Types of monopoly and methods of regulating their activities. Methods for regulating natural monopolies Methods for regulating the activities of subjects of natural monopolies include

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Legal regulation of the activities of natural monopolies

Natural monopoly- a state of a commodity market in which satisfying demand in this market is more effective in the absence of competition due to technological features of production (due to a significant reduction in production costs per unit of goods as production volume increases), and goods produced by natural monopoly entities cannot be replaced in consumption by other goods, and therefore the demand in this product market for goods produced by natural monopolies is less dependent on changes in the price of the product than the demand for other types of goods (Article 3 of the Federal Law of August 17, 1995 . No. 147-FZ “On natural monopolies”).

Natural monopolies are characterized by the following features:

satisfying demand effectively in the absence of competition due to technological features of production;

goods produced by subjects of a natural monopoly cannot be replaced in consumption by other goods.

In the Russian Federation, a natural monopoly has been established in the following areas:

transportation of oil and petroleum products via main pipelines;

gas transportation through pipelines;

services for the transmission of electrical and thermal energy;

rail transportation;

services of transport terminals, ports, airports;

public electric and postal services.

Methods for regulating natural monopolies:

non-price.

Price method of regulating natural monopolies– this is the establishment of prices or maximum tariffs for the products of the above companies. The non-price method of regulating natural monopolies consists of determining consumers who are subject to mandatory servicing. The regulatory body is the Federal Tariff Service.

The position of an economic entity of a natural monopoly in a product market that is in a state of natural monopoly is recognized as dominant.

The main regulatory act regulating the legal regime of natural monopolies in the Russian Federation is the Federal Law of August 17, 1995 “On Natural Monopolies”.

Methods of regulating the activities of natural monopolies.

The purpose of state legal regulation is to maintain and, if necessary, balance the balance of interests of subjects of natural monopolies and consumers.

The high economic efficiency of natural monopolies makes their fragmentation unacceptable, but on the other hand, their uncontrolled activity can cause significant harm, so the state cannot refrain from regulating natural monopolies.

The essence of any regulation is to streamline the activities of participants in social communication, first of all, to establish for them certain rules of conduct, in this case - in market relations. Regulation is the main form of government influence on natural monopolies, and its specificity is manifested in its methods, which the Federal antimonopoly authorities are not endowed with.

Specially formed federal executive authorities for regulating natural monopolies have many similarities in their structure and functions, as well as powers and the procedure for their implementation, with federal antimonopoly authorities. They set prices for the monopoly's products and determine the composition of consumers of the products to whom the monopoly is obliged to supply its products.

In all legalized areas of activity of natural monopolies, bodies regulating natural monopolies are formed. One federal executive body can regulate several areas of activity of natural monopolies at once and it is not at all necessary to have a separate body in each area. To exercise their powers, they have the right to create their own territorial bodies and vest them with powers within the limits of their competence. Territorial bodies are created with the permission of the Government of the Russian Federation and, together with the corresponding federal body, form a unified system of regulation in the relevant area of natural monopoly.

The first Decree of the President of the UF dated November 19, 1995 No. 1194 established the Federal Energy Commission of the Russian Federation (FEC RF) as a federal executive body to regulate natural monopolies in the following areas: transportation of oil and petroleum products through main pipelines; gas transportation through pipelines; services for the transmission of electrical and thermal energy. By Decree of the President of the Russian Federation of January 25, 1996. No. 96, the Federal Service of the Russian Federation for the Regulation of Natural Monopolies in the Field of Communications (FSEMS of Russia) was formed.

The last to be formed was the Federal Service of the Russian Federation for the Regulation of Natural Monopolies in Transport (FSEMT of Russia). It had the status of a federal executive body regulating natural monopolies in the following areas: railway transportation; services of transport terminals, ports, airports.

According to the Decree of the President of the Russian Federation of September 22, 1998. No. 1142 “On the structure of federal executive authorities” The Federal Service of Russia for the Regulation of Natural Monopolies in the Field of Communications and the Federal Service of Russia for the Regulation of Natural Monopolies in Transport have been abolished. Their functions were transferred to the newly formed Ministry of the Russian Federation for Antimonopoly Policy and Entrepreneurship Support. The functions of the abolished State Committee of the Russian Federation for the Support and Development of Small Business, as well as the State Antimonopoly Committee of the Russian Federation, were also transferred to this ministry.

