Below we list and explain recently adopted rules and executive regulations under the Azerbaijani Competition Code.
The Competition Code of the Republic of Azerbaijan provides for a range of financial sanctions to ensure the protection of the competitive environment. These sanctions are applied against entities attempting to gain an unfair advantage in the market or violate competition rules.
According to Article 77 of the Code, the amount of the sanction varies depending on the nature and severity of the violation. If the violation falls under Articles 77.1 and 77.5.1, the sanction is set at 50% of the established maximum amount. For more serious violations, such as those falling under Articles 77.2 and 77.5.2, this percentage increases to 60%. The most severe violations (under Articles 77.3 and 77.5.3) result in sanctions of up to 70%.
Additionally, the law takes into account both mitigating and aggravating circumstances. For example, if the entity voluntarily ceases the violation or assists the authorities in investigating the violation, the sanction may be reduced. On the other hand, if the violation is repeated or committed intentionally, the sanction can be increased. Article 79.2 of the Code allows for the sanction to be increased by up to 25% in such aggravating circumstances.
It is important to note that, in addition to legal entities, individuals holding positions of responsibility can also be held liable. According to Article 77.12 of the Code, a financial sanction equivalent to the person's last salary may be applied.
Overall, the competition legislation of the Republic of Azerbaijan views the imposition of sanctions not only as a punitive measure but also as a tool to protect healthy competition in the market. The goal is to ensure compliance with competition rules and prevent violations of the law.
This document is prepared in accordance with Article 13.2 of the Competition Code of the Republic of Azerbaijan and regulates the exclusion of agreements that meet the conditions outlined in Article 13.1 of this Code. The terms used in this document are based on the meanings defined in the Code and other normative legal acts.
Agreements and coordinated actions that do not restrict competition but bring benefits to consumers may be excluded in accordance with the requirements of Article 13.1 of the Code, provided the following conditions are met: an increase in production by more than 30 percent in the relevant market within one year, the possibility of producing a new product, a reduction in per-unit costs by 15 percent or more, an increase in investments by 20 percent at the market boundary, the creation of significant know-how, the presence of technical capabilities for a single entity to operate in the market, and the conclusion of the agreement in a way that does not harm priorities such as national security and consumer health. Additionally, cases where, without an agreement, the production of a product with special quality and licensing requirements would lead to inefficient results can also be excluded.
Agreements related to technology transfer may be excluded if the market share of the participants is less than 30 percent and if these agreements are related to the production or use of technology. Such agreements should allow the receiving party to reduce research and development costs by 50 percent, prevent the duplication of work, and should not impact competition. Moreover, these agreements should not restrict the parties' rights to implement technological innovations and conduct market development research.
Agreements related to market research and development may also be excluded if they meet certain criteria. These agreements should not exceed a 30 percent market share, should be related to the production, use, and research and development of technologies, and should provide mutual benefit from the results achieved. Furthermore, these agreements should include conditions that do not affect competition.
In conclusion, the decision regarding the exclusion of agreements is made by the competition authority and is determined based on the specific circumstances of the case.
This document has been prepared in accordance with the second sentence of Article 11.5 of the Competition Code of the Republic of Azerbaijan and defines the criteria for determining whether agreements result in or may result in a restriction of competition. The terms used in this document reflect the meanings defined in the Competition Code and other legal acts of the Republic of Azerbaijan.
In the case of horizontal agreements, considering the requirements of Article 11 of the Competition Code, the conclusion of such agreements from the moment of their signing will be assessed as agreements that may result in a restriction of competition if at least two of the following conditions are met: a significant reduction in the market share of companies not participating in the agreement and an increase in the market share of participants in the agreement; a significant increase in the number of companies exiting the market and an increase in the level of market concentration; prices for consumers purposefully and consistently rising; high correlation between the prices set by the participants in the agreement; a significant reduction in product variety; and the use of buyer power leading to a reduction in the profit margins of sellers despite an increase in the buyers' profit margins.
Additionally, the significant reduction in the overall demand volume by the buyers participating in the agreement, or the reduction or stabilization of prices to unprofitable levels for the sellers, as well as a reduction in the overall supply volume by the sellers or the raising or stabilization of prices to unfavorable levels for the buyers, are also considered as factors that may result in a restriction of competition.
Moreover, the reduction of innovations in the market, the exchange of information between competitors that could affect market structures, the limitation of competitors’ ability to operate efficiently in the market, and the monitoring of repeated participation in public procurements are also considered as factors that could lead to a restriction of competition.
For vertical agreements, after considering the criteria specified in Article 12 of the Competition Code, it is determined whether the agreement results in or may result in a restriction of competition. These criteria include limitations on the resale of products by buyers or their customers through the internet or limiting the volume of sales, the setting of resale prices by the seller, and the creation of barriers to market entry.
Furthermore, a reduction in the rewards or discounts given to buyers selling to customers outside the specified group, campaigns leading to market, customer group, or raw material distribution, and restrictions on a buyer’s ability to purchase from other sellers can also result in vertical agreements leading to a restriction of competition.
This document is prepared based on Article 4.4 of the Competition Code of the Republic of Azerbaijan and defines the cases, sectors, and products where the requirements of the Code do not apply or apply only partially. These situations arise under special legal regimes — during periods of martial law or a declared state of emergency.
The requirements of the Code do not apply or apply with limitations when martial law is declared across the territory of the Republic of Azerbaijan or in specific areas, as well as when a state of emergency is declared in certain regions. In such conditions, the Code is not applied or is applied partially to the sectors and products specified in Sections 3 and 4 of this document.
The following activities and products are exempt from the Code’s requirements:
– the production and sale of agricultural products by individuals without forming a legal entity, as well as the economic activities of family farms related to processing, storage, transportation, and sale of products;
– activities of trade union organizations;
– types of crafts (copperwork, tinner’s work, pottery, household utensils, gardening tools, folk musical instruments, toys, souvenirs, household items made of reed and cane, artistic processing of ceramics, embroidery, making of wooden household items — excluding industrial production);
– passenger and freight transportation by all types of vehicles;
– circulation of goods with restricted civil turnover (as defined by legislation).
The following sectors and products are subject only to Chapters 4, 5, 10, 11, and 12 of the Code:
– use of renewable energy sources and the application of “green” technologies;
– import and sale of specified publishing products and paper (according to the Cabinet of Ministers decision No. 184 of May 13, 2022);
– funeral and cemetery services;
– activities of entities with “Startup” certification;
– government purchases of goods for defense and security needs funded by the state budget.
Additionally, in such conditions, Chapter 6 of the Code does not apply to the following activities:
– economic activities in the agricultural sector carried out by legal entities categorized as micro and small businesses (processing, storage, transportation, and sale of products);
– activities of sports clubs;
– provision of cultural services (museums, historical parks, and reserves).
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