Competition Policy and Regulation of Prices in Natural Monopolies
Visits: 0 Date: 07/08/2019

 

 

The Cairncross Foundation Lecture was held on 8 December, 2013, in the University of International Business and Economics (UIBE), co-sponsored by the Expert Advisory Board of Anti-Monopoly Commission of the State Council (AMC) and the Competition Law Center of UIBE.

 

Sir Derek Morris was formerly: Chairman of the UK’s Competition Commission (now the Competition and Markets Authority); Provost of Oriel College, Oxford; and Professor of Industrial Economics, University of Oxford. He co-directed the Cairncross Foundation’s studies on competition policy in China, and was formerly a member of the Foundation’s International Advisory Board.

 

Lecture Summary. The benefits of liberalised market competition are well recognised. But a number of key industries, typically utilities and transport related network industries are natural monopolies which, by definition, cannot easily, if at all, be made subject to competitive forces. In the United Kingdom in the 1980s, a new approach to this problem was developed, initially as a transitional arrangement in just one such industry. Its impact, however, was such that, in an increasingly more elaborate form, it became the established method of price regulation throughout all such industries in the UK; and then went on to be the basis of many regulatory regimes throughout the world.

 

The lecture briefly reviewed the RPI-X approach, its characteristics and implementation. It then examined a series of problems that have arisen as the approach has become more developed, such that there is now the strong likelihood of a review of the whole approach. This was based on Sir Derek Morris’s work while Chairman of the independent body charged with hearing appeals by companies against the price control decisions of sector regulators in the UK. In the light of this, Sir Derek then explored three of the more fundamental issues underpinning such regulation. While the basis of the lecture was the experience to date in the UK, this approach to price regulation, the analysis of its problems and the identification of the underlying features of the regime had some implications for price control regimes everywhere (including China) and indeed beyond the specific area of natural monopolies.

 

The lecture was chaired by Prof. Huang Yong (Director of the Competition Law Center, UIBE, and the Deputy Head of the Expert Advisory Board of Anti-Monopoly Commission of the State Council). The distinguished guests to the lecture included: Prof. Wu Jinglian (Research Fellow, the Development Research Center of the State Council), Minister Chen Qingtai (the Development Research Center of the State Council), Vice Chairman Peng Sen (The Economic and Finance Committee of the National People's Congress (NPC), formerly the Vice Chairman of the National Development and Reform Commission (NDRC), Chairman Zhang Qiong (the Expert Advisory Board of AMC). The lecture was followed by Q & A session. Prof. Wu Jinglian, Minister Chen Qingtai and Peter Freeman (former Chairman of the UK Competition Commission) also shared their views with the audience. An audience of about 600 was present to the lecture. The important guests also included Mr. Xu Kunlin, Director General of Price Supervision and Anti-Monopoly Dept of NDRC; Mme. Ren Ai-Rong, Director General of Anti-Monopoly and Anti-Unfair Competition Enforcement Bureau of the State Administration for Industry and Commerce (SAIC), Vice President Zhao Zhongxiu of UIBE, the officials of anti-monopoly departments of NDRC, SAIC & MOC (The Ministry of Commerce of the People's Republic of China), and the experts of the AMC.