Public Sector Restraints of Trade

The China AML and its Contribution to Efficiency

State Measures and State-Owned Companies

• The problem of public sector restraints of trade

– Need to focus on both public and private restraints that are anticompetitive

• Need to focus on promoting efficiency

• Dealing with over-capacity problem

• State-Ownership; Definitions and Spectrum from Privileges to Full Ownership

US/EU Approaches to Public Sector Restraints

• Historical Perspective

• US – State Action Exemption

• Evolution Towards Market Economy Investor type test, not unlike EU State Aids jurisprudence

• EU State Aids Jurisprudence

• Altmark, Services in the General Economic Interest

Treatment of Public Sector Restraints

• China AML Provisions on Administrative Monopolies and State-Owned Companies

• Important Step in Ensuring Competitive Markets Between Private and State-Owned or Privileged Companies

• Benefit to Efficient Markets, Resource Allocation

• Maximized China’s Economic Growth Potential

Spectrum Between State Measures and State Owned Companies

• Definition of State-Owned Companies

• Spectrum from State Measures to Full Equity Ownership

• Includes Privileges, Grants

• Examples of Different Kinds of State Ownership

Specific Examples of SOE Activities (I)

• Predatory Conduct

• Appropriate Use of Predatory Pricing Test

• Brooke Group and Modifications for SOEs

• Evaluation of Measures of Cost for SOEs

Specific Examples of SOE Activities (II)

• Exclusionary Practices

• Refusals to Deal, Essential Facility

• Different Approach from Purely Private Conduct

• SOEs as Revenue Maximizers

• Different Tests Should Be Applied to Achieve Equivalent Competitive Environments

Specific Examples of Administrative Monopoly Activities

• Regional Blockade (Provincial)

• State Aid Type Measures

– Impact on Welfare?

• State Measures that impact competitive landscape

– Regulatory Exemptions

– Privileges

– Other

Importance of Competition Advocacy

• Competition Advocacy Takes Many Forms

• Evaluation of Competition Advocacy Experiences

• Japan Postal Privatization and the Role of the JFTC

• Mexico’s Advocacy Report on Tariffs and Customs Procedures

• Working with other Government Departments and Agencies

• Value of Networks e.g. ICN

Presentation to Chinese Inter-Agency Delegation

Shanker Singham

Squire Sanders & Dempsey, L.L.P.

Delivered at US Chamber of Commerce

March, 2009