Right to Conduct Economic Activity – Nurida Babasheva

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The economic rights of a person have a most principal meaning for his life. This group of rights provides freedom for a person in the economic, social and cultural spheres of life in its aggregate and gives him an opportunity to provide for his requirements of existence. In this essay we will deem such category of economic rights as the right to conduct free enterprise which, in combination with the right to private property, appears to be the legal base of market economy, excluding the state monopoly to arrange the national economy. Entrepreneurial activity is understood as “independent enterprising activity of physical persons, their unions and also juridical persons, aiming to receive a profit or personal income in all the permitted by the legislation forms of economic activities such as production, distribution of goods and rendering of services at their own risk and their property accountability or on behalf of others judiciary or physical persons.

The right to economic activity includes a number of concrete rights providing an opportunity to start and conduct entrepreneurial activity. Toward this end the holder of the right to economic activity may establish enterprises at own risk and accountability, freely enter into contracts with others entrepreneurs, acquire and manage property. No state agency has a right to dictate to the entrepreneur which product he has to produce and which prices of products he wishes to set (unless the restrictions are regulated by law).

An entrepreneur hires and fires employees with observance of the labor legislation and disposes of his profit himself. The freedom of enterprise also includes the right to implement a foreign-economic activity creating unions and associations with others entrepreneurs, and establish accounts in banks.

The recognition of the right to economic activity generates certain responsibilities for the government appearing as guarantees of this right. State structures cannot refuse a registration referring to an inexpediency of the business in question. The government must fight racket, blackmail and protect entrepreneur’s property as ardently as if it were state ownership. The Government of a jural state provides assistance to private business through its entire economic policy, encourages its development and protects from illegal infringement. Any damage rendered to an entrepreneur through an official’s fault must be compensated.

At the same time this right is subject to definite limitations. The government prohibits certain kinds of economy activities (production of arms, manufacture of orders of distinction, etc.) or determines such an activity by special permissions. The government regulates export and import of goods which also applies certain restrictions on many enterprises.

At last, state agencies have the right to demand financial reporting from entrepreneurs without disclosing the commercial confidential information. These and a number of other limitations are essential for the national economy as a whole, but they must be based on active legislation.

Concrete issues connected with the implementation of the rights to economic activity are regulated by many statutes and, first and foremost, by the Constitution, Constitutional Act on State Independence, Civil Code, Law on Entrepreneur Activity of the Azerbaijan Republic and other laws ensuing the above.

The legislation of the Azerbaijan Republic specifically marks out another form of economic activity subject to forbiddance – an activity aimed at monopolization and unfair competition.

Unfair competition is understood as competitive struggle conducted by dishonest or illegal methods. Abuses of power benefited from the dominating positions in the market and infringement of the ethic regulations of competition are destructive for citizens and the society as a whole. Absence of competition impedes the economic and technological progress.

Unfair competition infringes the citizen’s and economy’s interests appearing in establishment of prices (targeted at keeping the prices at high level), division of markets and elimination of other entrepreneur form the market. The interests of consumers are infringed when they are misinformed about the producer, purpose, means and place of the produce, the quality and other values of other producer’s goods by means of unethical comparison of goods in advertising and other kind of information, copying of the attribute and using of other goods’ trade mark or by other ways.

Such kinds of methods are prohibited by the Law of the Azerbaijan Republic on Unfair Competition (2nd June 1995) and Law of the AR on antimonopoly activity (3rd March 1993). Also prohibited are the dispersion by an entrepreneur of false, inaccurate, or distorted information, potent to incur losses to other entrepreneurs, withdrawal of goods from circulation aiming to create or maintain a deficit in the market or increase the prices, obtrusion to contractor terms of the treaty being unprofitable for him and number of others actions.

The Law establishes that a position may be recognized as dominating (i.e. monopoly) if the share of goods on the market exceeds 35% leading to a possibility to restrict competition. Competition’s restriction is prohibited not only to separate entrepreneurs but also to state structures. The ways of fight monopoly and unfair competition may be appeals to the antimonopoly agencies that are authorized to issue orders on stopping the illegal actions and, in case of a failure to realize the order, to impose a fine. In case of damage from such actions there is a possibility to appeal to court (both general and arbitral).

The Law on Antimonopoly does not refer to the group of actions of the so-called natural monopolies, i.e. the monopolies producing goods meeting the demand more effectively in the absence of a competition by virtue of the technology features of production and in case if goods have firm demand in view of impossibility of their full replacement by others goods. For example, transportation of oil and through pipelines, railway transport, facilities of terminal and port’s transmission, facilities of electric coupling and mail service. The Law of the AR on natural monopoly envisages the regulation of natural monopoly’s activity through special state structures