Cases on applications of market entities to appeal actions, acts and notifications of the authorized body

When considering court cases challenging notifications about the presence of signs of violation of legislation in the field of competition protection in the actions of a market entity, only the presence of factual information indicating the presence of signs of violation of legislation is subject to consideration. The Order of the Minister of National Economy of the Republic of Kazakhstan dated November 30, 2015 No. 745 "On approval of the Rules for issuing notifications on the presence in the actions (inaction) of a market entity, state, local executive bodies, organizations endowed by the state with the functions of regulating the activities of market entities, signs of violation of the legislation of the Republic of Kazakhstan in the field of protection of competition and its form" established, that the notification is issued on the strict reporting form of the department and contains: 1) the name of the market entity, the state, local executive bodies, an organization endowed by the state with the functions of regulating the activities of market entities in respect of which a notification is being drawn up; 2) a description of the sign(s) of violation of the legislation of the Republic of Kazakhstan in the field of competition protection, as well as the norms of law that were violated by the market entity, state, local executive bodies, an organization endowed by the state with the functions of regulating the activities of market entities; 3) actions that must be performed by a market entity, state, local executive bodies, organizations endowed by the state with the functions of regulating the activities of market entities in order to eliminate the sign(s) of violation of the legislation of the Republic of Kazakhstan in the field of competition protection and (or) which must be refrained from.; 4) the deadline for the execution of the notification and the submission of information on the execution of the notification, which does not exceed ten working days from the date of its receipt by the market entity, state, local executive bodies, an organization endowed by the state with the functions of regulating the activities of market entities; 5) the signature of the person authorized to sign the notification; 6) the stamp of the department. According to paragraph 2 of Article 199 of the Criminal Code, the antimonopoly authority decides to conduct an investigation if the market entity has not stopped the actions (inaction) specified in the notification within ten working days.

Cases on applications of market entities to appeal actions, acts and notifications of the authorized body

Paragraph 3 of Article 199 of the PC establishes that if, within one calendar year from the date of notification, the antimonopoly authority finds in the actions (inaction) of the same market entity signs of the same violation of the legislation of the Republic of Kazakhstan in the field of competition protection, the antimonopoly authority decides to conduct an investigation without notification. The above indicates that the notification of the presence in the actions (inaction) of a market entity, state, local executive bodies, organizations endowed by the state with the functions of regulating the activities of market entities, signs of violation of the legislation of the Republic of Kazakhstan in the field of competition protection may also be the subject of judicial appeal. At the same time, since the notification is issued when only signs of an offense are found, and not its fact, only the fact of the presence of such signs according to the information available to the antimonopoly authority is subject to judicial review. The purpose of investigations of antimonopoly law violations themselves, including violations where the initial notification is not provided for (setting monopolistically high/low prices, anticompetitive horizontal agreements) may also be the subject of a court appeal. Thus, JSC "K" challenged in court the decisions and actions of the territorial authorized body. It was established that on August 3, 2016, the Department issued a notification on the presence of signs of abuse of a dominant or monopolistic position in the actions of a joint-stock company. On August 24, 2016, Department No. 105-OD issued an order to investigate violations of the antimonopoly legislation, which resulted in the unjustified refusal of JSC to conclude a contract for the provision of services for the organization of freight transportation by rail. By the decision of the Council of Ministers of the Mangystau region of October 10, 2016, which entered into force and remained unchanged by the decision of the appellate instance, notification No. 03/1248 of August 3, 2016 was declared illegal and cancelled. The court's decision of October 10, 2016 contains conclusions on the absence of violations of the legislation of the Republic of Kazakhstan in the field of competition protection in the actions considered by the antimonopoly authority.

