Parliament to discuss bill against monopolies in spring

ZGM DAILY

2019-02-19 11:00 GMT+8

The Parliament is expected to discuss the draft revision to the Law on Competition in the upcoming spring session. The bill is focused on more on fair competition and standing up to monopolies.

About a year ago, oil dealers refused to sell and presumably stored A-92 fuel, creating a long and stressful queue on purpose. It was the results of monopoly companies opposing the increase in excise tax rate. The situation ended with the Government agreeing to annul excise taxes on certain fuels. This confirms that there is an urgent need to make regulations for such companies.

With the exception of fuel, it became clear that there are multi­ple monopoly companies, or even oligopoly companies, in many business fields. Mongolia has adopted the Law on Combatting Unfair Competition in 2010 to regulate the fresh and fair conditions of business. At that time, the budget revenue of Mongolia was MNT 2.3 billion, which now stands at MNT 9.6 billion in 2019.

In connection with the growing economy and increased number of companies in the market, the Parliament is trying to reform the old legal conditions of business sectors, which remained unchanged for over a decade.

The next big change is the regulations on mergers and acquisitions. With the current law, companies are required to issue a document from the Authority for Fair Competition and Consumer Protection that an M&A will not affect the market if they hold over 20 percent of its stakes; however, there were cases where small shareholders would form to create a stock concentration. Thus, the bill requires the same documents from every company regardless of the amount of stake it holds.

Furthermore, the bill will allow law enforcers to conduct underover investigations on unfair competitions as the current law requires them to notice the entity under investigation beforehand. Additionally, the revision also sets the prescription period at 3-5 years from two years.

 

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