Cases on challenging the regulations of the antimonopoly authority

According to Article 226 of the PC, in accordance with the established powers, the antimonopoly authority has the right to give binding orders to market entities on stopping violations of the norms of this Code and (or) eliminating its consequences; restoring the original position; terminating or amending contracts that contradict this Code; the need to cancel transactions by terminating or invalidating them when regulating economic concentration. And also to give state and local executive bodies, organizations endowed by the state with the functions of regulating the activities of market entities, mandatory instructions on the cancellation or amendment of acts adopted by them, the elimination of violations, as well as the termination, cancellation or amendment of agreements and transactions concluded by them that contradict this Code, and the commission of actions aimed at ensuring competition. The requirements for the execution of the prescription are established by Article 227 of the PC. In accordance with Article 230 of the PC, the instructions of the antimonopoly authority may be appealed to the court in accordance with the procedure established by the legislation of the Republic of Kazakhstan. The grounds for appealing the regulations of the territorial division to the antimonopoly authority are: 1) incomplete clarification of circumstances relevant to the case; 2) lack of evidence of circumstances relevant to the case and recognized as established; 3) inconsistency of the conclusions set out in the decision with the circumstances of the case; 4) violation or improper application of the norms of the legislation of the Republic of Kazakhstan.

Cases on challenging the regulations of the antimonopoly authority

The courts generally correctly apply the norms of legislation on challenging the instructions of the authorized body. Thus, by the decision of the Astana City Council of Ministers of Justice dated February 14, 2018, which was left unchanged by the decision of the Judicial Board for Civil Cases of the Astana City Court dated May 23, 2018, the application of JSC "K" to challenge the Committee's order to eliminate violations of legislation in the field of competition protection was refused. It was established that, following an appeal from consumers and the Chamber of Entrepreneurs of a number of regions about the illegal inclusion of joint-stock companies in the contracts of clause 8.1, by order of the Committee dated February 14, 2017 No. 27-OD, an audit of the compliance of joint-stock companies with regulated activities in terms of abuse of a dominant position and violations of legislation in the field of competition protection was appointed. Based on the results of the investigation, the Committee concluded that the JSC was carrying out activities on the subject of the audit in violation of sub-paragraphs 2), 4) and 9) of Article 174 of the Criminal Code and legislation on competition protection, and therefore, by order dated July 21, 2017, approved the conclusion on the results of the investigation dated July 17, 2017. Based on the results of the audit, the Committee initiated proceedings on an administrative offense against the JSC and by a decision of the Astana city court dated November 28, 2017, the JSC was brought to administrative responsibility under Article 159 part 4 of the Administrative Code with the imposition of an administrative fine in the amount of ten percent of the income received as a result of monopolistic activities in the amount of 944,855,296 tenge to the state revenue. After the court's decision of November 28, 2017 entered into force, the Committee issued an order demanding that the investigation stop violating the law, return the funds received under clause 8.1 of the agreements to consumers and exclude this clause from the agreements. The JSC's requirement is based on the fact that clause 8.1 is included in the contracts by mutual agreement of the parties, it is obliged to supply consumers with a certain amount of gas, and the other party is required to ensure its full use, while liability for violation of this obligation is provided for in clause 8.1. Dismissing the claim, the court proceeded from the fact that JSC, abusing its dominant position, applied different conditions under equivalent agreements with consumers by charging lost profits in accordance with clause 8.1 of the contract in different regions, rejecting adjustments to contractual gas volumes without specific justification, which violated the requirements of sub-paragraphs 2), 4) and 9) of Article 174. The PC prohibits the commission of actions by such entities that have led to infringement of the legitimate rights of market entities. Another example, by the ruling of the Astana City Council of Ministers dated February 14, 2018, which was left unchanged by the court of appeal, the proceedings in the case on the application of the Professional Paramilitary Rescue Service to the Committee on the recognition of illegal orders and regulations and their cancellation were terminated. By Order of the Committee dated November 17, 2017 No. 284-OD, the conclusion on the results of the investigation of violations of legislation in the field of protection of competition in relation to the RSE "PVASS" was approved. The investigation was conducted for violations of the legislation in the field of protection of competition, provided for in subparagraph 14 of paragraph 2 of Article 177 of the PC, regarding the incorrect comparison of the services provided by the market entity with services sold by other entities of this market.