On October 21, 2016, the Department drew up an act extending the investigation period for violations of antimonopoly legislation and issued an order extending the investigation period for JSC "K". By virtue of subparagraph 5) of Article 223 of the Criminal Code, the antimonopoly authority shall terminate the investigation of violations of the legislation of the Republic of Kazakhstan in the field of competition protection in the event of a judicial act that has entered into force, which contains conclusions on the presence or absence of violations of the legislation of the Republic of Kazakhstan in the field of competition protection in the actions (inaction) considered by the antimonopoly authority. According to paragraph 1 of Article 222 of the Criminal Code of the Republic of Kazakhstan, the antimonopoly authority has the right to suspend the investigation of violations of the legislation of the Republic of Kazakhstan in the field of competition protection in cases where the antimonopoly authority, the court, or the criminal prosecution authorities consider another case relevant to the investigation of violations of the legislation of the Republic of Kazakhstan in the field of competition protection. In accordance with the requirements of paragraph 5 of Article 65 of the Law of the Republic of Kazakhstan "On Legal Acts", the submission by interested persons of an application for cancellation, amendment, addition or suspension of a legal act of individual application to a higher state body or court suspends the validity of the legal act (with the exception of the legal act of the National Bank of the Republic of Kazakhstan on suspension and (or) withdrawal licenses to operate in the financial market, conservation of financial institutions, and its written regulations, as well as legal acts of the state audit and financial control bodies related to the identified facts of misuse and unjustified use of budgetary funds) before making an appropriate decision. Due to the filing of an application by JSC to the court to cancel the notification dated August 3, 2016, the Department should have suspended the notification until the relevant decision was made. However, in violation of these norms, the Department drew up an act and issued an order to extend the investigation period for violations of antimonopoly legislation, and an opinion was drawn up based on the results of the audit. The Department's order No. 121-NK dated October 21, 2016 on extending the investigation period for violations of the antimonopoly legislation of the Republic of Kazakhstan in respect of JSC "K" until December 7, 2016 is based on the Department's order No. 105-OD dated August 24, 2016 on conducting an investigation of violations of the antimonopoly legislation, which was subsequently declared illegal by the court and canceled. The court's decision declared illegal and cancelled the Department's order No. 121-NK dated October 21, 2016. The actions of the Department to continue investigating violations of the antimonopoly legislation have been recognized as illegal. Violations committed by the authorized body during the inspection in accordance with subparagraph 3) Paragraph 1 of Article 155 and Article 156 of the PC may be the subject of judicial challenge. Thus, LLP "A" has appealed in court against the actions of the Department for the Aktobe region on the appointment and suspension of inspections due to gross violations of the requirements of the current legislation governing inspections. It was established that by order of the Department dated July 31, 2015, the Partnership was included in the local section of the State Register of Subjects of Natural Monopolies for access road services.

Based on the instructions of the Aktobe Transport Prosecutor's Office, the Department, by Act No. 23 dated September 21, 2015, appointed an unscheduled inspection with a deadline from September 21 to October 16, 2015. By Act No. 23 of October 5, 2015, the audit was suspended in connection with the consideration of a civil case at the Aktobe City Council of Economic and Social Council on the application of LLP "A" to the Department challenging Order No. 131-OD dated July 31, 2015. The audit was resumed on March 13, 2016, and the Department notified the Partnership by letter dated March 14, 2016. On March 21, 2016, the Department issued an act on changing the composition of the audit participants, and on April 25, 2016, No. 23, the Department issued an additional act extending the audit by 30 working days. The final act on the results of the unscheduled audit of the Partnership was drawn up by the Department on May 24, 2016. Considering the actions of the Department to suspend, resume and extend the audit period to be unlawful, the Partnership filed this application with the court. By the decision of the Council of Ministers of the Aktobe region Court of September 19, 2016, the application was denied, since the Department did not violate the law, the rights and legitimate interests of the applicant when committing the contested actions. By the resolution of the judicial Board for Civil Cases of the Aktobe Regional Court dated December 23, 2016, the court's decision was changed. The court's decision regarding the refusal to satisfy the Partnership's application for recognition as illegal and cancellation of the act on suspension of the audit dated October 5, 2015 No. 23; the additional act on the appointment of an extended audit dated March 25, 2016 No. 23; the act on the results of an unscheduled audit of the Partnership dated May 24, 2016 was canceled with the adoption of a new decision on the satisfaction of the application in this part. The rest of the court's decision remains unchanged.

