PRESIDENTIAL DECREE OF THE REPUBLIC OF KAZAKHSTAN

of June 22, 2022 No. 938

About approval of the Concept of protection and development of the competition in the Republic of Kazakhstan for 2022-2026

I DECIDE:

1. Approve the enclosed Concept of protection and development of the competition in the Republic of Kazakhstan for 2022-2026 (further - the Concept).

2. To the central and local executive bodies, state bodies, directly subordinate and accountable to the President of the Republic of Kazakhstan, responsible for implementation of the Concept:

1) to take measures for implementation of the Concept;

2) to provide information on course of execution of the Concept according to the procedure and the terms established by System of state planning;

3) to represent intermediate results of execution of the Concept to Agency on protection and development of the competition of the Republic of Kazakhstan on quarterly basis, till the 5th following reporting quarter.

3. To impose control of execution of this Decree on Administration of the President of the Republic of Kazakhstan.

4. This Decree becomes effective from the date of its signing.

Approved by the Presidential decree of the Republic of Kazakhstan of June 22, 2022 No. 938

The concept of protection and development of the competition in the Republic of Kazakhstan for 2022-2026

Section 1. Passport

Section 2. Analysis of the current situation

2.1. Assessment of current status of competitive environment and the taken measures for development of the competition and restriction of monopolistic activities

Results of the analyses of competitive situation which are carried out by antimonopoly authority to the period from 2018 to 2021 in the separate goods markets show that at key branches of national economy there is high level of concentration of the market power (low level of the competition).

On average concentration level (it is determined as percentage of sales amount (delivery) of goods by certain number of the largest suppliers to the total amount of realization (delivery) of goods in this goods market all suppliers) three largest suppliers of goods (the goods are understood as the goods, work, service which are object of civil circulation) for the last three and more years varies in the range from 60 to 100%.

As a result the created structure of the markets creates premises for different abuses of "exclusive rent". In this regard efforts of antimonopoly authority long time were directed to identification and suppression of violations of the law of the Republic of Kazakhstan in the field of protection of the competition.

The markets of electrical energy are characterized by high-concentrated. The wholesale market of the electric power oligopolizirovan the vertically integrated energy companies combining in themselves power assets on production, transportation and retail sale of the electric power (the cumulative share of groups of companies "Samruk-Energo", "Kazakhstanskiye kommunalnye sistemy", "Tsentralno-Aziatskaya elektroenergeticheskaya korporation" exceeds 50%, in separate borders the markets are almost monopolized to 100%), and separate regional power plants. Relative shares of these groups from 2019 for 2021 remain invariable or are subject to insignificant changes.

In the retail market it was not succeeded to organize sufficiently optimum structure of the goods market for development of the competition between the power supplying organizations: actually shares of the power supplying organizations which are vertically integrated with the power grid and (or) power making organizations vary in the range from 55-70% (in Nour-Sultan's city, the Turkestan, Kostanay, East Kazakhstan regions) to 90-100% (in other regions).

The largest level of domination of oligopolistic groups in the field of fuel and energy complex is observed also in the markets of oil products where the share of three largest suppliers following the results of 2021 reached 80% (in 2019 - 86%, in 2020 – 77%), the liquefied oil gas (share of three prime vendors: CNPC, "Petrosun", KMG more than 70%, at the same time certain local producers deliver gas mainly to the region corresponding to geographical arrangement).

Market research of household coal shows that the market share of 2 largest suppliers constitutes more than 70% (in 2019 - 76%, in 2020 - 74%), at the same time shares of JSC Shubarkol Komir and JSC Karazhyra exceed 30% at everyone. In the goods market of supply of coal for needs of the power making organizations the dominant position is steadily held by Bogatyr Komir LLP.