An administrative offense case has been initiated against the company and Order No. 14 on the elimination of violations of legislation in the field of competition protection dated December 7, 2017 has been introduced. The approval of the conclusion on the results of the investigation of violations of the legislation of the Republic of Kazakhstan in the field of competition protection was issued by the order of the antimonopoly authority. By the decree of the specialized interdistrict administrative Court of As of January 4, 2018, the administrative proceedings against the RSE "PVASS" under Article 163, part 2 of the Administrative Code were terminated due to the absence of elements of an administrative offense in its actions. Therefore, the court proceeded from the fact that, on the basis of the inspection report, a protocol on administrative offenses was drawn up and, accordingly, the legality of the decision of the authorized body was reviewed in the case of administrative offenses, and the contested act was terminated, therefore, it is not subject to appeal in accordance with Chapter 29 of the CPC, does not violate the rights and legitimate interests of the applicant and does not give rise to legal consequences. The arguments about the absence of violations of antimonopoly legislation, the illegality of the order and the prescription by the enterprise are presented in the framework of the consideration of an administrative offense case for committing offenses in the field of antimonopoly legislation, during which the existence of an event and the composition of an administrative offense were verified with the examination of evidence provided by both the authorized body and the person being held accountable, and the actions of the enterprise were not there are signs of violation of the law. Accordingly, the antimonopoly authority has the right to review the order in accordance with Article 228 of the PC. Another example, by the decision of the Council of Economic and Social Council of Astana dated September 24, 2018, the proceedings on the application of JSC "K" to the State Institution "Committee for Regulation of Natural Monopolies, Protection of Competition and Consumer Rights of the Ministry of National Economy" on challenging the order were terminated on the grounds provided for in subparagraph 1) of Article 277 of the CPC, the application is not subject to consideration in civil proceedings. By an appeal decision of October 31, 2018, the court's ruling of September 24, 2018 was canceled, with the referral of the case for a new hearing to the court of first instance.