Cases on applications of market entities to appeal actions, acts and notifications of the authorized body

The Appeals Board concluded that the Department had violated the legislation governing the procedure for conducting inspections of business entities, and therefore declared the disputed inspection acts illegal and annulled them. By the decision of the Judicial Board for Civil Cases of the Supreme Court of the Republic of Kazakhstan dated August 1, 2017, the decision of the appellate board was annulled, while the decision of the court of first instance remained in force. The Cassation Board concluded that the court of first instance had correctly applied the norms of substantive law – article 20 of the Law of the Republic of Kazakhstan "On State Control and Supervision in the Republic of Kazakhstan", in force at the time of the appointment of the audit, and article 148 of the Criminal Code, in force at the end of the audit. In accordance with these standards, in cases where it is necessary to obtain information and documents from foreign countries that are essential in the framework of the audit, conducting special studies, tests, and examinations for periods exceeding those specified in this article, the period of verification is suspended until they are received or completed. The Department, suspending the inspection, was guided by this norm. In this case, the reason for the suspension of the audit was the consideration in court of a civil case filed by LLP "A" to the Department challenging Order No. 131-OD dated July 31, 2015 on the inclusion of the Partnership in the local section of the State Register of Natural Monopoly Entities for access road services. The resolution of this issue essentially affected the status of the Partnership as a subject of natural monopolies and, accordingly, required an audit. If the court satisfied the Partnership's application, there was no need to conduct an audit. The Department's order dated July 31, 2015 is a legal act of individual application. In accordance with paragraph 4 of Article 65 of the Law of the Republic of Kazakhstan "On Legal Acts", the submission by interested persons of an application for the cancellation, amendment, addition or suspension of a legal act of individual application to a higher state body or court suspends the validity of the legal act until the relevant decision is made. Thus, considering that the above-mentioned order of the Department was challenged by the Partnership in court, its effect was suspended until the entry into force of the judicial act issued as a result of consideration of the application. Under these circumstances, it was impractical to conduct an audit of the Partnership as a natural monopoly entity, which is why the Department made a reasoned decision to suspend the audit and applied the analogy of the law. Considering that the above-mentioned order of the Department was legally recognized, the audit was subsequently reasonably resumed and conducted within the time limits established by law. According to Article 224 of the Criminal Code, based on the results of an investigation into violations of the law, the antimonopoly authority prepares an opinion, the date of signing of which is considered the end of the investigation. The approval of the conclusion based on the results of the investigation of violations of legislation in the field of protection of competition is formalized by an order of the antimonopoly authority, which can be appealed by the object of the investigation in court in accordance with the procedure provided for by the CPC. An analysis of the stated norm indicates that the conclusion cannot be challenged in court, since without approval by an order of the authorized body, it cannot entail consequences for the subject of investigation related to the imposition of duties or restriction of rights. Thus, by the decision of the Council of Economic and Social Council of Almaty dated April 14, 2017, the proceedings on the application of IP "E." regarding the invalidation of the conclusion based on the results of the investigation were terminated. The applicant's claim to invalidate the conclusion based on the results of the investigation dated January 31, 2017 was declared not to be considered in civil proceedings, since it does not entail any legally significant consequences for the applicant, does not violate his rights and legitimate interests.

