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Azerbaijan
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Azerbaijan regulates competition policy with a system comprizing various legislative texts. The major laws dealing with competition issues are: the Law on Antimonopoly Activity no. 526 of 1993 which was amended by Law 381-IGD of October 10, 1997, hereby analysed; the law on Natural Monopolies No 590-IG of December 15, 1998, published in the “Azerbaijan” newspaper on 19 March, 1999; the Law on Unfair Competition No 62.Law No. 1049 June 2, 1995; and the Law on Protection of Consumer Rights.
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General Profile
Substantive Provisions
Institutional | | GENERAL PROFILE
| | Contact information | State Committee on Antimonopoly Policy
and Support for Entrepreneurship
370002, Baku, Azerbaijan, S.Askerova st. 85
tel: (994 12)957972 fax (994 12)946951
E-mail: komit@antimon.baku.az
http://web.az:8101/antimon/ Ministry of Economic Development
Department of Antimonopoly Policy
20, Usif Safarova str.
370025 Baku
AZERBAIJAN
Tel: (99412) 94 78 75; 99 74 43
Fax: (99412) 94 69 51
E-mail: office@economy.gov.az
Website: http://economy.gov.az/HTML/Departments/AP/structure.htm | | Competition Law | Law no. 526 of March 4, 1993
Law no. 526 establishes in Art. 1 that the Antimonopoly legislation of the Azerbaijan Republic consists of the Constitution, the Law no. 526 and other normative-legal acts. | | Year CL first enacted | 1993 | | Years CL amended | | | Type of law | Administrative | | Principal objectives | |  Consumer welfare | | | Economic efficiency | | | Public interest/benefit | | | Promotion of competition | | | Other | Art. 1
Prevention, restriction and suppression of the monopoly activity. Monopoly activity is defined as activity of economic subjects or executive power and administrative bodies which, being in one or another form monopolistic, is directed to prevention of competition, its restriction or elimination. | | Coverage | | | Effects in the country | Art. 2; Art 10.5
The Law is applicable to the whole territory and it covers all legal entities and physical persons. Administrative bodies, and executive power are covered. The Law covers as well acquisition of foreign companies by Azerbaijanian companies wich might restrict the competition in the national market. | | Extraterritorial application | Art. 2
If agreements and contracts concluded with physical or legal foreign entities have anticompetitive effects in the Azerbaijan territory, the Law applies. | | Sectors exempted | Art. 2, 3; Art. 11;
Law on Natural Monopolies No 590-IG, of December 15, 1998.
IP rights are not covered. Natural monopoly are separately monitored. A list of natural monopolists is approved by the Milli Mejlis (National Assembly) of Azerbaijan Republic. Control of the activity of subjects of natural monopolies is carried out by relevant executive
power bodies (hereinafter - the bodies carrying out control over natural monopolies). | | State enterprises | | | Practices (Collective Bargaining, R&D Coop) | | | Other | |
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SUBSTANTIVE PROVISIONS
| | Law differentiates between horizontal and vertical agreements | | | Yes | | | No | Art. 10
The Law does not distinguish between horizontal and vertical agreements. | Horizontal Agreements | | | | Collusion | Art. 10.1
The agreements are prohibited if they lead to monopolization of the market because one of the subject is a dominant player in the market. | | Price fixing | Art. 10.1 | | Bid-rigging | | | Prevent the entry or expulsion from the market | Art. 10.1; Art. 10.8 | | Restricting output: limit/control market, production, technical development, or investment | | | Customer/market allocation | Art. 10.1 | | Export/import cartels | | | Collective bargaining | | | Discriminatory practices: dissimilar conditions to equivalent transactions | Art. 10.1 | | Tying | | | Open ended provision | | | Other | | Cooperative agreements-exceptions | | | R&D | | | Production agreements | | | Purchasing agreements | | | Commercialization agreements | | | Agreements on standards | | | Environmental agreements | | | Exchange of information or statistics | | | Other | | Vertical Agreements | | | | Resale price maintenance | Art. 10.2
