| 摘要 | 1. Research Purpose
The natural gas industry in Korea has long been anticipated to undergo a structural change to embrace supply competition. After much deliberation, it is now expected that the method of conceiving the supply competition in gas industry is through new entry by eliminating institutional entry barriers and inviting new entrants to the market. Under this scheme, the incumbent monopoly, Korea Gas Corporation (Kogas), is likely to maintain its current functions of facility operation and gas sales. New entrants would then have to compete with the incumbent and with one another in gas sales, relying on the essential supply facilities that the incumbent owns.
While the new entry method has the merits of easier implementation and ensuring market stability during the transition period, it also entails possibilities of various anti-competitive behaviors that can impede effective competition, such as the incumbent's refusing access to supply facilities or abusing its dominant market position. Besides the anti-competitive behavior of the incumbent, there also exist concerns over retail market foreclosure by new entrants that are affiliated with local distribution companies.
As such, regulation that properly restrains anti-competitive behaviors will be critical in achieving effective competition. This study analyzes the elements of potential anti-competitive behaviors in Korean natural gas industry, for the understanding of which is prerequisite to formulation of regulation principles that can underpin fair and effective competition.
2. Major Findings
- Potential Anti-Competitive Elements in Korean Gas Industry
In implementing competition in gas industry through new entries, perhaps the most important matter is to ensure fair access to supply facilities. When a facility cannot be reasonably duplicated and without access to which competitors cannot reasonably provide services, it is considered an essential facility and under the rubric of essential facilities doctrine it is common to make access to it mandatory.
In gas industry, a pipeline network constitutes an essential facility and, accordingly, a mandatory open access is expected to apply to the pipeline network that Kogas owns. However, even if an open access is applied, asymmetry in information and expertise regarding the facility that can exist among Kogas and its competitors as well as between Kogas and regulatory agency can lead to unfair conducts by Kogas such as discriminatory access to its rivals.
Moreover, unlike the pipeline network, whether the mandatory open access or the negotiated access should be applied for LNG receiving terminals is in dispute. Since access and associated conditions are all contingent on agreement between the user and the facility provider under the negotiated access, the user is practically left to the mercy of the facility provider. Indeed, it can be like giving the dominant incumbent the choice over its competitors since a receiving terminal can be regarded as an essential facility considering the difficulties of constructing it due to siting problems under the prevalent NIMBY phenomenon and the need to consult with pipeline operator for its desirable location.
Beside the issues regarding facility access, the treatment of legacy import contracts has been the most difficult and contentious problem that has to be addressed in restructuring the industry. Considering the requests and discussions in the past such as guarantee of stable customer base and priority of access to facilities for the legacy contract volumes, and measures for equalizing import prices among suppliers in case of disparity in import prices, this issue can impose significant limitations on the extent of competition, depending on the outcomes.
Potential anti-competitive elements also exist on the retail side. Currently, a considerable portion of local distribution companies can be grouped into a few affiliations, and they constitute potential entrants in the industry. Hence, there can arise incentives for retail market foreclosure with affiliated local distribution companies and discriminatory treatment between affiliated and non-affiliated customers by such entrants.
- Cases of Anti-Competitive Behavior in Overseas Gas Market
Recent cases in Europe manifest the likelihood of a dominant firm to abuse its market power to deter entry, unless there is a regulation that properly restrains such incentives. A flagrant case is the one with British Gas, which exercised discriminatory pricing practice to limit entries. Other European gas companies are no exceptions, however. Thyssengas of Germany, ENI of Italy, Gas Natural of Spain, E.On-Ruhrgas of Germany, for example, have been accused of anti-competitive behaviors involved in either unfairly denying access to pipeline facilities or foreclosing the market through long-term contracting.
In a recent study on the gas market competition in Europe, the European Commission concluded that the high level of concentration of pre-liberalization period is still maintained in most countries, that lack of liquidity and limited access to facilities prevent new entries, and that there is a lack of reliable and timely information on the markets, which are vital for healthy competition. Above cases and the conclusion of the European Commission clearly demonstrate that the regulation of anti-competitive behavior and competition policy leveling market dominance are essential in promoting effective competition.
- Analysis of the Incentives for Anti-Competitive Behaviors
As a theoretical framework for analyzing incentives of the vertically integrated incumbent to discriminate its competitors regarding facility access, the upstream (facility) is assumed to be monopolized and firms in the downstream (gas sales) are assumed to compete in Cournot fashion. The model is specialized to reflect the characteristics of gas industry that gas sales require facility as an essential input and that the level of required facility depends not only on the sales volume but also on the specific demand pattern that the supplier serves.
The analysis shows that the incumbent has strong incentives for raising the access charge to competitors, for non-price discrimination making the access difficult and costly beyond the level of access charge, and for strategically limiting the access capacity to competitors.
3. Future Works
In this study, we have focused on the potential anti-competitive behavior of the dominant incumbent. As such, the possibilities of other types of anti-competitive behaviors, such as retail market foreclosure by entrants affiliated with local distribution companies, and entry-deterring behaviors through collusion among early entrants to block further entry, and their effects on competition remain to be examined.
Furthermore, while a non-symmetric discretionary regulation that treats players with different market power differently is commonly recommended for effective competition when there exists a dominant incumbent, few studies have been conducted regarding such regulatory measures. Analysis on specific measures and their effects on promoting competition in gas industry is a future work direction worth the pursuit. |