Cases on challenging the regulations of the antimonopoly authority

Canceling the ruling of the court of first instance, the board pointed out that bringing the applicant to administrative responsibility did not entail the termination of proceedings in the case in terms of challenging the legality of the order of the authorized body, which entrusted him with certain duties, the legality of which is subject to judicial review. An illustrative example is the consideration of a civil case on the application of JSC "K". Thus, by the decision of the Judicial Board for Civil Cases of the Supreme Court of the Republic of Kazakhstan dated May 14, 2019, the judicial acts issued by the courts of Astana city in the case of the application of JSC "K" (hereinafter – JSC) to the Committee on recognition as illegal and cancellation of the order approving the conclusion based on the results of the investigation and the order were changed. JSC challenged in court the Committee's order approving the conclusion on the results of the investigation of violations of legislation in the field of protection of competition dated October 18, 2018 No. 249-OD and the order No. 13 on the cessation of violations of the PC norms and elimination of their consequences dated October 22, 2018. By the ruling of the Astana City Council of Ministers of Justice dated November 29, 2018, which was left unchanged by the ruling of the Judicial Board for Civil Cases of the Astana City Court dated January 23, 2019, the proceedings were terminated. In the case, it was established that in connection with the appeal of A. regarding the unjustified write-off of the JSC from the balance of the subscriber number of 32,000 tenge for mobile Internet access services, the Committee conducted an investigation into violations of legislation in the field of competition protection against the JSC, which, based on the results of the Committee's analysis and assessment of the competitive environment in the market of mobile Internet access services for 2016-2017, was recognized as dominant. Based on the results of the investigation, a conclusion was drawn up on October 8, 2018, from which it follows that JSC violated the requirements of Article 174 of the PC, expressed in abuse of a dominant position, infringement of the legitimate rights of an indefinite circle of consumers, including economically, technologically and otherwise unjustifiably setting different prices (tariffs) for the same product. By the Committee's Order No. 249-OD dated October 18, 2018, the above-mentioned conclusion was approved, indicating that an administrative offense case was initiated against the JSC and an order was issued to eliminate violations of legislation in the field of competition protection. On October 19, 2018, a protocol on an administrative offense was drawn up against JSC under part 3-1 of Article 159 of the Administrative Code on the fact of abuse by market participants of their dominant or monopolistic position. The case was sent for consideration to the specialized interdistrict Administrative Court of Almaty, which suspended the proceedings on March 19, 2019, pending the resolution of this civil case. On October 22, 2018, the Committee issued an order to JSC to stop violations of PC standards and eliminate their consequences by: - eliminating economically, technologically or otherwise unjustifiably setting different prices (tariffs) for mobile Internet access services if subscribers exceed the bonus amount and do not pay the monthly subscription fee, - ensuring the availability of tariff plans available for connection under the kcell tariff mark, which grant subscribers the right to reconnect tariff plans ahead of schedule if they exceed the bonus amount of services, excluding binding to a certain date of the month, - ensuring that subscribers are properly informed about the essential information of the JSC's tariff plans regarding the terms of billing services if subscribers exceed the bonus amount and do not charge the subscription fee by eliminating their hidden locations, - to ensure the return to subscribers, under the kcell trademark, of funds written off in 2017 if the bonus amount is exceeded and if the monthly subscription fee for mobile Internet access services is not charged. In terminating the proceedings, the courts indicated that, in connection with the preparation of an administrative offense report against JSC, an assessment of the legality and validity of the order would be given in the framework of the administrative offense case under consideration, and the contested order had ceased to be effective in connection with the execution of the instructions contained therein. Therefore, in accordance with subparagraph 1) of Article 277 of the CPC, the applicant's claims are not subject to consideration in civil proceedings.

In accordance with Part 1 of Article 293 of the CPC, decisions, actions (inaction) of state bodies, local governments, public associations, organizations, officials, and civil servants subject to judicial challenge include collegial and individual decisions and actions (inaction) resulting in: 1) the rights and freedoms of a citizen and the legitimate interests of a legal entity have been violated; 2) obstacles have been created to the exercise by a citizen of his rights and freedoms, as well as by a legal entity of legitimate interests; 3) any obligation has been unlawfully imposed on a citizen or a legal entity or they have been unlawfully held accountable. The Judicial Board found the conclusions of the local courts to be justified regarding the termination of proceedings in the case challenging the order of the antimonopoly authority, since the instructions contained therein to institute an administrative offense case against the JSC and issue instructions to the JSC had been implemented. Resolving the issue of the legality of the order in civil proceedings will not resolve the issue of protecting the violated or disputed rights and legitimate interests of the JSC, since the consequences provided for in subparagraph 3) of part 1 of Article 293 of the CPC entail acts of the antimonopoly authority derived from the order. According to paragraph 2 of Article 65 of the Law "On Legal Acts", a legal act of individual application is terminated from the moment its requirements or instructions contained therein are fulfilled by the persons to whom this legal act is addressed. By virtue of the above, the judicial acts regarding the termination of proceedings on the claims of the Joint-Stock Company to challenge the order remained in force. At the same time, the judicial board recognized the conclusions of the courts that the legality and validity of the order should be assessed in the framework of the proceedings on an administrative offense as inconsistent with the legal norms and factual circumstances of the case. In accordance with paragraph 1 of Article 230 of the PC, the instructions of the antimonopoly authority may be appealed to the court in accordance with the procedure established by the legislation of the Republic of Kazakhstan. Part 3-1 of Article 159 of the Administrative Code provides for an administrative penalty in the form of a fine for small or medium-sized businesses or non-profit organizations in the amount of three, for large businesses - in the amount of five percent of the income (revenue) received as a result of monopolistic activities. The obligation imposed by the order on the JSC to refund unjustifiably written-off amounts in 2017 is a civil liability for committing illegal actions and is not provided for by the rules on administrative liability for violations of monopolistic activities. The legal consequences of the prescription in the form of imposing duties on the JSC to exclude the unjustified establishment of various tariffs, ensuring the availability of affordable tariff plans for subscribers and informing them on the terms of billing are also subject to investigation by verifying the validity of their imposition by the Committee, based on the identification of violations, their compliance with legal requirements, regardless of the establishment of administrative proceedings of the facts of abuse of the JSC their dominant position.

