LAW OF THE REPUBLIC OF ARMENIA

of December 5, 2000 No. ZR-112

About protection of the economic competition

Accepted by National Assembly of the Republic of Armenia on November 6, 2000

1. The purpose of this Law - to protect and encourage freedom of economic activity, the free economic competition, to provide the necessary circle for fair competition, to promote development of entrepreneurship and protection of consumer interests in the Republic of Armenia.

Chapter 1. General provisions

Article 1. Subject and sphere of regulation of the Law

1. This Law extends to actions, behavior or acts of business entities, state bodies, and also their officials who bring or can lead to prevention, restriction of the economic competition, prohibition on it or to unfair competition, and also to cause damage to consumer interests.

2. This Law also extends to actions or behavior of business entities in foreign states which can prevent, limit or prohibit the economic competition or cause damage to consumer interests in the Republic of Armenia.

3. This Law does not extend to the relations regulated by single competition rules in the cross-border markets, control of which is referred to competence of the Eurasian economic commission according to the international treaty of the Republic of Armenia. Standards of reference of the goods markets to cross-border are established by regulatory legal acts of the Eurasian Economic Union.

4. The commission performs the functions provided by this Law, concerning persons, regulated or controlled by the Central bank, based on cooperation with the Central bank. The cooperation of the Commission and Central bank is based on the following principles:

1) about the problems with the economic competition in the sphere connected with persons, regulated or controlled by the Central bank, the Commission reports the Central bank;

2) the Central bank before adoption of sublegislative regulatory legal acts about abuses of dominant position, anti-competitive agreements, concentration represents them to the Commission for receipt of opinion;

3) the Commission abstains from the intervention connected with the question posed about the economic competition if the Central bank reasonably reports to the Commission that this question, proceeding from the purposes of regulation established by the law belongs to the Central bank, and the Central bank performs the functions established by the law. In that case the final decision is made by the Central bank taking into account the line item provided by the Commission, having stopped on all questions raised by the Commission and having specified in the final line item or the solution of reasons for their acceptance or rejection;

4) the Commission abstains from representation of opinion, stipulated in Item the 2nd this part, and from any intervention connected with the question posed about the economic competition, stipulated in Item 3rd this part, in exceptional cases, when the purpose of the Central bank is prevention of the possible danger menacing to financial stability and price stability or response to it, financial institution is recognized insolvent, or the application for bankruptcy is submitted to court, compulsory acquisition of financial institution or share or the share of her participant is performed, reorganization, enforced sale or liquidation of financial institution is performed. In the cases provided by this Item, the Central bank transfers the made decisions of the Commission, except for decision fragments which contain bank secrecy or such information which provision is forbidden by the law or it can be authorized only based on court resolution;

5) the commission chairman and the chairman of the Central bank sign the joint order which regulate:

and. the directions and procedures of cooperation connected with problems of protection of the competition;

. cases and procedure for exchange of information between the Commission and the Central bank, including information on the actions undertaken in connection with problems of the economic competition;

century cases when the Commission and the Central bank perform the competences of the relation of persons, regulated and controlled by the Central bank, and the procedure of representation in such cases of line item of the Commission and detail of interaction;

the other questions concerning protection of the competition in the field of, provided by this part, and also which are not prohibited by the law.

5. This Law does not extend to such relations in regulated spheres of public services which regulation is referred by the law to competence of the Commission on regulation of public services. Functions on the economic competition concerning persons acting in the regulated sphere of public services, the Commission performs based on cooperative principle with the Commission on regulation of public services.

Article 2. Legislation on protection of the economic competition

1. The legislation on protection of the economic competition consists of the Constitution, the Civil code of the Republic of Armenia, this Law and other regulatory legal acts.

2. In the presence of contradictions between regulations of the international treaties ratified by the Republic of Armenia, and this Law regulations of the ratified international treaties are applied.

