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Interview by the EEC Minister for Competition and Antitrust Regulation Nurlan Aldabergenov to Kapital.kz web-portal: “Now it’s important to harmonize the laws of the CU member-states”

Interview by the EEC Minister for Competition and Antitrust Regulation Nurlan Aldabergenov to Kapital.kz web-portal: “Now it’s important to harmonize the laws of the CU member-states”

10/30/2012
The law making activity in the Common Economic Space member-states is carried out in line with the schedule. According to Nurlan Aldabergenov, the Member of the Board (Minister) for Competition and Antitrust Regulation of the Eurasian Economic Commission, harmonizing legislation and increasing competitiveness of domestic manufacturers and service providers will be the top-priority goals.
 
– Mr. Aldabergenov, the Eurasian Economic Commission has been functioning for already one year. Do you have any results to sum up?
 
– First, I would like to remind that the Eurasian Economic Commission was established on January 1, this year. It is a supranational body that is responsible mainly for economic issues. Currently, we have no borders, and since they are opened, there is an active trade. Its volume has increased considerably over the last year. It’s a great achievement, and it’s only the beginning of the huge integration that we initially expected in the field of cooperation. Any opening of borders is a great achievement in addressing the issues of trade in any state. This enables businessmen to move freely from one CES member-state to another. However, the member-states face the following challenges: what their legislation will look like and how their legal framework will function within their cooperation. We believe that harmonization of the legal framework of Russia, Belarus and Kazakhstan should be the first thing to do.

– What do you mean referring to harmonization of the three states’ legislation in the area of competition?

– We should adapt our laws. In case a businessman from Belarus, who knows how to do business in the domestic market and what measures are available to prevent violations, decides to start business in Russia, he will face totally different rules. To make the life of manufacturers easier and ensure that trade is carried out mostly within the legal framework, harmonization of legislations in the area of competition policy is the first task we should address. Kazakhstan, Belarus and Russia have an agreement dealing with the issues of harmonization. We are going to harmonize our legislation in the field of competition by next July. The three states have a law on competition, but work on it is also needed. The Republic of Kazakhstan will be the first country to adopt the law on competition, amended in line with all the harmonization requirements set by the Common Economic Space and the Eurasian Economic Commission. I think that the amended law on competition will be tabled in the next few months.

Belarus goes second. There, the law on competition, amended in line with the harmonization requirements, is being considered by the government. In the Russian Federation, this law is at the federal authorities, being reviewed by the executive bodies. This work is the first stage of harmonization. By next July, all the three states should fully harmonize their anti-trust legislation and fix the implementation date. Removing barriers will be the next goal. It is for achieving this goal that the Commission was created. Barriers can exist at the legislative level, at the level of a governmental order, at the level of governmental agencies or central executive authorities. We should tackle this issue also by next July. Next October, since we harmonize our legislation, the heads of the three states will adopt a document to formalize completion of work of this kind.

– In what way do you tackle the issue of common competition policy in the CU territory? What does the Commission do?

– The Eurasian Economic Commission is working in several areas. These include the issues of economy, integration, customs policy, technical regulation, transport, energy, and antitrust legislation. All these areas are critical. Competition policy is also among the most important areas. This includes antitrust regulation, i.e. preventive measures, and rules of conduct in the market. Issues related to price regulation and tariff policy, as well as issues of government procurements are also addressed. Since our borders are open, every businessman, and every legal entity or individual are willing to participate in tenders held by this or that state.

– What are the differences in antitrust regulation between Kazakhstan, Russia and Belarus?

– The laws are rather close. There are no considerable differences in this respect. For example, both in Russia and Kazakhstan abuse of a dominant position is punished with a penalty of up to 10% of the total unjustified income. The law of Belarus provides for a penalty of up to 15%. The figures don't differ very much. Our goal is to approximate them. Barriers in the field of licensing are a different issue. Assume that currently both Kazakhstan and Belarus freely sell tobacco products in Belarus, but since this area is subject to licensing, one should first obtain a license. Here, administrative barriers may arise. Legal services are one more example. A Kazakh lawyer will not be able to work in Belarus, since a license is required. All these barriers should be discussed and equalized.

– There is an opinion that the documents adopted to create a common competition policy are based on the antitrust legislation of one of the Customs Union member-states.

– This question is often asked. It’s impossible to say that the legislation in one of the three states is better. Take, for example, the Republic of Belarus. Their antitrust legislation is very tough, with huge penalties, and they have almost introduced government regulation of prices. In this respect, they regulate everything. We understand that, on the one side, regulation should be made more liberal. On the other hand, however, tougher regulation reinforces and provides more order.

– What preventive measures will be applied to those who violate antitrust legislation?

– Penalty will be applied. These will amount up to 10% of total revenues. Currently it applies and remains in the relevant laws. However, less tough measures such as warning and notification should be introduced. These are preventive measures that, at least at a certain stage, make one more disciplined. An appropriate law is being discussed at the moment. If these measures are adopted, competition between the states will improve and reach a new level in terms of quality.

– Obviously, an extended market entailed greater competition. Is Kazakhstan able to resist the pressure of business from the other CES member-states?

– It’s a good question, and it is frequently discussed in the press. Now, we can come to a shop and will see a wide range of products. It’s good for consumers, of course provided that we disregard such economic phenomena as inflation, increased electricity rates or fuel prices. However, a very serious task has been set for the manufacturers in this respect. They already should become competitive. They should be able to struggle in such conditions; they should be innovative and should compete, developing new markets. The task for our businessmen and entrepreneurs should be not to defend, but attack, entering the markets of other states. So, in this way we will be able to become competitive.

– What do you think about the activity of our businessmen, their involvement?

– Dynamics is positive. I think the picture will become clear at the end of the year. So far, we have seen a positive expansion of the range of goods, but still it’s too early for any evaluations with respect to businessmen. They should adapt and reconfigure themselves. In this case, evaluations can be conducted. Now, the heads of our states created all necessary conditions, the markets are open, the legal framework is developed, and the existing barriers are being removed. Everything is done in favour of our businessmen.

Mariyam Bizhikeyeva​