Comparative Research On Regulation And Control Of Vertical Monopolies From The View Of Auto-parts

Since 2014, Chinese government had started an anti-monopoly raid on the import auto-parts market. The Insurance Association of China(IAC) released the “parts to whole price ratio” of several common import automobiles, which draw much attention of the public. Then, 12 Japanese automobile manufacturers were fined 1.23 billion by the National Development and Reform Commission(NDPC).The truth above tells us that the competition environment of the auto-parts market is in chaos. The monopoly behavior are as follows, first of all, automobile manufacturers fix high price for auto-parts; secondly, automobile manufacturers ties the auto-parts with fix service; thirdly, automobile manufacturers control the sales behavior of retailers.We can analyze and find reasons for foregoing phenomenons from both market and legal aspects. From the market aspect, automobile has its own special characters, it is an complex system consists of several delicate mechanism systems and electric systems. Each single part is important and necessary to the whole system. Once one of these parts needs to be fixed, the manufacturer’s information and technology will be need, which is forbidden to be public. This character lead to retailers’ and customers’ lower position in the auto-parts market. From the legal aspect, the law and regulation concerning the auto-parts market is not sufficient and efficient enough. Administration of Automobile Brand Sales Implementing Procedures and Anti-monopoly Law are two major law and regulation in China,however, the administration is too old to regulate the market, and the Anti-monopoly Law lacks pertinence. All these reasons leads to the monopoly phenomenons.This thesis intends to make a compare study on foregoing phenomenons and the regulation methods of other countries, in order to solve monopoly problems in Chinese auto-parts market.The monopoly behaviors in Chinese auto-parts market can be classified into two categories, vertical price monopoly and vertical non-price monopoly. Vertical price monopoly refers to behaviors which conducts by automobile manufacturers through price-fixing and other price control methods. Vertical price monopoly leads to higher retail price which will not only harm interests of customers but also fail the supply and demand mechanism. The legislation of different countries on this kind monopoly behavior are similar. Most countries intend to adopt the “per se rules”. Vertical non-price monopoly includes several forms behaviors, which mainly refers to monopoly behaviors using non-price methods to control the market, including exclusive dealing agreements,selective distribution,tie-in arrangements and so on. As to non-price monopoly, most countries adopt relax policy—“rule of reason” which will take the effect of monopoly behavior into consideration.Other countries’ experience of legislation aim at foregoing monopoly behaviors can be used for reference. The European Union had issued specific regulation to regulate monopoly behaviors in auto-parts market in 2002, the Commission Regulation No.1400/2002. This regulation confirmed the alternative retail pattern, automobile manufacturers can choose one kind retail pattern between the exclusive retail pattern and the selective retail pattern, but they can only choose one pattern. This regulation balanced the position of manufacturers and retailers,and forbidden following behavior strictly, price-fixing,selective trading,tied selling and so on. The latest regulations of EU regulate the new sales market and after-sale market separately, consists the dual track system. The Regulation No.461/2010 which is applied for after-sale market continue to use the alternative retail pattern, and specifies forbidden and restrictive rules. In aspect of enforcement, the EU adopt the “Dawn Raid” investigation method and “Leniency Policy”. The “Dawn Raid” helps to keep the most amount of evidence to keep the investigation proceeding successfully, and the “Leniency Policy” can make the member of monopoly union to confess on its own which will shock and prevent monopoly behaviors.The legislation of United States not only includes substantive laws,such as FTC Franchise Rule and automobile franchise rules of each state,but also procedural laws,such as Automobile Dealers Day In Court Act. These substantive and procedure laws keep the manufacturers and retailers in equal position, reflecting the legislative intend of protecting all entities in the market. American government’s experience of enforcement is very practical, there are mainly three methods, release the result of punishment and the report way, “Plea Agreement” and the “Leniency Program”. The first method can realize the strict punishment on illegal behavior and prevent potential monopoly behavior, the “Plea Agreement” and “Leniency Program” can make the offender confess on its own which save much justice resources.Western countries’ experience of legislation and enforcement can offer great help to solve the monopoly in our import auto-parts market. On one hand, we should revise the Administration of Automobile Brand Sales Implementing Procedures and specify related clauses in Anti-monopoly Law in order to make the law and regulation more practical. On the other hand, the legislation should take the value of protect the interest of the weak into consideration. The last but not the lease, we should adopt some more flexible and practical enforcement method to prevent monopoly.