Creation of state enterprises under state regulatory agencies in the same sector shall also be qualified
in this area compared to their competitors. Ministries of Culture, Education, Communication, and
Healthcare issue licenses to private firms for business activities and, at the same time, have
commercial enterprises reporting to them, in the same industry. For example, Azeurotel claims that
Ministry of Communication creates obstacles for its normal work in pursuit of “preservation of
monopoly in the sector of telecommunications”.
, however, it is not the main
control and efficient judicial system, i.e., mechanisms of control over implementation of laws, foster a
favorable environment for unfair competition in much more significant way.
Absence of fair competition results in extraction of super-profits by unscrupulous companies at the
organization of an efficient management system. In the modern global economy fair competition is in
some cases restricted by governments, who aim to support local manufacturers. This mechanism can be
justified only under certain conditions and as an interim measure. For example, local legislation taxes
imported finished products more heavily than import of raw materials and semi-finished products. It is
difficult to disagree with expediency of this measure in the light of enormous volume of imports into
Azerbaijan and insufficient rate of local production. Nevertheless, as local industries develop, for
example, the food processing industry, tax advantages should be lifted, because local producers have to
learn to compete with producers of adjoining countries.
The U.S government protectionism policy for American car manufacturers led to loss of positions of
Violation of anti-trust legislation
Classic types of violation of anti-trust legislation are: division of market, collusion, coordination of
pricing policies and creation of monopolies. Market division takes place when several major companies
reach an agreement to divide the market for their product, for example, region-wise. Coordination of
pricing policies means that major manufacturers agree on the same artificial price for certain products
and thus deprive their customers of a price-based choice.
Two cell phone companies - Azercell and Bakcell regularly introduce into market new diverse packages
companies maintain a similar pricing policy. We hope that advent of a third operator, already being
discussed by media for some time now, will benefit consumers.
Collusion is often resorted to at closed auctions. For example, a company reaches an agreement with
exchange for other concessions. Creation and sustenance of monopolies in spheres other than natural
monopolies, like Barmek or Apsheron Regional Water Company shall also be qualified as a sort of unfair
competition. Such enterprises, as Karadag Cement, Baku Steel, European Tobacco are recognized
monopolists in their sectors of industry. It should be mentioned that in our country, the market is
dominated by state monopolies, rather than private companies. However, the corrupt practices of some
public officials very often contradict public interests, which these officials are duty-bound to protect,
leading to a classic conflict of interest.
Letter sent by Azeurotel to their customers at 14.36 on 2 March 2003 by e-mail, stated that at 11.30, 1 March Ministry of
Communication illegally cut the company off communication for the second time within 10 days.
However, the country has a law on unfair competition and a law on anti-trust policy.
from unethical behavior of their competitors.
is not without its deficiencies: as mentioned in Chapter I, legal norms give us minimums and do not
always cover all kinds of ethical misbehavior. Besides, legal procedures may drag on for years and
considerable expense may be incurred. In addition, the fairness of our courts is disputable. In other
countries, businesses wishing to follow ethical principles in addition to legal mechanisms (court
litigation), would resort to professional self-regulation instruments as well.
One self-regulation instrument used by businesses belonging to a business association, is the adoption of
of conduct or ethics. The main difference between these two types of documents lies in the degree of their
details. A code is a set of more detailed norms and principles, which takes into consideration the specifics
of business activities of a company, while other documents state the basic ethical principles shared by all
members of an association, which can be subsequently elaborated into a company code. An illustration
here is a Sample Code of Integrity, designed by International Chamber of Commerce and approved by
Council of Europe in December 1994,
or the Declaration of Business Integrity in St. Petersburg,
Another very convenient method for
can use industry codes without any changes or introduce minor amendments to them, but will not need to
make any radical changes.
Courts of Arbitration, consisting of three impartial and independent persons, might be another option.
verdicts passed by courts of arbitration shall be recognized by public courts and thus acquire a legal
status. At the moment there is an independent non-governmental organization (NGO) in Azerbaijan,
working to establish such a court.
Another NGO is also engaged in pre-trial settlement of disputes. For
newspaper and its founder, when the newspaper was closed down.
and expulsion from professional unions are possible.
In many countries businesses, in cooperation with the state, establish Coordination Councils to relay their
concerns and share experiences with the government. One may note that in Azerbaijan there is the
Entrepreneurship Development Fund and the Agency on Development of Small and Medium Size
Enterprises, which can perform these functions. However, as these are state structures, they do not fully
reflect the concerns of the business community. Recently a Coordination Council, comprised by
representatives of business associations, has been established. We hope this Council will meet with the
Ministry of Economic Development on a regular basis and make recommendations, publicize new
initiatives, promote the interests of businesses, file complaints of illegal actions by state organs, share
success stories, and ask for assistance to resolve delicate issues. In our opinion, meetings of the President
of the country with businesses in the spring of 2002 have set a precedent for such cooperation. This series
of meetings resulted in the adoption of a number of decrees and amendments to the Tax Code. According
to A. Mammadov, chairman of the National Confederation of Entrepreneurs (Employers), presidential
decrees, resulting from these meetings, “have taken into account all recommendations of businessmen,
Anna Ossipova, Presentation at a conference Managing Multi-profile Enterprises, under Business Education Project, 16 May
Information provided by International Court of Arbitration NGO, funded by Eurasia Foundation, Project Coordinator Natiq
Information provided by Independent Legal Center NGO, Project Coordinator Aydin Kerimov, tel. 41 37 32, e-mail