Inadmissibility of Abuse of the Freedom of Entrepreneurship
🔷 I. GENERAL CHARACTERISTICS
Article 11 of the Civil Code of the Republic of Kazakhstan establishes a balance between:
the guaranteed freedom of entrepreneurship (Article 10 of the Civil Code of the RK, Article 26 of the Constitution of the RK), and
limitations arising from public interest — protection of competition, consumers, and other market participants.
This is an anti-abuse provision that restricts actions of entrepreneurs that contradict the purpose of rights and freedoms.
🔹 II. PARAGRAPH 1 — PROHIBITION OF MONOPOLISTIC AND ANTI-COMPETITIVE ACTIVITIES
🔸 Key idea: the freedom of entrepreneurship is not absolute; it is limited by the need to:
preserve competition;
protect consumer interests;
prevent abuse of market power.
📌 Related legal acts:
Law of the Republic of Kazakhstan “On Competition” (December 4, 2023);
Entrepreneurial Code of the RK (Section 6);
Criminal Code of the RK, Article 198 (abuse of a dominant position).
📌 Example:A retail chain with a significant market share stops supplying goods to remote regions in order to push out local competitors — this constitutes a violation.
🔹 III. PARAGRAPH 2 — SPECIFICATION OF PROHIBITED FORMS
🔸 1) Abuse of a dominant position
For example: artificial creation of shortages, imposition of unfavorable conditions, unjustified price increases.
📌 Example:A cement manufacturer reduces market supply in order to artificially increase prices — this is an abuse of dominant position.
📌 Legal basis:
Law of the RK “On Competition”, Article 63;
Resolution of the Supreme Court of the RK No. 2 (2016) “On disputes related to violations of antimonopoly legislation.”
🔸 2) Anti-competitive agreements (cartels)
Agreements on prices, market division, or elimination of competitors are prohibited as forms of collusion that undermine the market.
📌 Example:Two developers agree to maintain identical housing prices in a certain district — a cartel agreement.
📌 Related provisions:
Article 170 of the Entrepreneurial Code of the RK — anti-competitive agreements;
Article 198 of the Criminal Code of the RK — criminal liability for cartel agreements.
🔸 3) Unfair competition
Any actions that mislead consumers, copy competitors’ goods, or violate business ethics.
Main forms include:
misleading consumers (false advertising);
incorrect comparison of goods (e.g., “our product is better than X”);
copying product design or packaging;
discrediting a competitor.
📌 Example:A home appliance manufacturer uses packaging and branding similar to a well-known brand in order to mislead consumers.
📌 Related regulation:
Law of the RK “On Advertising” (Article 15 — unfair advertising);
Chapter 43 of the Civil Code of the RK — intellectual property;
Resolution of the Supreme Court of the RK No. 3 (2014) “On protection of business reputation.”
🔷 IV. ANALOGIES WITH INTERNATIONAL LAW
| International Act | Provision | Similarity |
|---|---|---|
| Treaty on the Eurasian Economic Union | Protocol No. 18 (on competition) | Anti-competitive agreements, abuse of dominance |
| EU Directive 2006/114/EC | On misleading and comparative advertising | Protection against false information |
| Article 10 of the European Convention on Human Rights | Interpretation by the ECtHR | Freedom of expression may be limited to protect fair competition |
| UNCTAD Model Law on Competition (2020) | Model approach to prohibiting abuse of market power |
🔷 V. RELATED PROVISIONS OF NATIONAL LEGISLATION
| Code/Law | Article | Commentary |
|---|---|---|
| Civil Code of the RK | Articles 8, 9, 10 | Principles of good faith, reasonableness, and freedom of entrepreneurship |
| Entrepreneurial Code of the RK | Articles 170–180 | Anti-competitive agreements, abuse, enforcement measures |
| Law of the RK “On Competition” | Articles 62–68 | Dominant position, prohibitions |
| Criminal Code of the RK | Article 198 | Liability for cartel agreements |
| Law of the RK “On Advertising” | Articles 14–16 | Unfair advertising |
🔷 VI. PRACTICAL CASES (KAZAKHSTAN)
🔸 Case 1:The antimonopoly authority found that a car dealer violated the law by refusing to sell vehicles without an additional charge for “extra services.” The court recognized this as an abuse of market power.
🔸 Case 2:A producer of consumer goods copied a competitor’s packaging. The court recognized this as a violation — copying the external design and misleading consumers (Article 1027 of the Civil Code of the RK).
🔷 VII. CONCLUSION
Article 11 of the Civil Code of the Republic of Kazakhstan:
limits the freedom of entrepreneurship within the framework of fair competition;
aims to protect consumers and honest market participants;
is based on international standards of antimonopoly policy.
It serves as an important legal instrument for antimonopoly authorities, courts, and entrepreneurs seeking lawful and ethical conduct in the market.
Attention!
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