Similarly there is high concentration level in the goods markets in the field of transport and communication. Analysis results of the market of rail freight transportation showed that this market is high-concentrated with the undeveloped competition. The share of three large suppliers in this goods market in 2021 constituted more than 93% (in 2019 - 100%, in 2020 - more than 98%). JSC KTZh-Gruzovye perevozki (the affiliated organization JSC KTZh Oil Company) which is national carrier of loads, carrying out also special and military transportations and providing implementation of the plan of forming of trains on all high-level railway system has the main market share.

On analysis results of the market of services of passenger rail haulings it is determined that the greatest share on passenger turnover is occupied by group of persons of JSC Passazhirskiye perevozki and JSC Prigorodnye perevozki which share constituted % 63,5 (in 2018 - more than 76%, in 2019 - more than 75%). JSC Passazhirskiye perevozki is national carrier on transportation of passengers, baggage, cargo baggage and mailings.

In total amount of passenger traffic on air transport, including on separate domestic passenger traffic the dominant position is held by JSC Air Astana, JSC SCAT Airline. Earlier activities of JSC Vek Air airline for transportation of passengers were suspended that strengthened afterwards the dominating line items most of the largest players of the market which cumulative share in 2021 constituted more than 93% (in 2019 - more than 86%, in 2020 - more than 89%).

The market of services of cellular communication is duopolistichesky with the high level of concentration (the share of prime vendors from 2019 for 2021 constitutes 100%). Two subjects of the market are presented at the market (earlier till 2016 four subjects of the market acted: Altel, "Mobayl Telecom Service", Ksell and "Kar-Tel") - group of persons Kazakhtelecom and "Kar-Tel". Of share of the national company with the state participation - JSC Kazakhtelecom is the share more than 60% of the market of mobile communication.

Provision of services in the field of housing and communal services is characterized by availability of large number of participants of the market, at the same time despite it there is high level of concentration, for example, in the markets of services in export firmly - household waste the share of three largest service providers from 2019 for 2021 exceeded 90% (in 2019%, in 2020%, in 2021%), in the market of services of lift servicing in 2021 exceeded % 89,7 (in 2019 - % 89,5, in 2020 - % 87,2), in the market of intercom services in 2021 exceeded 85% (in 2019 - % 85,9, in 2020 - % 86,5).

The market of road bitumen also showed availability of the dominating subjects of the market (JSC Karazhanbasmunay, PETROSUN LLP, Gazpromneft Bitumen Kazakhstan LLP) which share in 2021 exceeded 80% (in 2019 - % 82,6, in 2020 - % 77,74).

The limited number of the companies also perform the activities in the markets of non-ferrous metals (Kazakhmys Corporation LLP, Kaztsink LLP, KAZ Minerals group of companies).

One of the key principles of interaction of the state and subjects of entrepreneurship is limited participation of the state in business activity.

According to the Entrepreneurial code of the Republic of Kazakhstan (further - the Code) creation of the state companies, legal entities, more than fifty percent of shares (share in the authorized capital) which belong to the state, and persons affiliated with them and expansion and (or) change of the performed types of activity by the state companies, legal entities, more than fifty percent of shares (share in the authorized capital) which belong to the state, and persons affiliated with them who will perform the activities in the territory of the Republic of Kazakhstan requires the consent of antimonopoly authority.

In 2021 it is refused creation of 5 companies of the quasi-public sector (in 2020 - 15, in 2019 - 7). At the same time more than 80% of subjects of the quasi-public sector whose creation was approved (in 2021 - 61, in 2020 - 44, in 2019 - 50), belong to different social objects and critical infrastructure.

Measures for reducing share of the state in business activity are performed also by means of reducing the list of the types of activity performed by the state companies, legal entities, more than fifty percent of shares (share in the authorized capital) which belong to the state, and persons affiliated with them, No. 1095 approved by the order of the Government of the Republic of Kazakhstan of December 28, 2015 (further - the list).

Before approval of the list to subjects of the quasi-public sector in the form of the joint-stock company, the limited liability partnership was allowed 652 types of activity, after approval their quantity was reduced to 346.

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