The PC rules regulate the procedure for conducting an investigation, the list of persons involved in the investigation of violations of legislation in the field of competition protection, their rights and obligations. Thus, Article 217 of the Criminal Code establishes that the persons participating in the investigation are: the applicant, the object of the investigation, interested parties, an official of the antimonopoly authority, a witness, an expert. According to article 218 of the Criminal Code, an investigation begins with the issuance by the antimonopoly authority of an order to conduct an investigation. The requirements for an investigation order and its content are set out in paragraph 3 of article 218 of the Criminal Code. In accordance with Article 222 of the Competition Code, the antimonopoly authority has the right to suspend the investigation of violations of the legislation of the Republic of Kazakhstan in the field of competition protection in the following cases:: 1) consideration by the antimonopoly authority, court, and criminal prosecution authorities of another case relevant to the investigation of violations of the legislation of the Republic of Kazakhstan in the field of competition protection; 2) conducting another investigation of violations of the legislation of the Republic of Kazakhstan in the field of competition protection in relation to the same object of investigation; 3) conducting an expert examination; 4) the need to analyze the state of competition in the commodity markets if, during the investigation of violations of the legislation of the Republic of Kazakhstan in the field of competition protection, it is established that despite exceeding the share of fifty The position of a market entity in the commodity market is not dominant. The investigation period for violations of the legislation of the Republic of Kazakhstan in the field of competition protection is interrupted upon suspension of the investigation and continues from the moment the investigation is resumed. According to Article 224 of the PC, based on the results of an investigation into violations of the legislation of the Republic of Kazakhstan in the field of competition protection, an official of the antimonopoly authority prepares an opinion, on the basis of which the antimonopoly authority makes one of the following decisions on: 1) termination of the investigation into violations of the legislation of the Republic of Kazakhstan in the field of competition protection on the grounds provided for in Article 223 of this Code; 2) instituting proceedings on an administrative offense and, in the cases established by subitems 1) and 2) of paragraph 1 of Article 226 of this Code, issuing an order; 3) issuing an order to eliminate violations of the legislation of the Republic of Kazakhstan in the field of competition protection; 4) transferring materials to law enforcement agencies for pre-trial investigation. The approval of the conclusion on the results of the investigation of violations of legislation in the field of protection of competition is issued by an order, a copy of which is handed over or sent by letter to the subject of the investigation no later than three working days from the date of its signing, accompanied by the conclusion on the results of the investigation. At the same time, according to subparagraph 2) of paragraph 2 of Article 216 of the Criminal Code, the basis for initiating an investigation is the receipt by the antimonopoly authority of information on violations of the legislation of the Republic of Kazakhstan in the field of competition protection, which is an appeal from an individual and (or) a legal entity indicating signs of violation of the legislation of the Republic of Kazakhstan in the field of competition protection.

Cases on applications of market entities to appeal actions, acts and notifications of the authorized body

Thus, the actions of the antimonopoly authority to conduct an investigation in accordance with paragraph 1 of Article 293 of the CPC may be subject to judicial challenge, since the appointment of an investigation into violations of competition law without proven signs of such violations not only unreasonably imposes an obligation on the market entity to provide information, but also creates obstacles to normal functioning, violates its legitimate interests. Thus, the appellate judicial board of the Kostanay Regional Court, when considering the case at the request of LLP "Zh-2006", concluded that the appointment of an investigation by the antimonopoly authority was unlawful. The Judicial Board of the Supreme Court recognized this conclusion as justified. So, on March 13, 2017, the Department issued an order "On conducting an investigation of violations of the legislation of the Republic of Kazakhstan in the field of competition protection in relation to LLP "Zh-2006", LLP "B-2008", LLP "E". In relation to LLP "Zh-2006" - on the grounds of violation provided for in subparagraph 1) of Article 174 of the PC. The investigation dates are set from March 13, 2017 to June 10, 2017. By order of the Department dated June 8, 2017, the investigation period was extended until August 6, 2017. In rejecting the Partnership's application, the court of first instance concluded that the investigation was based on materials received from government agencies indicating a violation of the legislation of the Republic of Kazakhstan in the field of competition protection, and the order to appoint an investigation of the Department was registered with the legal statistics authorities, so its legality was verified during its registration. By overturning the decision of the court of first instance and satisfying the Partnership's application, the appeals board concluded that before conducting the investigation, the Department had not analyzed the market for the production and sale of chicken eggs, that is, the procedure for appointing an investigation had been grossly violated, and the Department had not received complaints from citizens and government agencies about violations of competition law. These conclusions of the court of appeal were found to be justified. According to paragraph 1 of Article 174 of the PC, actions (inaction) of market entities occupying a dominant or monopolistic position are prohibited, which have led or lead to restriction of access to the relevant commodity market, prevention, restriction and elimination of competition and (or) infringe on the legitimate rights of a market entity or an indefinite circle of consumers, including such actions as the establishment of maintaining monopolistically high (low) or monopsonally low prices. By virtue of the requirements of article 216 of the Criminal Code, 4 grounds are provided for the appointment of investigations by the defendant, and this list is exhaustive. Thus, according to subparagraph 1) of paragraph 2 of Article 216 of the Criminal Code, the basis for initiating an investigation is the receipt by the antimonopoly authority of information on violations of the legislation of the Republic of Kazakhstan in the field of competition protection, which are materials received from government agencies indicating violations of the legislation of the Republic of Kazakhstan in the field of competition protection. It was established, according to the initial arguments of the defendant and the response of the prosecutor's office based on the results of the audit, that the reason for the appointment of the investigation was letters from government agencies received in October, November 2016 from the territorial departments of East Kazakhstan, Akmola, Kyzylorda, Aktobe, Mangystau and Zhambyl regions, as well as from the territorial Department of Astana, in which It was reported about the increase in selling prices and restrictions on the sale of chicken eggs from Kostanay poultry farms and wholesale suppliers. However, in the court of appeal, according to the written responses of the same Departments, the defendant's arguments were not confirmed.

