1. To approve attached Rules on Monopolistic Income; Rules to Fix Monopolistic High and Monopolistic Low Price.

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1 On Approving Rules on Monopolistic Income and Rules to Fix Monopolistic High and Monopolistic Low Price The Order of Chairman of Competition Protection Committee of the Ministry of Industry and Trade of the Republic of Kazakhstan of November 7, 2006 # 252-ОD Registered at the Ministry of Justice of the Republic of Kazakhstan on November 15, 2006 # 4457 According to paragraph 10) of item 1 of Article 6 of Law of the Republic of Kazakhstan On Competition and Restriction of Monopolistic Activity ORDER: 1. To approve attached Rules on Monopolistic Income; Rules to Fix Monopolistic High and Monopolistic Low Price. 2.For the Department of Internal Administration of the Competition Protection Committee of the Ministry of Industry and Trade of the Republic of Kazakhstan to ensure registration of this Order at the Ministry of Justice of the Republic of Kazakhstan in the regular procedure. 3. Deputy Chairman of Competition Protection Committee of the Ministry of Industry and trade of the Republic of Kazakhstan, Mr. J. Kozhakhmetov, shall be entrusted with responsibility to keep control of execution of this Order. 4. This Order comes into force as of day of first official publication. Chairman Approved By the Order of Chairman of Competition Protection Committee of the Ministry of Industry and Trade of the Republic of Kazakhstan of November 7, 2006 # 252-ОD Rules on Monopolistic High and Monopolistic Low Prices 1. General Provisions 1. Rules on Monopolistic High and Monopolistic Low Price (Hereinafter Rules) are developed in compliance with Law of the Republic of Kazakhstan On Competition and Restriction of Monopolistic Activity (hereinafter Competition Law), as well as normative legal acts which regulate accounting procedures in the Republic of Kazakhstan. The purpose of these Rules shall be to fix monopolistic high and monopolistic low price set up by market entities with dominating (monopolistic) position at the existing goods market (hereinafter dominant). 2. Notions and terminology used for the purpose of these Rules shall be interpreted with the same meanings as in laws. 2. Indications of Monopolistic High Price and Monopolistic Low Prices 3. The indications of dominant s monopolistic high and monopolistic low prices shall be determined by antimonopoly authority: 1) during monthly monitoring of dominants performance.

2 Monitoring shall make use of information provided by dominants in compliance with Article 31 of the Competition Law to antimonopoly authority without fail, such as: Quarterly financial reporting according to legislation of the Republic of Kazakhstan on accounting and financial reporting; Monthly information on production (sales) volumes, selling price and level of income of manufactured (sold) goods (works, services) by monopolistic types of products. 2) during analysis of information provided by dominant together with the notice on forthcoming rise in prices for goods (works, services), or information provided by dominant upon request of antimonopoly authority; 3) during analysis of goods markets by antimonopoly authority; 4) upon complaints, information or evidence on dominant s monopolistic high and monopolistic low prices received by antimonopoly authority. 4. These are indications of dominant s monopolistic high price: 1) excess of actual price growth index for goods (works, services) monopolistically manufactured (sold) by the dominant over price growth for similar goods (works, services) of other market entities at the same goods market, or average in the sector; 2) excess of expenditures growth for the period per unit of product over production price growth; 3) excess of expenditures growth for the period per unit of product over production price growth per unit; 4) deliberate reduction of production (sales) volumes of goods (works, services) by dominant, or termination of production (sale) though consumer demand is available within geographical boundaries of goods market where it is a dominant; 5) latent rise in price for goods (works, services) monopolistically manufactured (sold): worse quality and others (e.g. weight of a unit of product); 6) artificial rise in price for goods (works, services) monopolistically manufactured (sold): dominant imposes extra terms not related to the subject of agreement on consumer; 7) artificial rise in price for goods (works, services) monopolistically manufactured (sold): additional terms in the contract which result in rising price for goods (works, services) monopolistically manufactured (sold); 8) excess of profitability level of goods (works, services) monopolistically manufactured (sold) over average sector profitability indicator and (or) profitability of similar goods (works, services) of other market entities; (it should be noted that if a certain type of expenses has the biggest weight in the structure of cost of goods (works, services) monopolistically manufactured (sold), and the dominant can not impact this type, then one can judge on monopolistic high or low price according to the dynamics of this type of expenses); 9) rise in growth rate for payroll of administrative personnel against growth rate of payroll of production staff; 10) dominant s excess of average monthly payroll level over average monthly payroll of a market entity involved in the same activity at the same goods market as the dominant. 5. These are indications of dominant s monopolistic low prices: 1) production (sale) of goods (works, services) by dominant at a price below the cost and (or) below price level of the competitive market, and (or) below average sector (average regional) level, unless it is a result of state of the market; 2) price-cutting is not caused by state of the market and dynamics of production costs; 3) purchase of goods (works, services) by a market entity with dominating (monopolistic) share in the goods market as a customer at a price below the price of competitive market which does compensate production (sale) costs;

