Kuralay K. Kussainova, Master’s degree student at specialty of Economics,

Shynar D. Zhailaubaeva, Candidate of Economics,

Shakarim State University of Semey, Kazakhstan.

ANTITRUST REGULATION IN KAZAKHSTAN,

RUSSIA, U.S. and Europe.

The most important factor in the market environment is competition, which largely determines the form of business enterprises.

Competition can be defined as economic rivalry of manufacturers of identical goods or services on the market to attract the largest possible number of buyers and thereby receive maximum benefits.

Competition is an important means of controlling the market system. It is the competition which forces manufacturers and suppliers of resources to properly meet the wishes of consumers, expands production and lowers the price of the product to a level corresponding to the cost of production. Competition makes enterprises more fully perceive the scientific and technical achievements, and apply effective technique, technology, modern methods of production and labor. Opposite to the competition is the monopoly, under which the market has only one seller and many buyers. As the only manufacturer of the product, the monopolist sets high monopoly price of the product on the market. As a result, society will bear higher costs, since relatively fewer consumers will buy the goods produced and offered under monopoly, and those who buy these goods will pay more for them. Under free competition the monopolist has fewer offers.

As the only manufacturer of the product, the monopolist is in a very advantageous position. The monopolist is free to raise commodity price, as the monopolist is not worried about competitors who, by assigning a lower price, could capture the market.

Therefore, monopoly undermines competition and market mechanisms of self-regulation. Thus monopoly needs to be regulated [1].

It should be noted that the monopoly can not exist in all fields. The British economist Joan Robinson Violet exploring monopoly allocated the fields where competition can not exist because of its features. These are the so-called "natural monopoly industries". Robinson attributed to such fields gas industry, electric power, railway transport, referring to the fact that there are no conditions for competition in these sectors.

The industries of natural monopolies in many countries include most of the enterprises, products of which are "subjects of public use". Most often it is such sectors as communications, power transmission lines, oil and gas pipelines, railways, cable television, communications systems, water and sanitation, etc.

For the above-mentioned industries effective size businesses is usually equal or close to 100% of the domestic consumption of these goods, which corresponds to the presence of one manufacturer in the industry.

One of the features of natural monopolies is the existence of high entry barriers to the industry.

To control monopolies, most countries use the antitrust laws. Antitrust regulation is a set of legislative, administrative and economic measures undertaken by the government to limit manufacturers' capability to monopolize markets [2].

The law regulating the competitive relationship in the market in Kazakhstan is called the Competition Act.

The law of the Republic of Kazakhstan "On competition" constrains the actions of market participants aimed at the conclusion of an agreement between the market, which encroaches on the legitimate rights of consumers, concerted actions aimed at restricting competition and (or) infringement of the legitimate rights of consumers and the abuse of dominant and monopolistic position [3].

In Russia, the Federal Law "On Protection of Competition" applies to relationships that are associated with the protection of competition, including the prevention and suppression of monopolistic activity and unfair competition involving Russian legal entities and foreign legal entities, organizations, federal executive bodies, state authorities of the Russian Federation, local authorities, other bodies carrying out functions of specified bodies or organizations as well as state funds, the Central Bank of the Russian Federation, and individuals, including sole proprietors [3].

However, when considering antitrust regulation, it is important to take into account the situation in other developed countries. Many countries with developed market economies hold active antitrust policy. In the twentieth century some of them had already qualified monopoly as an economic crime against society, thus their legislation had been intended to prevent or reduce adverse effects of market monopolization.

The start of antitrust legislation was initiated in the U.S. and Canada, which was a response to the increasing power of union monopoly in the economy. In the U.S. system of antitrust regulation all acts of monopolistic activities, regardless of their effect on competition, are considered to be illegal. This principle, in addition to the U.S., is as well enshrined in the laws of such countries as Canada, Argentina and other countries. However, a total ban on monopoly exists only in the United States.

One of the important objectives of the U.S. government is to ensure competition in the market for goods and services.

The first antitrust law in the United States was adopted in Alabama in 1883. Then throughout 1889-1890 the similar legislation had been adopted in other states. Adoption of antitrust law by many states contributed to the development of relevant laws at the federal level [5].