The letter from the Department for the Mangystau region states that there are facts of restrictions on sales by LLP "Zh-2006", and not an increase in prices. At the same time, at the request of the court, the Department for the Mangystau region denied information about any complaints received against LLP "Zh-2006". According to subparagraph 2) of paragraph 2 of Article 216 of the Criminal Code, the basis for initiating an investigation is the receipt by the antimonopoly authority of information on violations of the legislation of the Republic of Kazakhstan in the field of competition protection, which is the appeal of an individual and (or) a legal entity indicating signs of violation of the legislation of the Republic of Kazakhstan in the field of competition protection. It was established that the defendant submitted screenshots of IP A.'s e-mail to the court, in which he contacted Zh-2006 LLP with the issue of selling eggs to him. This screenshot is addressed to "Zh-2006" LLP, not to the defendant. The Court of Appeal correctly considered that the screenshot of IP A. was not his appeal to the defendant, as stipulated by the requirements of subparagraph 4) of Article 1 of the Law of the Republic of Kazakhstan "On the Procedure for Considering Appeals from Individuals and Legal Entities," according to which an appeal is an individual or collective written, oral or in the form of an electronic document, video conference call, video message, suggestion, statement, complaint, request or response. The registration of the screenshot of IP A. as an appeal to the defendant has not been carried out in accordance with the procedure established by law, any complaints in accordance with the Law of the Republic of Kazakhstan "On the procedure for considering appeals from individuals and legal entities" in relation to LLP "Zh-2006", including from IP A., have not been officially registered. In accordance with subparagraph 3) Paragraph 2 of Article 16 of the Criminal Code is based on the receipt by the antimonopoly authority of information on violations of the legislation of the Republic of Kazakhstan in the field of competition protection, which are the detection by the antimonopoly authority of signs of violations of the legislation of the Republic of Kazakhstan in the field of competition protection in the conduct of its activities in the actions of a market entity, state bodies, and local executive bodies. However, according to a memo from an employee of the Department, B. Uspanov, the last analysis of the egg market in Kostanay region was conducted in 2014. In 2016, after the price increase, the analysis provided for by law was not carried out and an internal investigation was ordered without observing the stages of the proceedings. In fact, the respondent did not determine the share of LLP "Zh-2006" in the commodity market in 2016. By virtue of paragraph 1 of Article 156 of the PC, an inspection carried out in gross violation of the requirements for the organization and conduct of inspections established by this Code is invalid. The list of gross violations leading to the invalidity of the audit is provided for in paragraph 2 of Article 56 of the PC. In particular, the results of an inspection conducted without grounds for its appointment are subject to unconditional recognition as illegal. Thus, the court of appeal correctly concluded that the Partnership's claims were justified, since the Department did not comply with the requirements for the procedure for appointing an audit, since it did not have a basis for conducting an investigation. Actions to refuse to conduct an investigation, in the opinion of some courts, may be the subject of judicial proceedings. Thus, LLP "C" applied to the court to the Department of Kostanay region to appeal the refusal to conduct an investigation against LLP "F" for violation of legislation in the field of protection of competition in the form of trademark misuse, expressed in letters of the Department dated July 28, 2016 No. 07-20/2643 and the Committee dated July 3. October 2016, No. 34-10-20/3T-A-249. In addition, the plaintiff requested that the defendant be forced to conduct an investigation in accordance with subparagraph 1) paragraph 2 of Article 177 and article 178 of the PC. By the decision of the Council of Economic and Social Council of Kostanay region dated January 17, 2017, the application of LLP "C" was refused. By the decision of the judicial board for Civil Cases of the Kostanay Regional Court, the above decision was changed. Regarding the refusal to satisfy the claim for the recognition of unlawful actions of the defendant to refuse to conduct an investigation against LLP "F", it was canceled and the plaintiff's claims in this part were satisfied.