By concentrating the functions of the abolished listed federal bodies within one federal body at the rank of the Ministry of the Russian Federation, the goal was to strengthen state support for the development of entrepreneurship, especially small and medium-sized ones. The planned abolition of the Federal Energy Commission of the Russian Federation was not carried out, and it retained its status as an independent federal executive body.

Related information.

Monopoly- this is a market situation when there is a single manufacturer of a product, and this product does not have close substitutes produced in other industries. In a pure monopoly, the boundaries of the industry and the boundaries of the firm coincide.

A special structure of the industry market is a natural monopoly. Natural monopoly is an industry in which economies of scale are so great that a product can be produced by one firm at a lower average cost than if it were produced by more than one firm. A natural monopoly is a structure of an industry market that has either been nationalized or is subject to government regulation.

Condition for the emergence of a natural monopoly: a large firm, relying on the low level of its costs, may consider it profitable for itself to exclude other firms from the industry by temporarily reducing prices, and then will remain a monopolist and can raise the price to the monopoly level, reducing output. Once a monopoly has been established in such an industry, entry into it becomes practically impossible, since a firm seeking entry will have to produce a relatively small volume of output, which is therefore associated with relatively high average costs.

With a natural monopoly:

– satisfying demand more efficiently than in a competitive market;

– lack of competition due to production technology;

– reduction in unit costs as production volume increases.

Features of a natural monopoly:

– technological exceptional advantages in this market;

– FC (fixed costs) are high, and VC (variable) are insignificant;

– AC (average cost) is higher than MC (marginal cost).

The most typical examples of this type of monopoly are energy networks, railways, pipeline transport, and public utilities, where there is a steady decrease in average long-term production costs as production capacity expands. There are global (railway transportation, communications) and local natural monopolies. Since the reason for the emergence of natural monopolies is a strict relationship between the volume of market demand and the effective size of the enterprise, such monopolies are under strict control of the state that regulates their activities. Regulation of the activities of monopolies is aimed at limiting their market power and is carried out with the aim of increasing the volume of supply and reducing the market price.

The main instruments for regulating natural monopolies:

– taxes;

– price control;

– eliminating barriers to entry into the industry;

– establishment of public ownership (or nationalization) to control a natural monopoly.

Taxes breaks into two parts. The first is income taxes related to direct taxes. Such taxes reduce excess profits (profits after taxes) and have no (or little) effect on price and output, which maximize the monopolist's profits.

Sales taxes are also used to regulate natural monopolies. Unlike the previous ones, they are indirect and lead to an increase in marginal production costs. The production volume will decrease and the price will increase.

Price control in order to reduce monopoly profits, it is carried out by establishing the so-called maximum price. For this price to be efficient, it must lie between the profit-maximizing price and average cost, which corresponds to the profit-maximizing output.

Removing barriers to entry into an industry aims to encourage new firms to enter the industry, which in turn will result in the monopoly being replaced by a competing structure. However, this method is not effective for regulating a natural monopoly.

In addition, other methods of regulating natural monopolies are used. Notable among them are Ramsey pricing and quality control.

In Ramsey pricing, the price is determined by the value of average costs P = AC. At this price, the company does not make a profit, but does not incur losses. However, due to the fact that dead weight losses remain, this control option is called the “second best solution”.

Under regulated prices, the company has no incentive to improve the quality of the product. At a price set by the government, a firm can increase profits by reducing production costs by reducing the quality of the product. Additional profit from the sale of goods of worse quality at prices corresponding to higher quality is appropriated by the company, and in the absence of competition in the market, a decrease in product quality does not have a significant impact on its position. Theoretically, to control the level of quality of goods produced by a regulated natural monopoly, the state can use two levers: the inclusion of quality indicators in the list of regulated standards and the practice of compensating consumers for losses at the expense of the manufacturer if the quality of the product decreases below an acceptable level.

REGULATION OF NATURAL MONOPOLY

INTRODUCTION

Natural monopoly in Russia.

1. The concept of natural monopoly

2. Reasons for the formation of a monopoly regime

a) legal

b) economic

3. Subjects of regulated monopolies.

4. State regulation in areas of natural monopoly.

a) methods of regulation.

b) regulatory bodies, their functions and powers

5. Prospects for the development of natural monopolies

State regulation of natural monopolies abroad.

