In our previous post, we looked at the legal regulation of business entity in “Dominant Position” from a competition law perspective. In today’s post we will review background and legal regulation of business entity in a “Natural Monopoly.”
The legal entity in natural monopoly defined as legitimate monopoly entrepreneurs exists when a single entity alone accounts for the total supply of particular goods to the market at the lowest minimum social cost.
A business entity in natural monopoly shall be determined in accordance with the methodology set forth in the Procedures for Identifying Business Entity in Natural Monopoly and Dominant position. If an entrepreneur is identified as natural monopoly, the Authority of Fair Competition and Consumer Protection issues a decision confirming that the business entity is a legitimate monopoly.
The Authority for Fair Competition and Consumer Protection shall regulate the activities of of naturally monopolistic business entities as follows:
- Regulating/monitoring changes in the amount and size of products supplied to the market in connection with its capacity;
- upon considering the actual costs, controlling and granting a permission to change of the selling price of particular products;
A business entity in natural monopoly is obliged to submit its annual financial statement, market research, survey, proposal and other required documents to the Authority of Fair Competition and Consumer Protection the within first quarter of each year.
According to such report, research and proposal comparing with sources, such as news, information, reports, research and analysis conclusions issued by the Customs Authority, Tax Authorities, the Central Statistical Office and other government agencies, the business entity shall be decided to exclude from the “Registration of a legitimate monopoly entrepreneurs”.
It is strictly prohibited to conduct the dominant activities for the business entity in natural monopoly by using their monopolies illegally, restricting the number, quantity, and price of goods sold in the market in order to block other entrepreneurs from entering into the market, restricting the fair competition and blocking consumers’ rights and interest.