"There is a need for different models and rules to ensure the functioning of competition law 's enforcement mechanism"

  • 4 March 12:16

Today’s topic is especially exciting to explore as I got the opportunity to interview a special guest. I would like to introduce Prof. Julian Nowag, a professor you will most likely be familiar with if you started to deepen your knowledge in a Competition Law, EU Law. Mr.Julian is an associate professor (docent) in EU law at Lund University specialised in EU and Competition Law and an associate at the Oxford Centre for Competition Law and Policy where he is on the editorial board of The Journal for Antitrust Enforcement as managing editor. Julian earned a Master’s degree (MSt) and a doctorate (DPhil) from the University of Oxford. He also completed an LLM in European Legal Studies at Durham University and undergraduate law studies in Germany and Austria. In Lund he is Director of the Master programme in European Business Law and teaches course on Competition and various areas of EU law. Julian taught EU law and competition law at Oxford and gave lectures and seminars on EU law, comparative law and competition law in Hanoi (Vietnam), Malaysia, various European cities and Latin America. Julian is a qualified lawyer in Germany. His professional training focused on competition law with placements at the German Competition Authority’s international co-operation unit, the European Commission (DGComp, cartels unit) and Allen & Overy’s German Antitrust unit in Hamburg.

- Dear Professor! We truly appreciate our profound gratitude to you for accepting our invitation and taking out your precious time to attend in an interview. For brief information I would like to mention that in ‘Strategy for socio-economic development of Republic of Azerbaijan for 2022-2026’, it is envisaged to adopt the Competition Code in Azerbaijan, which will significantly improve business environments, and to prevent unfair competition. Azerbaijan Competition Law has undergone a process of modernization after passing the first Competition Code of Republic of Azerbaijan in 8th December 2023 which is expected to come into effect from 1st of July 2024. Competition Code has merged the previous Law on "Antimonopoly Activity", Law on "Unfair Competition", Law on "Natural Monopolies" which will lose their legal effect once the Code comes into effect. According to article 77 of the Competition Code of Republic of Azerbaijan, “Financial sanctions are applied to undertakings for submitting incomplete, incorrect or false documents and information to the competition authority, or for late submission or non-submission of those documents and information.” Privilege against self-incrimination is one of the fundamental human rights. Respect for the rights of the defence of anyone who has been charged shall be guaranteed. From that perspective, can “clause 77” be considered as a violation of basic human rights?

- The answer to this question would depend on a number of considerations, taking in particular also into account the legal framework in Azerbaijan. First, to what extent can companies claim ‘human rights’. Second, not every state action that restricts a right is also a violation. Think about other human rights. Often restrictions can be justified. Third, we need to look at the overall set up of the enforcement system that will be established. In a US-style prosecutorial system such an obligation might well be seen as a violation of the rights of defence. In an EU- style model of administrative enforcement, the situation might look different. In fact, you might find similar provisions in the relevant EU procedural rules.

- To what extent, competition authorities can compel the individuals working for or in the undertaking concerned to provide incriminating information?

- This again relates to the enforcement model (e.g. prosecutorial vs administrative) and specific rules applicable in a jurisdiction. In the EU for example, companies and their employees are required to provide all kind of (including incriminating) information. However, the obligation only relates to factual matters and stops short of an admission of guild. The law in the EU in this regard is far reaching so that for example they might have to provide that one email that contains the ultimate proof of an infringement e.g. the email that shows that the parties agree on a specific price in a cartel case. Yet, at the same time the obligation to provide factual information does not mean that the parties would be required to admit that this proofs the infringement.

- What’s your stance on this issue? And what will be the practical problems?

- Without knowing the details on the Azerbaijan’s institutional set up and rules, I would be hestitent to comment. However, I would point out that in a prosecutorial model a number of tools are available that usually exist only in criminal proccedures. These tools provide prosecutors with effective means to obtain proof of a violation for the law. These tools are not available under the administrative model. Thus, other tools need to be available to ensure that the enforcment system is able to function effectivly and efficently.

- Is there truly any need for regulating digital economy? -Was the traditional Competition Law not well-equipped enough to tackle today’s new business models?

- Those are difficult questions that have lead to a number of reports around the world (e.g. there are reports on digital markets, in the US, the UK, Japan, the EU, Germany, France, Australia, and many other jurisdictions). One problem with using competition law in the digital economy that the majority of these reports have highlighted are tipping points after which competition in these markets is damaged to an extent that the enforcment of competition law will not make substantial differences. Simiarly, the ex post nature of competition law has been highlighted. In other words, competition law enforcment becomes only active when the damage is already done (the law has been violated). Thus, laws like the EU’s DMA adop an ex ante approach which is forward looking trying to prevent problems from arrising or addressing existing problem going forward.

- “Trendyol”, the leading e-commerce platform of Turkey, is a very serious obstacle for the development of local retailers in Azerbaijan. They complain that their income is much weaker than in previous years. Unfortunately in new Competition Code, there is not any article dealing with new business models, digital market. For example, The Digital Markets Act is the EU's law to make the markets in the digital sector fairer and more contestable. Question: In the similar vein, should we also expect the adoption of another legislative act addressing the Digital Market? Would it be good idea to incorporate the regulation of digital economy in the Competition Code once and for all?

- You again raise important and difficult questions. The fact that Trendyol has entered the market might have reduced the income of some local retailers, but at the same time will most likely have lead to lower prices for consumers. Thus, answers are not straight forward. However, protecting competition in digital markets is an important matter that certainly deserves attention. One could imagine that the competition agency (or other agencies) might need additional tools to address competition related problems that arrise in this space as more and more commerce will be done predominantly or exlusivly online.

- Sustainability in competition law- How do you assess Azerbaijan Competition Law in terms of sustainability? Professor, I have read “Sustainability Objectives in Competition and Intellectual Property Law” book, specially the first part written by you which is called “Sustainability and Competition Law: An International Report”. From the mutual comparison of the competition law of different countries, I came to the conclusion that the Azerbaijani competition law is more similar to the Austrian competition law. According to article 13 of the Competition Code of Republic of Azerbaijan, “When agreements related to technology transfer, market research and development meet the criteria defined by Article 13.2 of this Code, as well as agreements and concerted actions whose benefits to consumers outweigh the negative effects of restriction of competition meet all of the following conditions, competition as long as those conditions exist exempted from the ban by the competition authority: 13.1.1. when such agreements serve to improve the production or sale of the product, or promote technical or economic progress and allow consumers to obtain additional benefits in a fair manner; 13.1.2. if such agreements do not establish disproportionate additional restrictions in order to achieve what is mentioned in Article 13.1.1 of this Code; 13.1.3. when such agreements do not allow economic entities to restrict competition in relation to a significant part of a certain product.”

- How would you assess sustainablity matters in this context? Given this text there is obviously the opportunity to see sustainablity benefits as a quality improvement or an improvement of the production process. The question would then be to what extent consumers receive a fair share, which would depend on the facts of the case. However, I would want to point out that there are numerous agreements fostering sustainablity that might not restrict competition in the first place. I have highlighted with a student this in a paper in 2020 (https://ssrn.com/abstract=4030470) and the EU commission has also included a specific section on sustainablity standards in its new horizontal guidelines where it explains the conditions that need to be met for such standards not to restrict comeptition in the first place.

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