Article 3. The basic concepts and terms used in the Law

1. The basic concepts and terms used in this Law are applied in the following sense:

1) the economic competition or the competition - competition of economic subjects in case of which independent actions of each of them objectively exclude or limit possibility of unilateral influence on general terms of turnover of goods in the corresponding goods market;

2) goods - object of the civil law, including the property, work, service (including financial) provided for realization;

3) interchangeable goods - goods which can be compared to destination their uses to application, qualitative, technical, price or other characters in such a way that acquiring them actually replaces or it is ready to replace them with each other in the course of consumption or in the course of the use for the production purposes;

4) the goods market - the sphere of turnover of goods and the goods which are mutually replacing it in certain territory which borders are determined by opportunities or feasibility of acquisition, realization or production of goods in the corresponding territory, economic or other opportunities or feasibility and lack of such opportunities or feasibility beyond its limits. The goods market is characterized by commodity and specific and geographical boundaries, the studying period, structure and amount of his subjects;

5) commodity and specific border of the goods market - set of these goods and the goods which are mutually replacing it;

6) geographical boundary of the goods market - certain geographical territory (including the road, air, air, overland and other route) within which it is economically possible or reasonable to acquire, implement or make these goods and goods which are mutually replacing it and such opportunity or feasibility is absent outside this territory. The geographical boundary of the goods market can cover all territory of the Republic of Armenia or its part or the territory of the Republic of Armenia (or its parts) and other state (or its parts);

7) the period of studying of the goods market - certain period (day, month, year) within which the goods market is studied;

8) subjects of the goods market - the implementor, the producer or the acquirer of these goods or the goods which are mutually replacing it;

9) the implementor - the legal entity or physical person or state body which are implementing or potentially realizing goods;

10) the acquirer - the legal entity or physical person or state body which are acquiring or potentially acquiring goods;

11) the consumer - the legal entity or physical person or state body which are acquiring or potentially acquiring goods for its consumption;

12) amount of the goods market - the total amount of realization or acquisition of these goods or the goods which are mutually replacing it in geographical boundaries of the goods market in natural and (or) value term;

13) realization - alienation (sale, delivery, transfer of property on property otherwise), rendering or accomplishment;

14) acquisition - purchase, obtaining or acceptance;

15) Commission - Commission on protection of the competition;

16) state body - the state body or local government body, the state or municipal non-profit organization, the public or local government office, the Central bank, the legal entity or the organization acting on behalf of the Republic of Armenia or community of the Republic of Armenia or performing functions or powers of state body or local government body, the organization from shares of the Republic of Armenia or community of the Republic of Armenia in the amount of 50 and more percent;

17) business entity - the individual entrepreneur, the legal entity, other organization, its representation or branch, group of persons or the union of persons, and in the cases of concentration, unfair competition and coordination of economic activity by business entity provided by this Law is considered also physical person

18) the official of business entity - person performing competences of sole executive body of business entity, either the member of collegiate executive body or person performing organizing, rasporyaditelsky or administrative functions;

19) the shopping facility - property complex (the parcel of land, the building, structure) used for the report of goods to the consumer in the field of realization;

20) retail chain stores - complex from two or more shopping facilities which are under general management or operating under one trademark or other means of identification;

21) economic conditions (factors) - the expenses connected with acquisition, production, sales of goods (rendering services, performance of works), taxes, duties, obligatory payment, inflation, deflation;

22) unreasonable advance in price - increase by business entity during certain period of the price of goods and (or) the goods which are mutually replacing it which is not caused by economic conditions (factors);

23) unreasonable reduction of price - decrease by business entity during certain period of the price of goods and (or) the goods which are mutually replacing it which is not caused by economic conditions (factors);

24) unreasonable maintenance of the price - maintenance by business entity during certain period of the price of goods and (or) the goods which are mutually replacing it in that case when availability of certain economic conditions (factors) could or owed lead to establishment of lower or higher price;

25) discrimination conditions - conditions of exit to the goods market, productions, exchange, consumption, realization or other transfer of goods, including the price of goods which create for business entity or the consumer unequal conditions or unequal position in comparison with other business entity or the consumer;