Since the Committee's actions in issuing the injunction stem from public law relations in the field of public administration in the field of competition protection and may entail consequences for the JSC provided for in Part 1 of Article 293 of the CPC, judicial acts on termination of proceedings in challenging the injunction were canceled, and the case in this part was sent to court for consideration on its merits. the first instance. According to paragraph 2 of Article 225 of the Tax Code, income received by a market entity as a result of monopolistic activities limited by this Code is monopoly income. Monopoly income can be obtained by a market entity as a result of: 1) commission of an anticompetitive agreement or coordinated actions of market entities; 2) abuse by a market entity of its dominant or monopolistic position. Monopoly income is determined from the moment when the above actions are performed by the market entity until their termination. Monopoly income is determined when: 1) the establishment of monopolistically high prices by a market entity occupying a dominant or monopolistic position - as the difference between the income received when applying a monopolistically high price and income calculated on the basis of the price determined in accordance with the provisions of Article 175 of this Code; 2) the establishment of a monopolistically low price by a market entity occupying a dominant or monopolistic position - as an additional income received by a market entity occupying a dominant position as a result of an increase in sales volumes due to the elimination of competitors from the commodity market; 3) the establishment of a monopsonally low price by a market entity occupying a monopsonally low position - as the difference between the costs of this market entity for the purchase of goods at a price determined on the basis of the costs necessary for the market entity selling the goods, the costs of production and sale of such goods and profits, and the costs incurred when buying goods at monopsonally low prices; 4) the commission of anticompetitive agreements or coordinated actions by a market entity as the entire income received from these actions, minus the reasonable expenses necessary for the production and (or) sale of goods, and taxes actually paid. The withdrawal of monopoly income is carried out in accordance with the procedure established by the Code of the Republic of Kazakhstan on Administrative Offenses. Courts should distinguish the concept of monopoly income, which is withdrawn in the order of administrative proceedings to the state's income, from the amount of damage caused to consumers by the activities of market entities related to violations of antimonopoly legislation. Such damage, according to the general requirements of the norms of the Civil Code on tort obligations, is subject to compensation to the injured person who caused the damage. Thus, the Department of the Mangystau region filed a lawsuit to compel GKP "B" to return unjustified income to consumers in the amount of 12 572 397 tenge.

