Antitrust Practices: Clearances, Unfair Competition, and Enforcement in Mongolia

1) What types of unfair competition are prohibited in your jurisdiction?

• Abuse of a dominant market position;
• Entering into agreements or arrangements (cartels) aimed at restricting competition;
• Engaging in any activities that restrict competition (such as discrediting competitors or their goods and products, or conducting advertising that has adverse effects on competition);
• Disseminating any information or news detrimental to the reputation of a business entity before a violation of Antitrust Law has been fully reviewed and a final decision rendered.

2) What types of bid rigging exist, and how are they classified?

Under the Antitrust Law, any arrangements involving prior agreement on prices or other terms and conditions constitute a cartel. Business entities are prohibited from entering into agreements or arrangements (cartels) aimed at restricting competition, including the following:

• Agreeing on and fixing the prices of goods and products;
• Dividing markets by territory, production, services, sales, product names, types, or customers;
• Restricting the production, supply, sales, shipment, transportation of goods and products, access to the market, investment, or technological innovation and modernization;
• Participating in tenders, auctions, or procurement of goods, works, and services with state or local property together with affiliated parties for the same lot or package, or entering into agreements or arrangements with other participants aimed at restricting competition, or making prior agreements on prices, other terms, or criteria.

3) How do antitrust authorities detect and investigate cartels and anti-competitive agreements?

The Antitrust Law does not provide specific regulations on how agreements and arrangements restricting competition are to be detected and investigated; such matters are detected and investigated by the Anti-Monopoly Agency (state inspectors) based on inspections.

Grounds for conducting inspections include:

• Complaints and petitions submitted by business entities, organizations, or individuals;
• Information published in the media;
• The Authority’s own initiative;
• Other grounds provided by law.

Any person who submits credible information along with supporting evidence regarding a party that has entered a cartel or issued a collusive decision shall be granted a monetary reward equal to 5% of the value of the fine imposed for the violation by the Anti-Monopoly Agency.

4) What measures can companies take to mitigate antitrust risks?

The measures that companies should take to mitigate antitrust risks:

• Refrain from engaging in, or supporting, any activities that restrict competition as prohibited under the Antitrust Law;
• Notify the Anti-Monopoly Agency if there is clear information or evidence regarding the existence of a cartel and other anti-competitive practice;
• Strictly comply with lawful decisions issued by the Anti-Monopoly Agency and state inspectors within the prescribed timeframe;
• If a decision of a state inspector is deemed unlawful, submit a complaint to the Anti-Monopoly Agency within the statutory period; and if a decision of the Anti-Monopoly Agency is considered unlawful, file a complaint with the court within the time limit provided by law.

5) What are the specific rules governing undertakings with a dominant market position?

In addition to the general activities prohibited for all business entities that restrict competition, the law specifically sets out the activities prohibited for business entities in a dominant position, as well as the measures to be taken in case of violation.

• Article 7 of the Antitrust Law provides that “A business entity in a dominant position shall be prohibited from engaging in the following abusive practices (any activities that constitute unlawful abuse of its dominant position),” which include artificially creating a shortage of goods, suspending or restricting the production or sale of goods, setting unreasonably high prices for goods, among others, with a total of 12 prohibited practices listed;
• Furthermore, if a business entity in a dominant position is reorganized through merger or consolidation or purchases shares in a competing company engaged in the sale of similar goods, or merges/consolidates with an affiliated entity, it is required to apply and obtain approval from the Anti-Monopoly Agency. Failure to notify shall result in fines in accordance with the Law on Infringements;
• The Antitrust Law also provides that if a business entity in a dominant position repeatedly (two or more times within one year) engages in abusive practices for which it has already been held legally liable, measures shall be taken to reorganize the entity through division or separation.

6) What powers do antitrust authorities have when conducting inspections?

The Anti-Monopoly Agency shall be independent and autonomous in carrying out its duties as prescribed under the Antitrust Law.

In connection with the inspection, the Anti-Monopoly Agency is empowered to:

• Conduct inspections of business entities and organizations, regardless of their form of ownership, and issue conclusions;
• Request and obtain, free of charge and without delay, the necessary data, information, studies, explanations, certifications, financial and other documents from business entities, state administrative bodies, local self-governing and administrative bodies, and officials to assess competition conditions and analyse the market situation, and to obtain expert opinions and certifications;
• Involve other organizations, their employees, and citizens in inspections and research activities;
• Cooperate and exchange information with foreign and international organizations of a similar nature regarding the creation of competitive conditions and inspections.

Authors: Bolormaa Volodya, Enkh-Uchral Khurelbaatar