2.1 Overview

The Antimonopoly Law prohibits unfair competition which includes disclosure of information that might impair the business reputation of another business entity or mislead consumers regarding the quality of goods or the advertising of goods which do not meet the quality requirements.

Also it is prohibited for business entity to create a dominant position in the market which includes the prohibition of withdrawing goods from circulation for the purpose of the creation and maintenance of a deficit in the market or price increase, imposing conditions that are unprofitable for counteragents, the creation of barriers to entry or exit from the market for other business entities, or the infringement of pricing policy established by law.

The antimonopoly regulations prohibit any agreements (or coordinated actions) between competing business entities (potential competitors) taking in aggregate the dominant position if such agreements (coordinated actions) could cause a substantial restriction of competition. Also, the acts of executive authorities restricting the rights of business entities when selling goods in the market, except for those acts that are allowed by the laws of Kyrgyz Republic, might be invalidated under these regulations.

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2.2. Dominance

The Antimonopoly Law differentiates between such concepts as "monopolistic activity" and "dominant position".

Monopolistic activities are those of business entities or executive authorities undertaken to achieve the restriction or elimination of competition, or to misuse a dominant position in the market or the economic dependence of counteragents, which result in damage to public interests, interests of other business entities and the interests of consumers.

A dominant position is the exceptional position of a business entity in the market of certain goods which enables it to impact upon competition or to complicate access to the market to other business entities. A business entity has a dominant position if its share of the corresponding market of certain goods exceeds 35% or another percentage annually set by the Antimonopoly Agency.

To prevent certain business entities attaining a dominant position the Antimonopoly Agency exercises preliminary state control of the creation, merger and joining of unions, associations, concerns, interindustrial, regional and other consolidations, enterprises, and other.

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2.3. Monopolistic agreements and concerted actions

The Antimonopoly Law prohibits any agreements (or coordinated actions) of competing business entities (potential competitors) taking in aggregate the dominant position if such agreements (coordinated actions) are aimed at:

1. the establishment (maintenance) of prices (tariffs), discounts, allowances (surcharges), margins;
2. increasing, decreasing or maintaining the prices at auctions;
3. market division by territory, sales and purchases volume, assortment of the goods or by sellers or buyers (customers);
4. restriction of access to market or exclusion from it of other business entities as sellers or buyers (customers) of certain goods;
5. refusal of contract with certain sellers or buyers (customers).

In exceptional cases, the above-stated agreements (coordinated actions) of business entities can be recognized by the Antimonopoly Agency as lawful if the business entities prove that their agreements (coordinated actions) promote or will promote the market saturation of goods, lead to an improvement of consumer welfare and increase their competitiveness, in particular in foreign markets.

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2.4. Unfair competition

Unfair competition is any action of business entities aimed at gaining an advantage in entrepreneurial activities which contradicts current legislation, customs of trade, the requirements of respectability, rationality and justice, and can cause or has caused losses to other competing business entities or can impair or has impaired their business reputation.

The Antimonopoly Law contains the list of actions which can be regarded as unfair competition:

1. spreading false, inaccurate information (misrepresentation of information), with the capacity to damage the business reputation of another business entity;
2. misleading consumers regarding the character, method and place of production, properties, usability or quality of goods;
3. unauthorized use of a trade mark, company name or goods marking, unauthorized copying of the form, packaging, or attribute of the goods of other business entities;
4. advertizing of goods which do not meet the quality requirements;
5. unauthorized use or disclosure of confidential scientific and technical, production or trading information;
6. actions which can cause doubts concerning the enterprise, goods or industrial or trading activity of a competitor.

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2.5. Antitrust investigation

An antimonopoly review is instigated based on the claims of individuals and legal entities, state government or local self-government bodies or on the initiative of the Antimonopoly Agency (e.g. as result of inspection). In cases of an infringement of legislation on unfair competition, the Director of Antimonopoly Agency makes the decision whether or not to order an investigation by the Antimonopoly Agency's Board in which state government, local self-government bodies, and public associations are represented.

Based on the findings of the investigation on antimonopoly legislation infringement, the Board can make the decision in the form of a resolution (prescription) which can lead to:

1. elimination of violations of antimonopoly legislation, in the case of unfair competition;
2. imposition of a penalty, including the recovery of illegally received income;
3. referral of the case to state bodies, which have the competence to conduct a criminal investigation;
4. referral of the case to judicial or law enforcement bodies;
5. termination of the case.

Persons, in whose respect the decision was made, must, within the time specified in the decision, report to the Antimonopoly Agency about the actions taken. In the case of a disagreement with the decision, the parties may appeal it to the court.

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2.6. Implications for infringers

Civil liability

Pursuant to Kyrgyz laws, transactions made in violation of antitrust laws might be declared invalid at the claim of the person concerned. In addition, Kyrgyz antimonopoly laws provide for the common type of civil liability in the form of compensation of damages caused by violation of antimonopoly laws. A claim for compensation of damages may be filed with the court by any individual or legal entity whose rights were abused by the violation.

Administrative liability

As the body with administrative liability for breach of antimonopoly laws, the Antimonopoly Agency may request the downsizing of a business entity and confiscate the profit received by the entity which committed violations. Moreover, the Antimonopoly Agency may apply, among others, the following administrative fines:

• for officers of business entities which used their dominant position, or executed an agreement limiting competition – from 2,000 KGS to 3,000 KGS;
• for withdrawal of goods from circulation in order to raise the prices, or artificial creation of barriers to entry for other business entities, or execution of agreements on raising prices, or the division of market into spheres of influence – from 1,000 KGS to 2,000 KGS;
• for officers of business entities which committed unfair competition, i.e. the distribution of false, inaccurate information capable of impairing the reputation of other business entities, misinterpretation about the character, way and place of production of goods, features, usability and quality of goods, unauthorized use of trademarks, company names, disclosure of confidential information, application of dumping prices – from 2,000 KGS to 3,000 KGS;
• for failure by a dominantly positioned business entity to timely declare prices, as well as a breach of the antimonopoly review procedure – from 1,000 to 2,000 KGS;
• for officers of business entities, for avoiding the fulfillment or failing to timely fulfill the prescriptions of the Antimonopoly Agency responsible for consumer rights protection – up to 1,000 KGS.

The fine imposed by the Antimonopoly Agency shall be paid within 30 days of issuing the relevant prescription to the legal entity.

Criminal liability

Kyrgyz Criminal Code provides for the liability of individuals for the establishment and maintenance of monopolistically high prices or monopolistically low prices as well as the limitation of competition through conspiracy or agreed actions aimed at the division of the market, exclusion of other players from the market, establishment and maintenance of unified prices, if such actions are committed by a group of persons or group of persons upon preliminary consent. Such actions are punishable by fine, or imprisonment, or imprisonment with confiscation of property depending on the qualifying elements of the criminal offence.

The Criminal Code imposes this liability irrespective of the amount of damages caused by such crime.

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