of competition is carried out in accordance with Article 196 of the Labor Code and the Methodology for analyzing the state of competition in the commodity market.
Paragraph 3 of Article 196 of the PC regulates that the analysis of the state of competition in the commodity markets includes 8 stages.
For reference:
1) definition of criteria for the interchangeability of goods;
2) defining the boundaries of the commodity market;
3) determination of the time interval for commodity market research;
4) determining the composition of market entities operating in the commodity market;
5) calculation of the volume of the commodity market and the shares of market entities;
6) assessment of the competitive environment in the commodity market;
7) identification of circumstances or signs indicating the presence of obstacles, difficulties or other restrictions on the activities of market entities affecting the development of competition, including the identification of barriers to entry into the commodity market;
8) conclusions based on the results of the analysis of the state of competition in the commodity market, which are reflected in the conclusion.
Paragraph 11 of Article 196 of the PC regulates that in case of abuse of a dominant or monopolistic position, in order to determine the share (shares) of dominance of a market entity(s), an analysis of the state of competition in commodity markets is carried out, which does not include the stages provided for in subparagraphs 6) and 7) of paragraph 3 of this article.
At the same time, if the analysis of the state of competition in the commodity markets, when identifying signs of abuse of a dominant or monopolistic position, showed that the share of the market entity is more than thirty-five, but less than fifty percent, or there is a cumulative dominance of market entities, the analysis of the state of competition in the commodity market is carried out in compliance with all stages.
Thus, indicative cases of omission by the antimonopoly authority in terms of conducting an analysis and conducting an investigation for a period not covered by the analysis lead to a lack of evidence of market participants occupying a dominant or monopolistic position, which are represented by the following disputes.
According to the claims of JSC (No. 6001-23-00-6ap/1223), JSC (No. 4794-22-00-4/1725), the antimonopoly authority made an omission regarding the correspondence of the investigation period and the period for analyzing the state of competition in the commodity markets.
Since, according to Article 172 of the PC and paragraph 36 of the Methodology, the position of each of several market entities is recognized as dominant if the combined share of no more than three market entities that own the largest shares in the relevant commodity market is 50 percent or more, or the combined share of no more than four market entities that own the largest shares in the relevant in the commodity market, it is 70 percent or more if the following circumstances are established in relation to such a market entity:
1) over a long period (for at least one year or, if such a period is less than one year, during the lifetime of the relevant commodity market), the relative size of the shares of market participants remains unchanged or is subject to minor changes.;
2) a product sold or purchased by market participants cannot be replaced by another product when consumed (including when consumed for production purposes);
3) information about the price and (or) the conditions of sale of this product in the relevant commodity market is available to an indefinite circle of persons.
In this regard, the court reasonably granted the claims, since, by virtue of the above requirements, the dominant position must be at least one year old.
Regarding the recognition of the actions of a market entity as an abuse of a dominant or monopolistic position, expressed in the establishment of monopolistically high prices, the antimonopoly authority makes an omission in accordance with Article 175 of the PC. regarding compliance with the conditions, also in the LLP case (No. 4794-22-00-4/172), satisfying the claims, the local courts legitimately concluded that the antimonopoly authority had not proven the fact of exceeding the prices of the joint-stock company in the relevant or comparable market.
According to subparagraph 1) of paragraph 1 of Article 175 of the PC, a monopolistically high price of a product is the price set by a market entity occupying a dominant or monopolistic position if this price exceeds the amount of expenses and profits necessary for the production and sale of such goods and the price that has been formed in a competitive environment in the relevant or comparable commodity market, including the established:
by increasing the previously set price of the goods, if the following conditions are fulfilled in combination: the costs necessary for the production and sale of the goods have remained unchanged or their change is disproportionate to the change in the price of the goods;
the composition of sellers or buyers of the product has remained unchanged, or the change in the composition of sellers or buyers of the product is insignificant;
the conditions of circulation of goods on the commodity market, including those caused by government regulatory measures, including taxation, customs tariff, tariff and non-tariff regulation, have remained unchanged or their change is disproportionate to the change in the price of the goods.
