Some Aspects Of Legal Regulation Of "Vertical" Anticompetitive Restrictions In Kazakhstan

Aidyn Bikebayev, Senior Partner, Sayat Zholshy & Partners Law Firm.

It is generally admitted that in the many jurisdictions the competition laws are loyal with respect to vertical restrictions as compared to horizontal anticompetitive agreements. This is connected with the fact that such vertical relations are mainly reasonable and aimed to achieve the economic efficiency. And our Competition Law prohibits both horizontal and vertical anticompetitive agreements in an equal manner; it brings those persons, who have executed them, to the same administrative and criminal responsibility. At that, they do not take into account any significant differences in the consequences of such agreement, in particular, that in most cases positive effects of vertical restrictions exceed their negative consequences. Therefore, such a categorical imperative regulation of vertical anticompetitive agreements serves as an instrument for punishment of the business for an effective activity and achievement of success.

Taking into account the fact that agreements between the market participants may have a significant positive effect on achievement of the efficiency in the market, the rule of reason is used with respect to evaluation of such agreement in the whole world. Such rule is an institute of common law, which was first formulated at evaluation of the provisions of the Sherman Act by the federal court of appeal in 1898 with respect to the case of United States v. Addyston Pipe Steel Co. and accepted as a regulative doctrine in 1911 in the case of Standard Oil Co. of New Jersey v. United States. The substance of this rule is taking into account the positive consequences of the competition contracts for the consumers, technological development, and others, in order not to recognize as violation of law any cases when positive (procompetitive) consequences of transactions exceed the negative effect on the competition, that is, according to this rule, only unreasonable restrictions should be prohibited.

In view of the fact that the Sherman Act in the USA did not contain any direct reference to application of this rule, the practical application of the rule is a full prerogative of the courts. E. Gellhorn and V.E. Kovachich write that in this case the multifactorial investigation requires that three main questions are answered:

1) Do the restrictions contribute to the decrease in production and enhancement of prices?

2) Do the economic benefits of the restrictions exceed their possible unfavourable consequences for the competition?

3) Are the necessary restrictions justified as viewed from the enhancement of efficiency which is pursued by them? /1/

Currently this principle is applied in the international practice at the evaluation of practically all types of non-price vertical anticompetitive agreements and horizontal agreements, with the exception for cartel ones.

Application of the rule of reason ensures a flexible approach to evaluation of the behaviour of the market participants and prevents from punishing the business for the success and for the activity which is useful for the economy. According to Article 81 (3) of the Treaty of Rome the anticompetitive agreements meeting the set of following conditions may be recognized as acceptable:

1) The agreement must contribute to improving the production or distribution of goods or contribute to promoting technical or economic progress,

2) Consumers must receive a fair share of the resulting benefits,

3) The restrictions must be indispensable to the attainment of these objectives, and

4) The agreement must not afford the parties the possibility to eliminating competition in respect of a substantial part of the products in question.

It is generally admitted that the above provisions of Article 81 (3) of the EU Treaty of Rome do include all the necessary elements of the rule of reason.