Later in 1890 under the pressure of public opinion, the "Sherman Act" aimed at struggling with monopolies and undue restrictions of free competition was adopted in the United States. The author of the bill was the U.S. Senator John Sherman. The Sherman Act prohibits actions aimed at reaching agreements and associations colluded to restrict trade and monopolization and attempts for collusion monopolization [6]. In 1914, the Sherman Act was supplemented by the Clayton Act, which prohibits price discrimination, tying, exclusive dealings through certain trading companies and share purchases in cases where it leads to a monopoly or restriction of competition [7].

Law on the Federal Trade Commission is also aimed at struggling with anti-competitive mergers.

These three pieces of legislation formed the basis of modern U.S. antitrust laws.

A European system is in contrast to the American system. European antitrust regulation is based not on the principles of absolute prohibition, but on the principles of regulation and control of monopolies.

In Western Europe the antitrust laws have been adopted in the postwar period and has a number of features. On the one hand, the legislation is formally aimed at consumer protection, on the other hand the antitrust laws seek to encourage the concentration of production and the formation of large corporations related to scientific and technical progress.

A system of antitrust regulation in France can be taken as an example of a European system. Due to the long state intervention in the economy, the competition was not sufficiently developed in France. In order to deregulate the economy and to level the economic situation, a special competition authority – Competition Council, has been established. Currently government intervention in the economy is at the zero level. This situation allows the market mechanism to set and adjust prices on their own.

An important piece of legislation regulating the activities of monopolies in the United Kingdom is the Fair Trading Act of 1973, which provides conditions and procedure of state control over monopolies. In the UK the antitrust laws are more liberal compared to those in the U.S., and the direct government interference is minimized.

If we consider the European Union as a whole, the rules on competition are contained in the Treaty establishing the European Economic Community, which was signed in Rome in 1957 and came into effect in 1958. The agreement prohibits the abuse of a dominant market position. Antimonopoly control is carried out by the Commission, which conducts inspections and imposes sanctions on offenders.

In the Russian Federation, the company with market share of certain goods from thirty five to fifty percent has a dominant position. In the UK market dominance threshold established by law of 1973 is twenty-five percent. In Kazakhstan the market dominance threshold, provided by the legislation of Kazakhstan, is thirty-five or more percent, which is fully consistent with the practice of many countries. Considering the law of the Republic of Kazakhstan "On competition" one can say that mainly there has been adopted the experience of the European system of antitrust regulation, which limits rather than totally prohibits activities of monopolies.

In conclusion it can be stated that the use of the European countries’ experience in the regulation of monopolies did not turn to be highly effective for Kazakhstan. It is obvious that the state actively intervenes in the economy of the country, so in order to establish antitrust regulation in Kazakhstan it is necessary to minimize government intervention in the economy.

Literature:

1. Enterprise Economics. Edited by Professor V.Ya.Gorfinkelya, Professor V. Shvandar. – M. – Unity, 2007. – p. 7-8.

2. Dictionary of Economics [electronic resource] - URL: http://www.uafi.net/antimonopolnoe-regulirovanie/ (date accessed 01.04.2014).

3. Law of the Republic of Kazakhstan "On Competition" (with alterations and amendments as of 07.03.2014) [electronic resource] - URL: http://online.zakon.kz/Document/?doc_id=30369177 (date accessed 01.04.2014).

4. Federal Law № 135 dated 26.07.2006 "On Protection of Competition" [electronic resource] - URL: http://www.consultant.ru/document/cons_doc_LAW_157075/ (date accessed 02/04/2014).

5. Baydarov A.D. Antitrust legislation in Russia and abroad: a comparative legal analysis / / Law and the State: Theory and Practice - 2012 - № 11 - p.139-143.

6. Dictionary of Economics [electronic resource] - URL: http://abc.informbureau.com/html/caeii_oadiaia.html (date accessed 01.04.2014).

7. Dictionary of Economics [electronic resource] - URL: http://dic.academic.ru/dic.nsf/econ_dict/21010 (date accessed 01.04.2014).