Agreements between non-competing market subjects, one of them occupying dominating position, another being its supplier or buyer which are or might become the cause of restriction of competition in the market. | | Exclusive distribution/exclusive territories | Art. 10.7 | | Tying | Art. 10.6 | | Quantity forcing | Art. 10 | | Franchise fee contracts | | | Royalty | | | Discriminatory practices | | | Open ended provision | | | Other | | | Exceptions | | | Active sales in exclusive territory | | | Restrictions of sales to end-users by a wholesaler | | | Restrictions of sales to unauthorized distributors | | | Restrictions of sales of components by a buyer | | | License agreements | | | Other | | Dominance | | Single firm | Art. 14 | | Joint dominance | | | Size thresholds | | | Market share | | | Turnover | | | Factors considered | Art. 14
When dominant players carry out "monopolistic activity and their actions result in restriction of competition and violation of the customers' interests, and their forced desegregation doesn’t seem possible" the executive power body might apply to the executive power bodies and administrative bodies with respective proposals concerning establishment of state control on prices charged; application of progressive tax rates; forcing licensing of new patents; annulment of limitations provisions inserted in contracts concluded by the dominant players; annulment of import-export operations. | | Barriers to entry | | | Potential competition | | | Economic dependence of the suppliers and purchasers | | | Other | | | Abuse | Art. 14
Dominant players engaging in monopolistic activities and restricting the competition in the market. | | Predatory pricing | | | Prevent the entry or expulsion from the market | | | Refuse to deal | | | Refuse access to essential facility | | | Open ended provision | | | Other | Art. 14; Art. 15
The executive power body can decide to proceed to a forced desegregation for a period of at least 6 months. If this is not feasible due to technological, territorial and organizational reasons, other remedies are available as stated in Art. 14. | Monopoly | Art. 5; Art. 6; Art. 7; Art. 8; Art. 9; Art. 12
The Law covers in great detail with illegal actions of 1) executive power bodies, 2) branch administrative bodies, 3) economic subjects and 4) financial-credit organizations which result or might result in restriction of elimination of competition, infringement of interests of economic subjects and customers. For each entity a list of illegal behavior is listed. The Law makes illegal certain abuse of monopolistic right on patents and licenses such as 1) failure to use the patent by its owner and ungrounded refusal in granting license thereto; 2) restrictions in technical policy of the licensee; 3) restrictions in use of licensed technology by the licensee; 4) restrictions in commercial activity of the licensee; 5) making more difficult terms of payment for the license by its owner. | M&A | | Definition | Art. 13
Amalgamation and association of economic subjects; liquidation (except for cases of liquidation of enterprises according to judgement of court) and division of the enterprises, the total value of assets of which exceeds 50-threshold fold minimal amount of salary, and also municipal enterprises (if it will be resulted in establishment of economic subjects, the share of which exceeds 35% at respective commercial market). | | Merger of undertakings | Art. 10.3; Art. 13 | | Acquiring controlling interests | Art. 13.1
“• when purchasing more than 20% of shares constituting partnership capital of one economic subject and giving the voting right to other economic subject (association of economic subjects).
• if in the case of transfer of main assets of the production or non-material assets of one economic subject to the ownership or use of another economic subject (association of economic subjects), the balance value of the property, being the subject of transaction, exceeds 10 % of main assets of the production and non-material assets of economic subject, alienating this property;
• when the other economic subject (association of economic subjects) purchases the rights of one economic subject, specifying terms of business activity or giving the possibility to carry out the functions of his high management body by.” | | Joint ventures | Art. 10.4; Art. 13.1 | | Notification requirements | Art. 13.3
Establishment, reorganisation and liquidation of economic subjects without the approval of the executive power body may be invalidated by the courts.
