A CASE OF THIRD LINE FORCING

Early in 1994, the SZS Gas Company signed standard gas supply contracts with more than 1600 residents within its service area, according to which these residents have to use the gas heaters produced by the designated producer, otherwise, the Gas Company won� supply gas with them.

In December 1994, the Gas Company found out that 6 of the contracted residents were using the gas instruments not made by the designated producer. Then the Company stopped to provide those users with gas.

Article 6 of Law of the People� Republic of China for Countering unfair Competition provides �ublic utility enterprises or other enterprises having monopolistic status under law shall not force others to buy the goods of the enterprises designated by them so as to exclude others from fair competition.�� Article 23 provides that in such context , the authorities of industry and commerce should issue an order to stop the illegal conduct and impose a fine within the range from RMB 50,000 yuan to 200,000 yuan.

Based on the illustrated facts and according to the provisions, on April 17, 1995, the relevant industry and commerce authority made a decision that the Gas Company had constituted a restrictive practice by forcing users to buy gas heaters from the designated producers in violation of Law of the People� Republic of China for Countering Unfair Competition.

Accordingly, the Company was fined 50 thousand yuan of RMB and ordered to cancel the restrictive clause in the gas supply contracts.