Can the competition Code create competition in Azerbaijan?

In a bid to promote a healthier competitive landscape and bolster economic growth, Azerbaijan has set its sights on implementing a long-anticipated Competition Code. The draft of this transformative legislation, encompassing 12 chapters and 83 articles, has made its way to the Milli Majlis, the country's legislative body, marking a significant milestone in Azerbaijan's efforts to modernize its business regulations.

The comprehensive Competition Code seeks to consolidate various laws, including those related to antimonopoly activities, unfair competition, and natural monopolies, into a unified legal framework. According to statements from the Milli Majlis, this move is intended to establish a solid legal foundation for entrepreneurial activities within the nation, thereby fostering a healthy and competitive environment. This development is expected to hold great significance for Azerbaijan's economy, potentially driving growth and enhancing market dynamics.

The journey toward enacting the Competition Code dates back to 2004, with intermittent attempts to push it through parliament in different years. In 2006, the code even reached the second reading in the National Assembly but failed to become law. Now, the government seems more determined than ever to see it through.

Currently, the competitive landscape in Azerbaijan is governed by laws such as the "on unfair competition" enacted in 1995 and the "on Antimonopoly activity" passed in 1993. The proposed code introduces financial penalties for violations of competition legislation, setting the stage for stricter enforcement.

One of the notable provisions of the draft code is the definition of a dominant market position for economic entities with a market share ranging from 35 to 50 percent. This provision will extend regulatory scrutiny to entities that have the potential to influence the market, even if they do not hold a majority stake.

Furthermore, the code aims to delineate criteria for identifying low and high monopoly prices, offering more clarity in assessing market dynamics. Vahid Ahmadov, a member of the committee on Economic Policy, Industry, and Entrepreneurship of the Milli Majlis, in an interview with Turan stressed the importance of adopting the Competition Code. He highlighted its role in preventing and mitigating monopolistic practices, ultimately creating conditions for the growth of free competition in Azerbaijan.

Economist Natig Jafarli in an interview with Radio Azadlig, noted that the long-delayed Competition Code could potentially disrupt the status quo by enabling small and medium-sized businesses to challenge monopolistic practices and appeal to state authorities. While the code's adoption appears positive, there are questions about how it will be implemented and enforced, given the mixed track record of antimonopoly legislation in Azerbaijan.

Jafarli suggested that the recent push for the Competition Code's adoption may be influenced by negotiations between Azerbaijan and the European Union, where one of the key points of discussion is the creation of a free and competitive economic environment. Azerbaijan and the European Union have been engaged in negotiations aimed at forging a strategic partnership since 2017.

Efforts to gather insights from organizations like Azal (Azerbaijan Airlines) and the state Antimonopoly and Consumer Market Control Service under the Ministry of Economy were unsuccessful at the time of reporting. However, it is clear that Azerbaijan is poised to take a significant step forward in its pursuit of a more competitive and dynamic business environment with the potential enactment of the Competition Code.