| | Thresholds |
Art. 13.1
Resulting economic subject share exceeding 35% of the relevant market or total value of assets exceeding 75-ths-fold minimal amount of salary; | | De minimis | | | Test | | | SLC | | | Dominance | | | Efficiency Exception/Factor | | | National champion-export | | | Exceptions | | | Acquiring share for reselling | | | Failing firm defense | | | Other | | | Unfair Trade Practices | Law on Unfair Competition No. 62. Law No. 1049 dated June 2, 1995
The Law prohibits 1) copying of economic activity of competitor; 2) discrediting of economic activity of competitor; 3) interference with economic activity of competitor; 4) unfair enterpreunership 5) unscrupulous business behavior; 6) delusion of consumers. | State Aid | Art. 5
Art. 5 deals with some illegal actions done by executive power bodies, some can be qualified as state aids. | Other | |
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INSTITUTIONAL
| | Authority or agency | Art. 3
Department on Antimonopoly Policy of the Ministry of Economic Development (DAP/MED) and State Committee on Antimonopoly Policy and Support for Entrepreneurship. The Law states as well that the state policy on prevention, restriction and suppression of antimonopoly activity is carried by executive power bodies defined as executive power and administrative bodies of Azerbaijan Republic, its cities, regions and constituent administrative-territorial units. All unions, associations, concerns, consortiums and other unions of enterprises whenever they exercise administrative functions are also regarded as management bodies. | | Separate body | | | Part of Ministry | | | Part of the Congress or Parliament | | | Quasi-judicial authority | | | Independence | | | Number of Members | | | Appointment/Tenure | | | Appointment by President | | | Appointment by Prime Minister | | | Appointment + confirmation by Congress | | | Elections by Assembly | | | Cooptation | | | Ex Officio | | | Other | | | Membership requirements | | | Conflict of interest | | | Length of mandate | | | 5 years | | | Other | | | Compensation | | | Removal of commissioners | | | End of the term | | | Removal | | | Suspended as a civil servant by a court | | | Condemned for criminal offences | | | Resignation | | | Death or serious illness | | | Bankruptcy | | | Other | | | Voting system | | | Competences | | With relation to other regulatory agency | | | Part of international network | Partnership and Cooperation Agreement between the European Communities and their Member States, of the one part, and the Republic of Azerbaijan, of the other part (Council and Commission Decision
of 31 May 1999-99/614/EC, ECSC, Euratom)
Treaty on the Implementation of a Coordinated Competition Policy, signed on 24 December 1993 in Ashkhabad between Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Republic of Moldova, the Russian Federation, Tajikistan, Turkmenistan, Uzbekistan and Ukraine. | | Quarantine after completion of term | | | Number of staff | The Department on Antimonopoly Policy had in 2003 staff comprising of 21 persons. | | Total number | | | Civil servant | | | Lawyers | | | Contractors | | | Advisers | | | Economists | | | Admin. staff | | | Budget | | | Independent | | | Approved by the Assembly | | | Other | | | Separation investigation and adjudication | | | Opening case | | | Based upon complaints | | | Ex Officio | | | Authorization needed | | | Investigatory powers-subpoena | | | Enter in premises | | | Enter in private home/cars | | | Seize documents as legal evidences | | | Compel witnesses to testify | | | Compel the production of documents | Art. 16 | | Other | | | Timeframe | | | Hearing | Art. 13
In Merger analysis, "the respective executive power body should provide information in written form to the applicant on decision taken no later than 15 days after receipt of the required documents". | | Public | | | Closed door | | | Criteria used to solve the case | | | Based on law | | | Based on economics | | | Right of the parties | | | To be notified | | | Right to access to documents by the parties | | | Right to be heard | | | Opportunity to participate in the process of determining the conditions and obligations | | | Other | | | Interim measures Provisional Powers | | | Suspend the merger | | | Other | | | Leniency program | | | Decisions published | | | No | | | Opening investigation | | | Closing investigation | | | Requests for exemption | | | Type of remedies | Art. 15
In case of monopolistic activities by dominant players, forced desegregation is possible. | | Structural | | | Behavioral | | | Type of penalties | | | Administrative | Art. 3; Art. 14; Art. 17
Consequences of the violation of the Law are:
• repayment of the profit obtaining as a result of violation of the Law, to the state budget
in an order envisaged by the legislation;
• restore original situation, change or annul the agreement and undertake other actions;
• reimburse losses;
• pay penalties. | | Criminal | | | Other remedies | Art. 18; Law on Natural Monopolies No. 590-IG, dated December 15, 1998, Art. 6
The companies and their managers and officials are subject to up to 50-fold minimal amount salary for each day of delay or for the non provision of information and documents. In case of natural monopolies, the authorities may decide to control the prices (tariffs) for commodities; the identification of customers to whom the services must be provided and (or) in cases when subjects of natural monopoly are not able to satisfy in full customers’ demand in commodity, identification of required minimum of said commodity; bringing the production volume of commodity in correspondence with
requirements of this Law. | | Consent orders or undertakings | | | Damages | | | Publish annual reports | | | Enforcement of the decision | Art. 17
The losses are recovered by the law courts or arbitration courts | | Right of appeal | | | No | | | Based on law | | Based on economic facts | | | Nature of the appellate body | | | Same authority of the first instance | | | Part of the judicial system | | | Special appellate body | | | Competition Advocacy | | Independent role | | | Invited | | - by the public | | - by the government | | back to top
Updated as of: April 30, 2007 |
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