Study On Regulation Of Public Enterprises Abuse Of A Dominant Position In China

Public utilities are the operators of public affairs. Its operation state,service quality and the price level not only directly affect the public life,but also become the inevitable and significant prerequisite for ourcontemporary industry development. This paper analyzes the problems ofabuse of market power in public utilities of China. Except theintroduction and conclusion, this paper includes four parts altogether, themain content which has been discussed by each chapter is listed as follow:The first chapter is just to elaborate the theoretical basis for regulatingthe abuse of market power in public utilities. Just because of the attributeof natural monopoly, it is inevitable to get market power in Public unitiesfield. By analysis of SCP model, it provides that public unities are inclinedto abuse the market power in order to maximize its profits. To protectpublic interests, it is necessary to regulating public unities by antimonopolylaw.The second chapter introduces the behavior of public utilities in adominant position and analyses its severe impair. Firstly, several kinds ofabuse of the dominant position are discussed, such as excessive pricing,forced transaction or tying, refusal to supply, charge or sanction abuse.Secondly, in order to emphasize the significance of efficient regulation, thenegative consequence of exploitative abuse is discussed, involvingefficiency loss, enhancing income margin, and the great difficulty oneradicating rent seeking. As a result of these reason, resource distribution isdisordered.The third chapter is about the current legislative situation onregulating the abuse of market power in public unities. Compared to thelegislation of other developed country, lack of special law is the reality inChina. Related law to regulating is Anti-unfair Competition Law, but onlya few clauses prohibit forced transaction and tying. Though regulations ofspecific area are promulgated, they are too old to be used to regulate newconduct of abuse. For example, when vertically integrated firms control essential inputs, they might abuse their market power and discriminateagainst downstream competitors. Access price regulation should be used toprevent the vertically integrated firms to raise the rivals' costs, anduniversal service duty should imposed to ensures that basic fixed lineservices are available at an affordable price to all citizen-customers.In the fourth chapter, the countermeasures to regulate abuse of publicutilities are discussed. The paper concludes with a discussion of somelessons that can be learned from the experience of several countries/areas.It can be divided into two parts in general: the prevention method andpenalty method.In the part of prevention method, I mention the legal system ofregulation. As price regulation, there is a substantial menu of options tochoose. For instance, cost of service regulation (including direct pricesetting and rate of return) or price cap regulation. From the experience ofsome developed countries, it will be helpful to promote efficiency andincrease productivity through the use of price caps. As a part of theprevention methods, the hearing process gives consumers the right to gainaccess to the decision-making about utilities and to express their opinionsin an open heating, which can balance the interest between the public andutilities. In the part of remedy method, I mainly discuss the regulator, thepublic interest litigation, and civil liability in Anti-monopoly Law. To beeffective, regulators must establish independence, transparent processes,authority, and credibility. Considering the difficulty for single person toversus public utilities, it is necessary to perfect the system of public interestlitigation, which is set up for the protection of public interest. TrebleDamages, a recovery of three times the amount of actual financial lossessuffered which is provided by statute for certain kinds of cases, which canbe applied in the remedy method.