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ŞƏKİLLƏRİN TƏSVİRİ
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Natural monopolies and state monopolies

By the Decree of the President of the Republic of Azerbaijan No. 1017 dated May 12, 2020, the “Regulations of the State Service for Antimonopoly and Consumer Market Control under the Ministry of Economy of the Republic of Azerbaijan” were approved.

 

According to this Regulation, the State Service for Antimonopoly and Consumer Market Control under the Ministry of Economy of the Republic of Azerbaijan (hereinafter - the Service) is responsible for antitrust, unfair competition, public procurement, advertisement (excluding outdoor advertisement), standardization, metrology, technical regulation, conformity assessment, accreditation, quality management, protection of consumer rights and control of the consumer market and for ensuring the implementation of state control and regulation in above given fields (hereinafter - the relevant field).

 

The main tasks of the State Service are the following - to exercise state control over the activities of natural monopolies; to take measures in accordance with antitrust law to prevent and eliminate their actions that may adversely affect the interests of consumers and competition; to make proposals to the Ministry of Economy on the list of natural monopolies; to give consent for the implementation of actions of natural monopolies; to determine and apply the regulatory methods to be applied to each of the natural monopolies in accordance with the law; to make proposals on regulating the prices of natural monopolies.

 

The Law of the Republic of Azerbaijan “On Natural Monopolies” defines the organizational and legal bases of state regulation of natural monopolies in the Republic of Azerbaijan. It is aimed at reconciling the interests of consumers with natural monopolies.

 

 

 

Natural monopoly

Natural monopoly is a state of the commodity market in which the goods produced (sold) by monopolies are more efficient to meet the demand in the absence of competition due to the technological features of production and cannot be replaced by other goods in consumption.

 

Subject of natural monopoly

Economic entity engaged in the production (sale) of goods in a natural monopoly;

 

Consumer

Consumer is a natural or legal person who acquires goods produced (sold) by a natural monopoly entity.

 

 

The areas of activity of subjects of natural monopolies are:

 

  • Transportation of oil and petroleum products by main pipelines;
  • Transportation, storage and Distribution Services of natural gas by pipelines;
  • Electric and thermal energy transmission and Distribution Services;
  • Operation of Main and local railway lines, road facilities and constructions, traffic management and traffic safety activities, railway stations and passenger stations services;
  • Airport Services, operation of airports, runways and facilities, aviation and air navigation services for aircraft;
  • Operation of roads, tunnels and stations in Metro transport, traffic management and traffic safety activities;
  • Water port services, port facility operation, cargo handling and marine swimming safety activities;
  • Electrical and postal services in common use, operation and control activities of receiving and transmitting radio and television stations, high — frequency devices;
  • Main water treatment plants, main pipes, water pipeline network and operation of pressure and regulating devices on them;
  • Operation of aeration, mechanical cleaning stations, pumping stations, head and rain collectors and sewage lines in sewage industry;
  • Exploitation of water reservoirs, canals, collectors, pipelines and dams related to land reclamation and irrigation areas;
  • Heat Supply Services.

The list of natural monopolies is determined by the Cabinet of Ministers of the Republic of Azerbaijan.

 

The “List of natural monopolies” was approved by the Resolution No. 189 of the Cabinet of Ministers of the Republic of Azerbaijan dated July 19, 2013.

 

The Law of the Republic of Azerbaijan “On Natural Monopolies” is an integral part of the antitrust legislation of the Republic of Azerbaijan.

 

In order to prevent actions that may harm the interests of consumers or hinder the economically justified transition to a competitive restructuring of natural monopolies and in order to ensure a balance between the interests of natural monopolies and consumers, natural monopolies must agree with the Ministry of Economy on:

  • Acquisition of ownership or right to use fixed assets for the production (sale) of goods not subject to state regulation in accordance with the Law on Natural Monopolies (if the book value of the fixed assets of the natural monopoly entity involved in the production of these goods as a whole is more than 10% of the value of the authorized capital on the approved final balance of this entity);
  • Transfer of ownership or use rights of natural monopolies to other economic entities as a result of sale, lease or other actions for the production (sale) of goods subject to state regulation in accordance with the Law on Natural Monopolies (if the book value of fixed assets involved in the production (sale) of the commodity as a whole by a natural monopoly entity is more than 10% of the value of the authorized capital on the approved final balance of that subject);
  • Leasing of fixed assets to consumers;
  • Allocation of investments by natural monopolies in areas not regulated by law.

 

“Rules for consideration of applications for obtaining consent for actions under state control by natural monopolies and submission of relevant documents and information” were approved by the Decision of the Cabinet of Ministers of the Republic of Azerbaijan No. 201 dated 25.12.2001.