1. competition for a monopoly market

2. regulation of the rate of profit

a) determination of current costs

b) investment evaluation

c) acceptable profit

3. regulation of the upper tariff limit

4. unity and differences of models for regulating natural monopoly

Tariff policy in the field of telecommunications.

CHAPTER I NATURAL MONOPOLY.

1. The concept of natural monopoly.

The beginning of economic reforms in Russia was associated with a maximum reduction in the presence of the state in the economic system and an attempt to ensure the functioning of this system only on the terms of self-regulation. The current state of affairs in the Russian economy necessitates thoroughly thought-out and legally formalized state regulation of new economic relations.

Here are the main features of a natural monopoly:

1) the legal basis for establishing (consolidating), implementing and

termination of the regime.

2) the relationship between the legislation on monopolies and the Law “On Competition” and their differentiation by subject and means of legal regulation.

3) spheres (boundaries) of action of the monopoly regimes under consideration according to

industries and types of business, as well as relations on which

legislation on regulated monopolies applies.

4) general legal status of monopoly entities, specific nature

their rights and obligations both in the sphere of relations with third parties and

and in intra-company processes.

5) system for regulating the activities of monopoly entities.

6) sanctions and liability for violation of legal provisions

in the specified area.

And so now we can give a clear definition of natural monopoly, formulated by the State Duma on July 19, 19995. (Federal Law “On Natural Monopolies”)

Natural monopoly is a state of a goods market in which satisfying demand in this market is more effective in the absence of competition due to technological features of production (due to a significant decrease in production costs per unit of goods as production volume increases), and goods produced by subjects of a natural monopoly are not can be replaced in consumption by other goods, and therefore the demand in a given product market for goods produced by subjects of natural monopolies depends less on changes in the price of this product than the demand for other types of goods.

Areas of activity of natural monopolies:

Transportation of oil and petroleum products along main lines

pipelines.

Gas transportation through pipelines.

Services for the transmission of electrical and thermal energy

Rail transportation.

Services of transport terminals, ports, airports.

Public electric and postal communication services.

2. Grounds for establishing a monopoly regime.

a) legal grounds.

The monopoly regulatory institutions under consideration are exceptional. From an economic point of view, exclusivity means the removal of certain areas of economic activity from the influence of purely market competitive mechanisms of self-regulation. The establishment of a corresponding monopoly regime means the introduction of a special situation in a separate sector of the economy, which is impossible to imagine without any economic and legal grounds. The legal grounds and principles for using the legal regime of monopolies must be outlined in a federal legal act, taking into account the restrictive functions of this institution. When preparing such acts, it should be borne in mind that a natural monopoly is determined by objective economic and technological features of production. The activities of natural monopolies cannot be considered as economic activities prohibited in paragraph 2 of Art. 34 of the Constitution of the Russian Federation. After all, the functioning of a natural monopoly is not aimed at monopolization, but at eliminating unfair competition. It is carried out exclusively within the framework of state regulation of market relations and for the purpose of protecting consumers. When characterizing the legal justifications of the monopoly regimes under consideration, it is necessary to take into account their consistency and connection with antimonopoly legislation, the basis for which is the Law “On Competition”. The relations that arise in the commodity market of a natural monopoly are complex and specific, both in their subjective nature and in their content, and must be regulated by special legislation. It will serve as a limiter to the universal law “On Competition”. The natural monopoly regime has the character of a special exception. However, such exclusivity must have its limits, which are determined by the conditions and objectives of the institution being analyzed.

b) economic reasons.

A natural monopoly exists when economies of scale are so large that one firm can supply the entire market at lower unit costs than a number of competing firms would have. Such conditions are typical for public enterprises. In these cases, economies of scale in the production and distribution of a product are so large that large-scale operations are necessary to obtain low unit costs and low prices. This is clearly visible from the graph. As output increases significantly, long-run average costs fall

Figure 1 (long-run average costs)

If the market were divided among many producers, economies of scale would not be achieved, unit costs would be high, and high prices would be required to cover these costs. Two alternatives are presented as possible means of ensuring socially acceptable behavior on the part of a natural monopoly. One is government ownership and the other is government regulation. If competition is not possible, then regulated monopolies must be created to avoid possible abuses of uncontrolled monopoly power.

figure 2

Most monopolistic industries are natural monopolies and are therefore subject to public regulation. In particular, the prices and tariffs that public utilities - railroads, telephone companies, natural gas and electricity suppliers - can charge are determined by federal and local regulatory commissions or departments. Figure 2 shows the demand and cost parameters of a natural monopoly. Because fixed costs are high, the demand curve intersects the average cost curve at a point where average costs fall further. Obviously, it would be impractical to have a number of firms in such an industry, because by dividing the market, each firm would move further to the left along its average cost curve, so that unit costs would become much higher. The relationship between market demand and costs is such that achieving low unit costs allows for one producer.