The Department's refusal to conduct an investigation against LLP "F" was declared illegal. By changing the decision of the court of first instance, the board pointed out that the court of first instance assessed the defendant's actions based on the requirements of the Law "On the Procedure for Considering Appeals from Individuals and Legal Entities." In the opinion of the board, the court of first instance should have been guided by the requirements of the Entrepreneurial Code governing public relations arising in connection with the interaction of business entities and the state, including state regulation and support of entrepreneurship. In accordance with article 177 of the Criminal Code, unfair competition is defined as any actions in competition aimed at achieving or providing undue advantages. Unfair competition is prohibited. One of the cases of unfair competition is the misuse of means of individualization of goods, works, services, as well as objects of copyright. In accordance with Article 178 of the Criminal Code, the unlawful use of means of individualization of goods, works, services, as well as objects of copyright is the illegal use of someone else's trademark, service mark, trade name, appellation of origin or similar designations for similar goods or the use of literary, artistic names without the permission of the copyright holder or an authorized person. works, periodicals, or the use of packaging in a manner that may mislead the consumer about the nature of, the method and place of production, consumer properties, quality and quantity of the product or in relation to its manufacturers.

Based on this rule, the board concluded that the illegal use of someone else's trademark is an independent manifestation of unfair competition, regardless of whether the use of someone else's trademark is misleading in relation to the nature, method and place of production, consumer properties, quality and quantity of goods or in relation to its manufacturers. The conclusions of the appellate judicial board of the Kostanay Regional Court in this case seem to be correct, since Chapter 20 of the Criminal Code defines the grounds and procedure for detecting violations of legislation in the field of competition protection. In accordance with article 216 of the Criminal Code, the antimonopoly authority, within the limits of its powers, investigates violations of the legislation of the Republic of Kazakhstan in the field of competition protection and makes a decision based on the results of the investigation. Investigation is understood as the activities of the antimonopoly authority aimed at collecting factual data confirming or refuting violations of the legislation of the Republic of Kazakhstan in the field of competition protection. One of the grounds for launching an investigation is the receipt by the antimonopoly authority of information on violations of the legislation of the Republic of Kazakhstan in the field of competition protection, including the appeal of an individual and (or) a legal entity indicating signs of violation of the legislation of the Republic of Kazakhstan in the field of competition protection. In accordance with paragraph 7 of Article 221 of the Criminal Code, officials of the antimonopoly authority, when reviewing information about violations and conducting an investigation, are required to: - take all measures to comprehensively, fully and objectively collect evidence and examine it; - prepare timely conclusions on the results of the preliminary review of information about violations.; - prepare timely conclusions on the suspension, resumption of the investigation and on the results of the investigation, as well as on the appointment of an expert examination; - within a period not exceeding three working days from the date of approval of the conclusions or the signing by the territorial authorities of orders on the review of information on violations and investigation of violations, send copies of these documents to the central government agency. The PC rules do not provide for the consideration of an appeal by an individual and (or) a legal entity indicating signs of violation of legislation in the field of competition protection by letter. The violations of the PC requirements committed by the defendant are assessed as inaction and, in this case, as a refusal to conduct an investigation, which is illegal. 

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