Paragraph 3 of this article indicates that a comparable commodity market means another commodity market comparable in terms of the volume of goods sold, the composition of buyers or sellers (suppliers) of goods, determined based on the purposes of the purchase or sale of goods, and the conditions of access to the commodity market.
Taking into account the above, the antimonopoly authority should request information and determine the relevant commodity market not only within the Republic of Kazakhstan, but also outside it, which would justify the conclusion that there is no relevant commodity market.
If it is impossible to compare the price in the same commodity market, the comparison is made with the price of the product in a comparable commodity market, including outside the Republic of Kazakhstan.
If it is impossible to determine the price prevailing in a competitive environment in a comparable commodity market, or a comparable commodity market, including outside the Republic of Kazakhstan, an analysis of the costs and profits of the market entity is carried out and a reasonable price of the goods is determined.
In this regard, the courts reasonably satisfied the claims, since the antimonopoly authority does not have a justification for the absence of a comparable market outside the Republic of Kazakhstan, while the authorized body did not send requests to the antimonopoly authorities of the member states of the Eurasian Economic Union.
Return of administrative cases.
The refunds fall on subparagraph 6) of the second part of Article 138 of the CPC "the plaintiff withdrew the claim" - as well as subparagraph 11) of the second part of Article 138 of the CPC "the case is not subject to consideration in administrative proceedings"
The basis (according to the second part of Article 138 of the APPC):
1) the plaintiff has not complied with the pre-trial dispute settlement procedure established by law for this category of cases and the possibility of applying this procedure has not been lost
4) the application is signed by a person who does not have the authority to sign or present it.
4) the application is signed by a person who does not have the authority to sign or present it.
4) the application is signed by a person who does not have the authority to sign or present it.
15) the court refused to restore the missed deadline
17) the case is beyond the jurisdiction of this court
The analysis showed that a large number of refunds based on subparagraph 11) of the second part of Article 138 of the CPC are related to errors made by plaintiffs when filing administrative lawsuits.
In accordance with the second part of Article 5 of the CPC, the task of administrative proceedings is the fair, impartial and timely resolution of administrative cases in order to effectively protect and restore violated or disputed rights, freedoms and legitimate interests of individuals, rights and legitimate interests of legal entities in public relations.
It is important to note that public law relations arise between subjects of law in connection with the exercise by one of the participants of his powers in relation to the other.
It should be noted that, in accordance with part 5 of Article 138 of the CPC, failure to provide a written response or a reasoned position is the basis for the application of a monetary penalty and does not prevent the consideration of an administrative case on its merits.
Regulatory legal acts
The main regulatory legal acts that courts should follow when considering cases related to the application of antimonopoly legislation are:
1) The Constitution of the Republic of Kazakhstan dated August 30, 1995;
2) The Business Code of the Republic of Kazakhstan dated October 29, 2015 (PC);
3) Administrative Procedural Procedure Code of the Republic of Kazakhstan dated June 29, 2020 No. 350-VI (APPC);
4) The Code of the Republic of Kazakhstan "On Administrative Offenses" dated July 5, 2014 No. 235-V SAM (Administrative Code);
5) The Law of the Republic of Kazakhstan "On Natural Monopolies" dated December 27, 2018 No. 204-VI SAM (Law);
6) Judicial Board on Administrative Cases of the Supreme Court of the Republic of Kazakhstan (SCAD VS);
7) The Agency for Protection and Development of Competition of the Republic of Kazakhstan and its territorial bodies (antimonopoly authority);
8) The Committee for Regulation of Natural Monopolies of the Ministry of National Economy of the Republic of Kazakhstan and its territorial bodies (authorized body for regulation of natural monopolies).
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