Cases on challenging the regulations of the antimonopoly authority

It is established that the Department's order dated June 15, 2007 approved, with effect from January 1, 2007, the tariff for services for transmission and distribution of electric energy of the State Enterprise "B" in the amount of 0.77 tenge per 1 kWh (excluding VAT) and the tariff estimate for transmission and distribution of electric energy according to Appendix No. 1. to the order. However, by the order of the GKP dated March 1, 2017 No. 41, starting from March 1, 2017, the tariff for services for transmission and distribution of electric energy of the GKP with a surcharge of 0.40 tenge was approved. The specified order of the State Control Committee was declared illegal by the court, since it contradicts the legislation of the Republic of Kazakhstan "On Natural Monopolies". The evidence in the case was the legally binding resolution on administrative offenses dated April 10, 2018 No. 3, by which the State Committee of the Kyrgyz Republic was found guilty under part 5 of Article 164 of the Administrative Code of the Republic of Kazakhstan with the imposition of an administrative penalty in the form of a fine in the amount of 10% of the income (revenue) received as a result of the commission of an administrative offense, which amounts to 1,257,240 tenge. This resolution established the illegality of the actions of the State Committee for the Approval of an additional charge for electricity supply in the amount of 0.40 tenge per 1 kWh of the approved tariff, which contradicts the requirements of subparagraph 2) of Article 7 of the Law on the Provision of Regulated Services (Goods, Works). according to tariffs (prices, rates of fees) approved by the authorized body. As a result, the GKP illegally charged individuals and legal entities an additional payment for the transmission of electric energy for the period from March to December 2017 in the amount of KZT 12,572,397. By virtue of the requirements of Part 5 of Article 76 of the CPC, the guilt of a person in committing an administrative offense, established by a court decision that entered into force in an administrative offense case, is not proven again when considering the case on the civil consequences of the same offense committed by that person. Based on the results of the case review by the court decision on August 28, 2018, the claim was satisfied. Another example, by the decision of the Council of Economic and Social Council of Astana dated January 16, 2017, which was left unchanged by the appeals board, the claim of the NGO "Society for Consumer Protection"A "Astana city" (hereinafter referred to as the NGO) to JSC "A" (hereinafter referred to as JSC), the Department for the City of Astana for recovery from JSC was denied. in favor of consumers of Astana, the amount of damage in connection with non–fulfillment of the investment program 2014 - 2016 in the amount of 15,643,000 tenge, penalties in the amount of 2,033,000 tenge; recovery in favor of the NGO in the amount of 1,564,300 tenge; forcing the Department to introduce a compensating tariff for JSC within the amount of 17,676,000 tenge. It follows from the case file that a joint order of the Department dated March 12, 2013, the Ministry of Industry and New Technologies of the Republic of Kazakhstan dated April 10, 2013, and the Ministry of Regional Development of the Republic of Kazakhstan dated June 27, 2013 approved the investment program of JSC for thermal energy production for 2014 - 2016. This investment program provides for the purchase in 2014 of a portable multibasic optical emission analyzer for chemical composition and alloys. The planned amount was 15,643,000 tenge. The claim filed by the NGO is motivated by the fact that non-fulfillment of the investment program by a natural monopoly entity causes damage to consumers and entails the need for the authorized body to introduce a compensating tariff. It was established that in 2014-2015, based on the results of public procurement of the specified equipment, suppliers did not fulfill their contractual obligations, as a result of which, based on court decisions, they were recognized as unfair participants in public procurement. In 2016, the equipment was delivered, and the device was accepted by the subject for responsible storage.

The courts, rejecting the claim, proceeded from the fact that, in accordance with subparagraph 4 of Article 3 of the Law, the investment program – a program of investment and repayment of funds aimed at ensuring energy conservation and improving energy efficiency, expansion, restoration, renovation, support of existing assets, reconstruction, technical re-equipment of fixed assets, creation of new assets of a natural monopoly entity, a regulated market, for short, medium or long-term periods in order to obtain a technical and economic effect, including one or several investment projects. According to paragraph 27 of the Rules for Approving Investment Programs (Projects) of a natural monopoly entity, their adjustments, as well as analyzing information on their implementation, approved by Order No. 194 of the Minister of National Economy of the Republic of Kazakhstan dated December 30, 2014, information on the implementation of the investment program (project) is provided by the entity to the department of the authorized body and the state body annually on time no later than May 1 of the year following the reporting period. According to paragraph 8 of Article 15 of the Law, the analysis of information on the implementation of the investment program (project) of a natural monopoly entity is carried out by the authorized body within thirty calendar days from the date of its provision (paragraph 8 of Article 15-3 of the Law). The department of the authorized body, based on the results of the analysis of information on the implementation of the investment program (project) of the entity, makes a decision in accordance with article 141 of the Law. The conclusions of the courts seem to be correct, since the deadline for providing JSC with information on the implementation of the investment program is set before May 1, 2017. Issues related to the implementation of the investment program, the detection of violations of antimonopoly legislation and the receipt of monopoly income are subject to determination by the authorized body based on the results of information analysis. Accordingly, the issue of introducing a temporary compensating tariff in connection with the actions of a natural monopoly entity that caused losses to consumers of regulated services by non-fulfillment of investment programs (projects) taken into account when approving tariffs (prices, fee rates) or their maximum levels was subject to after such violations were identified. 

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