Umid Gafurov

April 9, 2021

Image source: Pinterest


In order to develop competition in the economy, the Government of Uzbekistan adopted a number of important decrees and resolutions. While the case of UzAvtoMotors, has received much public attention due to being a great example of monopolistic injustice, I would like to point out the legal background for the problem, as well as sharing some other examples of misuse

Studying the Competition Law course at the Tashkent State University of Law and the law enforcement practice of the Antimonopoly Committee(Committee), I noticed the following problem. The Competition law (2012) has a unique article (article 12) that aims particularly at stopping state bodies from restricting competition. Nonetheless, for the sake of achieving departmental, possibly personal interests or lobbying individual interests of entrepreneurs, often officials at some state bodies (state-owned enterprises, SOEs) tend to prepare drafts of government regulations or presidential decrees that contradict competition laws. In the drafts of legal acts that they develop actions that contradict the competition law includes, but not limited to:

a) Creation of monopoly companies,

b) Obtaining the right to independently select economic entities without holding tenders (competitions),

c) Obtaining the right to provide benefits and preferences to individual economic entities.

2. Case-study

Here are some case studies published on the website of the Antimonopoly Committee:

2.1. Creation of monopoly companies

Currently, there are 224 state-owned monopoly enterprises (including natural monopolies) operating in Uzbekistan. Monopoly means high prices and lack of choice for consumers. Consequently, government policy should be aimed at reducing the number of monopoly companies, rather than creating new ones. Let me examine several cases when state bodies advocated the creation of monopolies.

  1. Currently there are several companies in Uzbekistan that provide online services for the sale of electronic tickets for transport. For instance,,,, as well as tickets to cinema, theater, concerts and sport events like and are some of them. However, in April of 2020 the Ministry of Culture, the Ministry of Finance, the Ministry of Transport and the State Committee for Tourism Development jointly proposed to create a single portal (operator) for the sale of electronic tickets. Undoubtedly, the creation of a single operator will lead to the establishment of a monopoly in this area.
  2. The Ministry of Agriculture, in the draft Resolution of the Cabinet of Ministers, proposed to create a state unitary enterprise Agroservice Operator. The project states that the company Agroservice Operator will be engaged in the implementation of targeted programs aimed at the sustainable development of horticulture and viticulture.
  3. The Ministry of Investment and Foreign Trade has developed a draft decree of the President, which provides for the creation of a foreign trade company JSC Uzintertrade. This trade company is planned to be granted the right to export monopoly products, purchase goods from local entrepreneurs and artisans without paying value added tax, subject to their full export, provision of intermediary services, etc.

As can be seen, ministries tend to opt for creation of single company in the field, which may result in suppressing other operating businesses.

2.2. Bypassing the tender in public procurement

Tender is one of the main ways to ensure competition in the public procurement market, which allows the customer to choose the worthiest supplier (manufacturer) in terms of price-quality ratio. According to the Law “On Public Procurement”, in order to ensure impartiality and prevent corruption, the implementation of public procurement of goods, works, services, as a rule, should be carried out on the basis of the principle of competition, i.e. through tenders. However, some state bodies wish to independently choose economic entities without holding tenders, unreasonably using exceptions to the general rules contained in the above law. Here are some examples:

  1. The Ministry of Housing and Utilities Services proposed the appointment of Technopark LLC as the main contractor for replacing old elevators with new ones in all apartment buildings of the country. The proposal also intends to grant the right to monitor elevator equipment and provide dispatch services.
  • The State Tax Committee has developed a draft of presidential decree that provides for the conclusion of a contract directly with LLC CRPT TURON company for the provision of digital product labeling services.
  • The State Committee for Geology and Mineral Resources, in the draft Law On Subsoil, offers, upon receipt of a permit for the right to use subsoil plots, the opportunity to issue a permit on the basis of an application from an interested persons based on the results of direct negotiations.
  • The local government of Surkhandarya region has developed a draft resolution for the Cabinet of Ministers, according to which cleaning the Surkhandarya Riverbed is appointed to SURXON TEKSTIL TOLA LLC, BOTIR ALI LLC and SHO’RCHI SHAG’AL SAVDO LLC without a tender.
  • The Association Uzeltehsanoat has developed a draft resolution of the Cabinet of Ministers, which enables former to independently choose methods of purchasing goods (equipment, works and services) for the construction of the new Center.
  • The Association of the Textile Industry (Uztekstilprom), in the draft resolution of the Cabinet of Ministers proposes the import of agricultural machinery and spare parts on the basis of direct contracts with Indorama Agro LLC and Pahtakor Teh LLC.

Thus, these cases show that state bodies’ attempt to receive some exemption from the public procurement procedures are not rare.

2.3. Granting benefits and preferences to certain business entities

Receiving benefits and preferences from the state always puts the recipient business in a privileged competitive position in relation to other players in the market. As a result, healthy competition is disrupted and the market is gradually monopolized.

  1. The Ministry of Health submitted a draft resolution for the Cabinet of Ministers, which requests to provide of 29.48 hectares of land to the private entity AKFA University for permanent use at no cost.
  2. The draft Resolution of the President developed by Uzavtosanoat JSC requires the local government of Andijan region to provide at least 100 hectares of land to Sanoat Habi, as well as exempt them from paying the compensation for      using the irrigated land for non-farming related activity.

    For all the above projects, the Committee issued a negative conclusion, and these are only a few cases that were officially published on the Committee’s website. In practice there should be a lot more. In most cases, negative conclusions of the Committee are neglected and the drafts are adopted.

Underlying reasons for competition law’s crisis in Uzbekistan

Several reasons can be argued for such a phenomenon in Uzbekistan. First of all, the absence of antimonopoly compliance in state bodies, which is a system of internal compliance with the requirements of antimonopoly legislation.

Second, lack of true institutional and operational independence of the Committee. Although Competition law states that the Committee is accountable to the Parliament and the President, de facto the Committee’s dependency on the Cabinet of Ministers still remains as the Chairman of the Committee is appointed and removed by the President based on the recommendation of the Prime Minister.

Third, absence of administrative liability for the infringement of Article 12 of Competition law. Article 178 of the Code on Administrative Liability sets no practical punishment for state bodies for restricting competition.  

Policy recommendation

In order to deal with above-mentioned problems, first of all it is necessary to promptly introduce an antimonopoly compliance mechanism and teach legal personnel about competition law in all state bodies and SOEs. The introduction of antimonopoly compliance may significantly reduce a risk of antimonopoly violation by state bodies and SOEs.

Secondly, it is necessary to establish an administrative penalty for violations of Article 12 by state officials. A responsible official should bear administrative responsibility for the infringements in the form of a fine. The size of the administrative fine is not as important as the fact of having administrative liability itself since in a bureaucratic state, having being brought to administrative responsibility may be enough to negatively impact future career growth. Therefore,  the having in the autobiography the fact that a state official has been brought to administrative responsibility may have negative impact on further career promotion. Therefore, it stimulates state official to be more careful in decision-making activity, which ultimately leads to significant reduction of the violations.

Finally, yet importantly, the conclusion of the Committee on drafts of legal acts should not be advisory, but obligatory. That is, without a positive conclusion of the Committee, drafts of normative legal acts should not be adopted.

Cite as: Umid Gafurov, “In defense of fair competition in economy: how to protect legislation from lobbying and monopoly?” Uzbekistan Law Blog, 09.04.2021.