Decision of the Cabinet of Ministers dated 10 March 2025

In the process of regulating a market economy, the accurate calculation of market shares, and the correct determination of product and geographic boundaries, as well as the size and structure of the market, are essential. These factors play an important role in preserving a competitive environment and ensuring the efficient functioning of the market. By the Decision of the Cabinet of Ministers of the Republic of Azerbaijan dated 10 March 2025, rules governing the aforementioned issues were approved. This brief article provides a short analysis of the key aspects of that decision.

Initially, the decision refers to the Herfindahl–Hirschman Index (HHI), a method used to calculate market shares. This index is calculated by summing the squares of the market shares of market participants. The HHI indicator is used to measure the level of market concentration and indicates the degree of competitiveness in the market.

For determining product boundaries, demand and supply substitutability methods are applied. Demand substitutability is considered superior because it takes into account the similarities in characteristics, utility, and price of products from the consumer perspective. Products identified using this method constitute the product boundaries of the relevant market.

The identification of geographic boundaries is also of significant importance. The geographic boundaries of the relevant market cover the areas in which the product is produced or sold. In this process, demographic characteristics, competitive conditions, and other relevant factors within the geographic region are taken into consideration.

In identifying market participants, the producers and sellers of goods and services in the market, regulatory bodies, and consumers are involved. The structure of the market is determined based on the shares held by these participants and is classified as monopolistic, duopolistic, oligopolistic, or competitive.

Thus, these rules play an important role in the proper regulation of the market economy and the protection of competition in the Republic of Azerbaijan. Obtaining accurate and objective information on market share calculations, product and geographic boundaries, and the size and structure of the market contributes to the efficient operation of the market and serves to protect the interests of consumers and business entities.

The information source refers to:
https://nk.gov.az/az/senedler/qerarlar/azerbaycan-respublikasi-reqabet-mecellesinin-teleb-8691