26) sign of prevention, restriction of the competition or prohibition on it - reducing number of business entities, not being group of persons, increase or reduction of price of goods which are not connected with corresponding changes of economic conditions in the goods market; refusal of business entities, not being group of persons, from independent actions in the goods market; establishment of general terms of turnover of goods owing to anti-competitive agreements of business entities in the goods market according to instructed them other person, subject to obligatory execution, or owing to approval of the actions of business entities which are not group of persons; other circumstances creating for business entity opportunity unilaterally to influence general terms of turnover of goods in the goods market, and also establishment by state bodies and (or) their officials of the requirements to goods or business entities which are not provided by the law;

27) direct control - possibility of predetermination of the decisions made by the legal entity which is shown by implementation of functions of executive body of the legal entity, acquisition of right to establishment of conditions of implementation of business activity of the legal entity and (or) ownership of more than 50 percent from total number of the shares (shares) granting voting power, constituting the authorized (equity) capital of the legal entity;

28) indirect control - possibility of predetermination of the decisions made by the legal entity by means of the legal entity or physical person having direct control concerning this legal entity;

29) asset cost - asset carrying amount, and in case of its absence - the actual or sdelochny asset cost;

30) revenue - gross cash inflow economic the exit resulting from regular actions of business entity during the corresponding period which leads to growth of equity, except for growth of equity as a result of investments of participants into equity. For taxpayers of the Republic of Armenia the entrepreneurial income in terms of money which is subject to obtaining from sales of goods which does not include the amount of indirect debts is considered revenue;

31) share - the participation right in the authorized (equity) capital of the legal entity (share, the share, other securities);

32) the body providing government assistance - state body, and also all bodies or the organizations or officials, representatives to provide government assistance at the expense of public finance or public resources in sense of this Law;

33) day - the working day established by the legislation;

34) the share – is applied in the sense established by the Law "About Trade and Services";

35) the discount – is applied in the sense established by the Law "About Trade and Services".

2. Other concepts and terms used in this Law are applied in the sense established by this Law, the Civil code of the Republic of Armenia, other laws and other legal acts.

Article 4. Group of persons

1. In sense of this Law, the group of persons is group of legal and (or) physical persons between which actually there is interrelation or control and concerning which, at least, one of the following conditions is satisfied:

1) the organization and physical person or legal entity if this physical person or legal entity based on the participation in this organization and (or) agreements in the procedure established by the legislation has the right directly or indirectly to dispose (including by means of the purchase and sale agreement, joint activities, the order, the power of attorney or other transactions) more than half of the authorized capital or share of the organization;

2) the organizations if the same physical person or legal entity based on the participation in these organizations and (or) agreements in the procedure established by the legislation has the right directly or indirectly to dispose (including by means of the purchase and sale agreement, joint activities, the order, the power of attorney or other transactions) more than half of the authorized capital or share of the organizations;

3) the organizations and physical persons or legal entities if they owing to coherence or control act from common economic interests;

4) the organization and physical person or legal entity if this physical person or legal entity based on statutory documents of the organization or the agreement or in other form has opportunity to predetermine the decisions made by this organization (including conditions of implementation of business activity) and (or) to make the recommendations which are subject to obligatory execution by this organization, concerning its main activities;

5) the organizations if the same physical person or legal entity based on statutory documents of the organization or the agreement or in other form has opportunity to predetermine the decisions made by this organization (including conditions of implementation of business activity) and (or) to make the recommendations which are subject to obligatory execution by these organizations, concerning their main activities;

6) the organization and physical person or legal entity if according to the offer of this physical person or legal entity the sole executive body of this organization and (or) more than a half of structure of collegiate executive body is chosen or appointed, and (or) more than a half of structure of governing body of this organization is chosen;

7) the organizations if according to the offer of the same physical person or legal entity sole executive bodies of these organizations and (or) more than a half of structures of collegiate executive bodies are appointed or elected, and (or) more than a half of structures of governing bodies of these organizations is elected;

8) the organization and physical person or legal entity if this physical person or legal entity performs, at least, a year competences of sole executive body of this organization;

9) the organizations, and the same physical person or legal entity if this physical person or legal entity performs, at least, a year competences of sole executive bodies of these organizations;

10) the organizations in which more than a half of members of collegiate executive body constitute the same physical persons;

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