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LAWYERS HELP COMPANY OF WEST KAZAKHSTAN TO DISPUTE KZT 69 MILLION IN FINES

21 January 2019 - West Kazakhstan Region
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Representatives of BKKS LPG LLP asked the West Kazakhstan Region Chamber of Entrepreneurs to provide legal assistance and legal support in litigious case with the anti-monopoly authority.

The experts from the Law Department of the Chamber carefully studied the submitted documents; they revealed that the Department of the WKR Committee on Regulation of Natural Monopolies, Protection of Competition and Consumer Rights (the anti-monopoly authority) violated the Competition law.

This is the case that the anti-monopoly authority charged BKKS LPG LLP for applying different prices for the wholesale sale of liquefied petroleum gas. In October 2017, the average selling price of gas was 91,665 tenge per tonne, however, some consumers acquired it for 90,000 tenge per tonne, and others bought the gas in the range of 98,000 to 105,000 tenge per tonne. In November 2017, when the average selling price of the gas was 103,561 tenge per tonne the Company sold the gas for 98,000 tenge and 105,000 tenge per tonne. A similar pattern was observed in December.

It should be noted that BKKS LPG LLP is a dominant within the boundaries of the West Kazakhstan region.

For violation of the provisions of the Entrepreneurial Code of the Republic of Kazakhstan, the company can be imposed sanction under the Article 159 of the Code of Administrative Offenses of Kazakhstan. The amount of the fine would make three percent of the income received as a result of the monopolistic activities. In addition, it would also entail confiscation of monopoly income for the whole year. Thus, the income amounted to 67,881,098 tenge and, accordingly, the amount of the administrative fine - 2,036,432 tenge.

However, according to the documents and calculations submitted by BKKS LPG LLP, the company set the different prices for consumers at different periods due to the increase in the purchase price of the gas supplier.

At the same time, the clause 2 of Article 174 of the Entrepreneurial Code of the Republic of Kazakhstan stipulates that: “any inaction of the dominant company that led to restricted access to the goods infringes upon the rights of consumers”.

Moreover, the Company’s actions were qualified under Part 3 of Article 159 of the Code of Administrative Offenses of the Republic of Kazakhstan, as it prescribes the administrative liability for abuse of its dominant position and setting monopolistically high (low) or monopsonically low prices (the price that was established by a buying entity (buying entities) in a way that it allows the entity to obtain additional income due to cost cut, and the price below the sum of necessary expenses and manufacturer’s profit).

However, the lawyers did not find out such acts on the part of BKKS LPG LLP.

As a result, the court agreed with the above arguments of the lawyers of the WKR Chamber of Entrepreneurs and issued a decision to terminate the proceedings on the administrative offense against the Company in the absence of an administrative offense, envisaged in the part 3 of Article 159 of the Administrative Code of the Republic of Kazakhstan.

The lawyers of the Chamber of Entrepreneurs helped the entrepreneur to attach an addendum to the prior application and also organized legal support in court.

“We protect the property rights of an entrepreneur in the amount of 69,917,530 tenge,” the Head of the WKR Sector of the Business Ombudsman Administration Nurzhan Maxotov said.

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