Case 5

In the beginning of year 2000, the Shanxi Youth and the Shanxi Industrial and Commercial News reported problems concerning the monopolized operation and designated sale in the gas instrument market in Taiyuan City. The Shanxi Provincial Administration for Industry and Commerce carried out relevant investigation.

It is investigated that the Taiyuan Gas Corporation affiliation to the Taiyuan Coal Gasification (Group) Corporation Ltd. (thereinafter referred to the Gas Corporation) issued the Measures on the Management of Gas Water Heater of Taiyuan City in December 1998. The Measures clearly stipulates as follow: Heaters shall be distributed by the Gas Corporation within Taiyuan City. The Gas Corporation shall sign agreements of distribution with factories. Any unit or individual in Taiyuan City, except the Gas Corporation, shall not establish direct or indirect trade relation with the factories. An additional fee shall be collected towards the heaters purchased from other channels at a rate of 100 to 200Yuan per heater when applied for installation. It shall be marked in the using certificate that the heater is self-purchased, so that no guarantee for repair will be provided. Being not approved by relevant departments, the Gas Corporation collected the additional fee of 32,000 Yuan from 200 users during the period of January 1999 to 20th February 2000.

The Shanxi Provincial Administration for Industry and Commerce holds that the Taiyuan Coal Gasification (Group) Corporation Ltd., as a public enterprise providing the citizen with gas service, abuses its monopoly position to restrict the right of fair competition of other operators and the right of free choice of the users. This transaction constructed the anti-competitive practice stipulated in Article 6 of the Law for Countering Unfair Competition and Item 7 of Article 4 of the Certain Regulations on Prohibiting Anti-competitive Practices of Public Enterprises. According to Article 23 of the Law for Countering Unfair Competition, the Shanxi Administration for Industry and Commerce ordered the Taiyuan Coal Gasification (Group) Corporation Ltd. to terminate its illegal acts and confiscated the illegal income of 32,000 Yuan RMB in November 11, 2000.