3 4) rise in profit is not caused by state of the market of a market entity with dominating (monopolistic) share in the relevant goods market as a customer by means of reducing own production (sale) costs at the expense of supplier; 5) withdrawal of two and over vendors (producers) from the market as a result of unprofitable performance provoked by consumer (purchaser). 3. Competitive Price 6. According to indications stated in paragraphs 4 and 5 of these Rules the antimonopoly authority shall compare dominant s prices with the prices for similar goods (works, services) at the competitive market. If it is not possible to take price for similar goods (works, services) at the competitive market, the antimonopoly authority shall calculate approximate competitive price for goods (works, services) similar to dominant s (hereinafter approximate competitive price) according to the this formula: P c = P a х (I : I a ), where P c approximate competitive price; P a price for monopolistic goods (works, services) set (declared) by dominant; I - sector (regional) index of price growth (inflation by this group of goods (services), % for the period since last price modification; I a - index of actual price growth for certain goods (works, services), %. 7. If there is a significant distinction between dominant s price for monopolistic goods (works, services) and approximate competitive price the antimonopoly authority shall perform a detailed analysis of dominant s price for monopolistic goods (works, services). The antimonopoly authority can take prices for similar goods outside Kazakhstan as approximate competitive price. 4. Analysis of Dominant s Prices for Monopolistic Goods (Works, Services) (Produced, Sold, Purchased) 8. To detect abuse of dominating (monopolistic) position by a dominant expressed in monopolistic high or low prices the analysis of the following is performed: 1) financial status of the dominant; 2) dynamics of production and overall cost of goods (works, services) monopolistically produced (sold, purchased) by dominant to reveal reasons for rise or cutting (for monopolistic low prices) of production costs; 3) profit of a dominant from monopolistic sale (purchase) of goods (works, services); 4) dynamics of prices for goods (works, services) monopolistically sold (purchased) by dominant; 5) dynamics of production (sale, use) volumes of a dominant; 6) use of production capacities; 7) contracts which resulted in direct or indirect composition of prices for goods (works, services) monopolistically produced (sold, purchased) by dominant; 8) production costs and expenses of the period. 5. Justified Price 9. Justified price shall be set according to approximate competitive price and justified deviations reveled after analysis.

4 10. If according to paragraph 6 of these Rules it is not possible to fix an approximate competitive price the antimonopoly authority shall calculate justified price based on analysis of actual costs of the dominant (less costs considered by the antimonopoly authority as unjustified) related to production (sale, purchase) of monopolistic goods (works, services) and justified profit or average sector profit. 11. Unjustified costs shall be costs not related to production activity performed by a market entity making use of dominating position (e.g. maintenance costs for health units, pre-school organizations, schools, camps, culture and sport units, housing stock, charity). 12. If a market entity does not maintain a separate account for costs by types of products the antimonopoly authority shall separate costs by types of goods via indirect methods (income, volumes, costs for payroll of production staff). 13. If it is not possible to separate costs by indirect methods the antimonopoly authority shall fix justified price through comparative analysis of prices for similar products at the goods market, including outside the Republic of Kazakhstan. 14. The analysis shall be finalized in statement of availability or absence of monopolistic high and low prices. Approved By the Order of Chairman of Competition Protection Committee of the Ministry of Industry and Trade of the Republic of Kazakhstan of November 7, 2006 # 252-ОD Rules on Monopolistic Income 1. General Provisions 1. These Rules on Monopolistic Income (hereinafter Rules) are developed in compliance with Laws of the Republic of Kazakhstan On Competition and Restriction of Monopolistic Activity (hereinafter Competition Law), and On Unfair Competition. The purpose of these Rules shall be to determine the procedure to calculate monopolistic income. 2. Notions and terminology used for the purpose of these Rules shall be interpreted with the same meanings as in laws. 2. Monopolistic Income 3. These are actions of a market entity which bring to monopolistic income thereof: 1) anticompetitive deals (agreed actions) of market entities; 2) abuse of dominating (monopolistic) position in the market by market entity; 3) anticompetitive actions of state bodies. 4. Monopolistic income shall be fixed from the moment an action of a market entity, state body takes place according to paragraph 3 of these Rules up to discontinuance of such action. 5. Monopolistic income shall be fixed:

5 1) during use of monopolistic high prices as spread between income from monopolistic high prices and income calculated from actual or approximate competitive price at the relevant goods market or similar market; or in the event of failure to fix a competitive price from the price calculated by antimonopoly authority from justified costs and profit; 2) while setting monopolistic low prices: as additional income of dominant from increased volumes at the expense of elimination of competitors from the market; as difference between costs of a market entity with dominating position as a customer for purchase of goods (works, services) at a real or approximate competitive and costs set during purchase of goods (works, services) at monopolistic low prices; 3) when dominant violates pricing procedure as spread between actual income and income fixed by price calculated according to approved pricing procedure. 6. Monopolistic income of a market entity from anticompetitive deals (agreed actions), anticompetitive actions of state bodies shall be determined as overall income from these actions.