Sectors

Fuel and energy markets are subject to ongoing monitoring by the Antitrust Agency. As part of the overall competition assessment, a large amount of information, often irrelevant to the tasks of the antimonopoly authority, is requested from entities.

The main antitrust violations in the fuel and energy markets that are the basis of investigations are: anti-competitive concerted actions and abuse of market dominance. These are liable in the form of pecuniary penalties and confiscation of infringer’s income.

The retail market for oil products has temporarily set high prices, after the cancellation of which market entities will be at risk - if all market entities increase prices at once, such actions may be recognised as anti-competitive concerted actions.

The rules for gas sales through electronic trading platforms have been amended and a strict corridor for price deviations has been established. However, even strict compliance with the rules does not exempt from liability if the bidding price has been overpriced or the bidding has been discredited by the bidders.

The coal market is distinguished by an unlimited number of levels (unlike other fuel and energy markets, where supply chains are legally regulated). Most wholesale market deals are done through commodity exchanges or bilateral contracts.

The Antitrust Agency divides the coal market into energy and utility markets.

In 2021, as part of a new function of developing exchange trading and providing access to coal for small companies, Recommendations (sectional rules) for the sale of utility coal through commodity exchanges were approved, which regulated the volume of sales, lot size, buyers and price corridor. Furthermore, the volume of coal sales under the sectional rules is planned to being increased.

At the same time, it should be noted that the wholesale market for thermal coal can be classified as cross-border market in accordance with the Eurasian Economic Union law on competition.

Electric power market - regulated - prices are set for wholesale sales by energy producers for electricity transmission and for retail sales by individual (large) energy suppliers within the framework of state regulation of prices.

Most wholesale market transactions take place on contractual basis. The level of centralised electricity trading is not high, so the Antimonopoly Authority has aimed to develop this type of trading to at least 30% of the wholesale electricity market supply. Problematic issues that may arise under this initiative of the Antimonopoly Authority are the possibility of antitrust law violations, monopolistically high prices, bid rigging, etc.

Recent amendments to the Entrepreneurial Code of the Republic of Kazakhstan include a new type of abuse of market dominance - failure to provide equal access to essential facilities. There is a risk of recognition of the wholesale elctricity market as the essential facilities and, accordingly, introduction of additional procedures regulation for selection of organizations for electricity transmission of their consumers and priority of electricity sales.

The Antimonopoly Authority has set itself the task of developing competition in the rail transport market and developing a new model for the rail transport market that considers the creation of a competitive market for private carriers.

Therefore, the Antimonopoly Authority will work towards "opening" the market to private companies. But the question remains whether this will be done through the adoption of access rules (by-laws) or through investigations of antitrust violations.

As part of the recent amendments to the Entrepreneurial Code of the Republic of Kazakhstan in order to develop competition, a new legal institution, essential facility, has been included, which allows access to the infrastructure or goods of a market entity that holds a dominant or monopoly position.
The passenger air transport market is highly concentrated and represented by a small number of airlines. New airlines are usually subsidiaries of existing airlines.

As in almost any commodity market, the entry barrier is high capital expenditures (acquisition of tangible assets, etc.).

The statistics of antitrust investigations show that they have been initiated for setting and maintaining monopolistically high prices for air tickets.

The passenger air transport market on international routes with the rules of competition law of the EAEU is also a cross-border market.

There are approximately 22 airports in the country and the Antimonopoly Authority considers each airport to be dominant within its administrative-territorial unit or airport area. Therefore, each airport bears the risk of abusing its market dominance in airport services (outside the areas of natural monopolies).

The investigations in this commodity market show that there have mainly been investigations into monopolistically high prices for jet fuel and jet fuel storage.

In general, the Antimonopoly Authority sees the development of competition on the jet-fuel market services at the airport in creating access conditions for alternative suppliers of jet fuel at the airport.

Staple food market is an object of close attention of the Government of the Republic of Kazakhstan. Price growth in this market is a permanent process.

The Antimonopoly Authority continuously monitors prices and analyzes the market for potential law violations of the law.

The aim of most investigations in this market is price reduction (regulation). The retail market is quite competitive. The statistics of investigations of the Antimonopoly Authority indicates anti-competitive concerted price-fixing as the main type of violation. On the wholesale market, large wholesalers or manufacturers have been investigated for monopolistically high prices.

Brief statistics on the work of the Antimonopoly Authority in the staple food market for the year 2021:
- 114 notices issued against manufacturers and wholesalers
- 16 initiated investigations
- 20 prescriptions issued to eliminate violations of the competition / antitrust legislation, 19 of them against retail chains
- 11 warnings issued for a public statement on potential price increases by manufacturers of bread, eggs, flour, noodles and chicken meat.

The housing construction market is analyzed annually by the Agency for Protection and Development of Competition of the Republic of Kazakhstan and, in general, the situation on the housing market is also under the attention of the Antimonopoly Authority. The main objective is price control.

The Authority's analysis of the market often reveals indications of violations of antitrust laws. In 2021, the analysis resulted in notices to construction companies for anti-competitive concerted actions.

As part of the analysis, a large amount of information, often irrelevant to the Agency’s tasks, is requested from entities.

The building materials market is repeatedly analyzed by the Antimonopoly Authority. Construction materials account for 49% of the cost per square meter of housing.

In 2021, the Agency took legal action against manufacturers of cement, rebar, wholesalers of bricks, rubble and pipes. In most cases, the grounds were anti-competitive concerted actions and abuse of market dominance in terms of setting monopolistically high prices and applying different prices to equivalent agreements without objectively justified reasons. Investigations were initiated into entities that failed to comply with the notice.

Road construction is usually financed from the state budget through a procurement procedure, so there is a risk of antitrust law violations when participating in a procurement by both the customer and the bidders. The Antimonopoly Authority has investigated cartels in relation to misrepresentation of bidding results.

The pharmaceutical market in Kazakhstan is well developed. The level of market concentration in the retail market is assessed as low to medium.

One of the problematic issues of the pharmaceutical market is the involvement of distributors (wholesalers) of suppliers in procurement under the guaranteed volume of free medical care.

A number of high-profile cartel cases on pharmaceuticals sales market in the framework of procurement, where distributors were charged with anti-competitive agreements to share the product market.

Also, during the Covid-19 pandemic, notices by the Antimonopoly Authority were issued to wholesale suppliers and large retail chains on indications of anti-competitive concerted actions in connection with unjustified price increases for pharmaceuticals.

In the medical devices market, a problematic issue is the exclusive rights of distributors to sell medical devices in one country, for example the case of sound processors manufactured by Cochlear Limited (cross-border market division of the commodity market).

There are 3 mobile operators in the cellular communication services market, two of which have significant market shares.

According to case reports in this commodity market, the Antimonopoly Authority has investigated abuse of market dominance as well as unfair competition.

The internet services market is represented by a small number of entities with market dominance in both the fixed broadband internet access market and the mobile internet market.

As a result, there are high risks of abuse of dominance for market participants.

It is difficult to enter cellular communication market due to complex legislative regulation of obtaining frequencies and licenses.

Recent amendments to the Entrepreneurial Code of the Republic of Kazakhstan include a new type of abuse of market dominance - failure to provide equal access to essential facilities. There is a risk of recognition of the infrastructure of the cellular communication services market as the essential facility.