We know, using the MR=MC rule, that P and Q are the profit-maximizing price and output that an unregulated monopolist would choose. Since the price exceeds average gross cost, the monopolist enjoys significant economic profits, which likely contributes to income inequality. Moreover, the price exceeds marginal cost, which indicates that the product or service is underutilizing its resources. The question is whether government regulation will produce better outcomes, from a societal perspective. The goal of the regulator is to achieve efficiency in the allocation of resources; for this, it should try to set by law a (maximum) price for the monopolist, which is equal to marginal costs. The important point is that at a given legally established price P, the monopolist will maximize profits or minimize losses by producing Q units of output, because it is at this output that MR(P) = MC. This price, at which resource allocation efficiency is achieved, is called the socially optimal price. But the socially optimal price P will raise the question of losses for the regulated firm. It is likely that the price that equals marginal cost will be so low that average gross cost is not covered, as shown in the figure. The inevitable result is losses. Therefore, imposing a socially optimal regulated price on a monopolist would mean losses in the short term, and bankruptcy in the long term. In this case, the regulator can act in several scenarios. One option would be a subsidy sufficient to cover the loss that marginal cost pricing would entail. For example, in the US, the regulator sets a price that “provides a fair return.” Remembering that gross average cost includes normal, or “fair profit,” we see that the price that produces fair profit in the figure would be P, where price equals average cost. Since the demand curve intersects average cost only at point F, it is clear that P is the only price that gives a fair profit. The corresponding output at the regulated price P will be Q.

3. Subjects of regulated monopolies.

A subject of a natural monopoly is an economic entity (legal entity) engaged in the production (sale) of goods under conditions of a natural monopoly.

World and Russian practice shows that the impact on the monopoly should be carried out by the state. To do this, as we have already said, you can use state property (enterprises where the state has a controlling stake) or special regulatory bodies of different levels and competencies. In Russia, a combination of the mentioned options will most likely be used. Thus, in accordance with the State Program for the Privatization of State and Municipal Enterprises in the Russian Federation, there are objects and enterprises that are in federal ownership, the privatization of which is either prohibited altogether, or is carried out by decision of the Government of the Russian Federation or the State Property Committee of Russia, taking into account the opinions of line ministries and departments, which include, for example , railways, enterprises and associations of the fuel and energy complex, enterprises for the production, bottling and packaging of alcohol and liquor products. It is easy to see that these areas are those that are subject to state and natural monopolies. Consequently, enterprises based on the property participation of the state are the obvious basis for the analyzed monopoly institutions. This implies the desire of the legislator to strengthen controllability, including of federal state enterprises. Russian legislation does not provide for prohibitions on the organization of state-owned enterprises as subjects of regulated monopolies. Thus, the characteristics of subjects of regulated monopolies include both the fact that these subjects operate under conditions of a state or natural monopoly, and in what organizational and legal forms they are created and what property they are endowed with.

Responsibilities of subjects of natural monopolies.

Subjects of natural monopolies do not have the right to refuse to conclude an agreement with individual consumers for the production (sale) of goods that are subject to regulation in accordance with federal law, if the subject of a natural monopoly has the opportunity to produce (sell) such goods.

Subjects of natural monopolies are required to submit to the relevant body regulating natural monopolies:

current readings of their activities in the order and within the time frames that

established by the natural monopoly regulatory body.

draft capital investment plans.

4. State regulation in areas of natural monopoly.

In the Russian Federation, the system for regulating monopolies is just being formed and provides only a comprehensive impact on production volumes, pricing processes and product quality in a predetermined area, or a functional impact on individual aspects of economic activity.

a) methods of regulation.

