On 27 February 2025, the Anhui Administration for Market Regulation (“<span class="news-text_medium">Anhui AMR</span>”) issued an administrative penalty decision against Dangtu County Shouchuang Water Affairs Co (“<span class="news-text_medium">Shouchuang</span>”), a water supply company, for abusing its dominant position in the market. This case highlights the continued focus of Chinese competition authorities on ensuring fair competition in public utility sectors, including water and gas services, where monopolistic practices can have significant implications for consumers and market dynamics.
In China, utility service providers like water and gas suppliers are typically granted exclusive rights to operate within specific geographic regions, giving them dominant positions in these markets. This structure, while necessary for infrastructure development and public service provision, can also make these sectors susceptible to anti-competitive behavior. The Anhui AMR has consistently made the regulation of these markets a priority in order to protect public welfare.
The investigation into Shouchuang began in September 2022, following allegations that the company had abused its dominant position in the urban water supply market of Dangtu County. Shouchuang was the sole provider of tap water in the county’s urban planning area, granting it considerable control over the terms of supply and customer choice.
The Anhui AMR found that Shouchuang had engaged in anti-competitive behaviour by compelling developers in new residential areas to exclusively use its water supply services. This practice significantly restricted the options available to developers, effectively excluding competitors from entering the market. As a result, Shouchuang's actions were deemed to violate Article 22 of China’s Antimonopoly Law, which prohibits the abuse of market dominance.
Following the investigation, the Anhui AMR imposed a fine of approximately RMB 986,000 (around USD 137,000) on Shouchuang. The fine was calculated based on the company’s illegal gains and 1% of its turnover from the previous year, 2021. This decision underscores the regulatory authority’s commitment to enforcing fair competition practices in sectors that have a direct impact on public welfare, such as utilities.
The Anhui AMR’s decision reflects a growing commitment in China to regulate monopolistic behaviour within critical public services. By addressing abuses of dominance in the water supply sector, the case highlights the importance of maintaining competitive conditions even in markets dominated by a single provider. This case serves as a reminder to utility companies about the potential legal risks of anti-competitive conduct and reinforces the Chinese competition authorities' stance on safeguarding market fairness.
