LLP related to Akimat breaks the law "On Competition"

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The commercial company in addition to its main activity controls market participants by issuing permits for outdoor advertising.

The experts of the Chamber of Entrepreneurs of Almaty tried to clear up the situation of the advertising market.

Subsidiary of the city akimat LLP "Almatyzharnama" operates in Almaty since 2012. The company is a commercial business and works at the market of advertising services of the city: places advertisements on outdoor banners, billboards, etc., provides printing services for the production of advertising materials. However, it is also involved in issuing ... permits for outdoor advertising!

According to the Law "On Advertising" competent authority in the field of issuing permits for outdoor advertising is the Department of Architecture and Urban Planning. But, in practice, the Department with the blessing of Akimat actually transferred its control functions to LLP "Almatyzharnama".

As a result, to obtain authorization for placing outdoor advertising , stakeholders must coordinate layout, text, design and placement of outdoor advertising with LLP "Almatyzharnama". Only after receiving approval from LLP "Almatyzharnama", Department of Architecture and Urban Planning provides the necessary authorization.

In addition, LLP "Almatyzharnama" conducts raids and checks of placed advertisements on compliance with the law, in fact, exercising control and supervisory functions of Akimat. Employees of the advertising company, who are called inspectors, monitor, photograph advertising materials of competitors (of course, they do not check their own materials) and send information about violations to the tax authorities of Almaty. At the same the Department of Architecture and Urban Planning and tax authorities receive information from LLP "Almatyzharnama" as from a state body and impose penalty on violators.

Thus, LLP "Almatyzharnama" – is a type of a dragon with three heads, which coordinates the activities of competitors by issuing permits and controls their activities, and it is engaged in the advertising business.

The company perhaps has even more potential in exercising control, than the public authorities, as the latter has to submit a set of documents in order to conduct an ordinary inspection and must register with the prosecution authorities and to inform in advance about the planned inspection. Inspectors of "Almatyzharnama" don’t need anything – they just take photos and provide information for further fines to be imposed.

It should be noted that according to Article 31 of the Law "On Competition", the state is involved in business activities in a manner strictly defined by the law: to ensure national security and defense of the state, use and maintenance of strategic facilities in the state monopoly sphere, to analyze the effectiveness of public policy. At the same time, you must lack private entrepreneurs who sell the same product or service. Despite this fact, the advertising business is not related to national security, state monopoly or public policies, LLP "Almatyzharnama" is a company with 100 percent state participation, for many years it was working at the market contrary to the requirements of the law.

Conflict with the law does not end there. As advertisers say, "Almatyzharnama" and the Department of Architecture of Almaty signed a secret contract under which the company gets an advantage over other advertising companies, which of course leads to the infringement of the competition. At the same time, the contract is so secret that LLP "Almatyzharnama" guards it as a "trade secret".

The lawyers in this situation in the actions of Akimat and "Almatyzharnama" see clear signs of violation of Article 31 and Article 33 of the Law "On Competition", which limit government involvement in business and prohibit anticompetitive actions of state agencies.

Complaints of advertising companies are constantly coming to the competent law enforcement authorities, but the activities of LLP "Almatyzharnama" do not change. Currently, the National Chamber of Entrepreneurs "Atameken" took over the case. In July 2015 NCE addressed to the Committee on Regulation of Natural Monopolies and Protection of Competition under the Ministry of National Economy of Kazakhstan, demanding an investigation of the company and Akimat of Almaty and its check on compliance with competition law. We will post information on further development of the situation at www.palata.kz.