Bodies regulating natural monopolies may use the following methods of regulating the activities of natural monopoly entities:

price regulation carried out by determining (establishing) prices (tariffs) or their maximum level.

identification of consumers subject to mandatory servicing and (or) establishment of a minimum level of provision for them in the event that it is impossible to fully satisfy the needs for a product produced (sold) by a natural monopoly entity, taking into account the need to protect the rights and legitimate interests of citizens, ensure state security, and protect nature and cultural values.

b) bodies regulating natural monopolies, their functions and their

powers.

regulatory bodies: regulatory bodies for natural monopolies are formed in the areas of activity indicated above. The general management of the federal executive body for the regulation of natural monopoly is carried out by a head appointed to the position and dismissed from office by the President of the Russian Federation on the proposal of the Chairman of the Government of the Russian Federation. The head of the natural monopoly regulatory body is also a member of the board of this body. To determine the main directions of activity of the federal executive body and make decisions, a board of no more than seven members, including the head, is formed from among highly qualified specialists with experience in the relevant field. Members of the board are appointed by the Government of the Russian Federation for a period of at least four years. To ensure continuity in the work of the board, starting from the fifth year of operation of this body, up to one third of the total number of board members is replaced annually. Regulatory employees are subject to the legal status of civil servants. The federal executive body for regulating natural monopolies is liquidated if an opportunity arises for the development of competition in the relevant product market and (or) if the nature of demand for the goods of natural monopoly subjects changes.

Functions of regulatory authorities.

There are several reasons for economic regulation.

Ensuring a balance between the interests of consumers (affordable prices) and regulated enterprises (financial results attractive to lenders and new investors)

Determining the tariff structure based on the principles of fair and efficient attribution of costs to tariffs for different types of consumers

Stimulating enterprises to reduce costs and unnecessary employment, improve the quality of service, increase the efficiency of investments, etc.

Creating conditions for the development of competition (for example, ensuring open equal access of competitors to information networks)

Regulatory bodies perform a number of functions that are defined by Federal Law. Firstly, they form and maintain a register of natural monopoly entities subject to government regulation. Secondly, they determine the methods of regulation (in accordance with the Federal Law) in relation to a specific subject of a natural monopoly. Thirdly, they monitor, within their competence, compliance with the requirements of the Federal Law, and make, in accordance with the established procedure, proposals for improving legislation on natural monopolies.

Powers of Regulators

Bodies regulating natural monopolies have the right to:

make mandatory decisions for natural monopoly entities on the introduction, change, or termination of regulation, and on the application of regulatory methods.

send mandatory orders to subjects of natural monopolies to stop violations of the Federal Law, including to eliminate their consequences.

make decisions on inclusion in the register of natural monopolies or exclusion from it.

make decisions on imposing a fine on a natural monopoly entity.

5. Prospects for the development of natural monopolies.

It should be noted that only part of the types of economic activities carried out in such industries as the gas industry, electric power, railway transport and communications actually belongs to a natural monopoly and should be subject to government regulation. Other types of economic activity can potentially function effectively in a competitive environment, but the creation of a competitive environment presupposes the need for adequate structural changes. For example, production in both the electric power and gas industries, unlike the transportation and distribution of resources, is not objectively a natural monopoly. Communication sectors such as long-distance and international telephone communications should also not be considered natural monopolies, but for now, in many cases, local telephone networks, at their current technological level in Russia, should be classified as natural monopolies and subject to regulation. In railway transport, competition with other modes of transport either already exists, or its emergence is possible if a number of conditions are met. Theoretically, it is possible to consider options for the emergence of internal competition between individual railway transport enterprises. Ideally, structural changes in these industries, allowing for maximum use of the competitive forces of the market, will lead to a limitation of the scope of government regulation. However, proper implementation of reconstruction will not only limit the scope of regulation, but will also increase its effectiveness by clearly separating regulated and unregulated business activities. If such activities are not separated and are carried out within the same enterprise, the task of establishing the permitted price level facing the regulatory authorities becomes more complicated due to the inability to accurately calculate the costs that should be attributed to the regulated activities. There are often cases of transferring costs from unregulated to regulated activities, which, on the one hand, allows enterprises to “reasonably” inflate prices, and on the other hand, to apply lower prices in unregulated markets, allowing them to eliminate competitors or unjustifiably increase the share of sales in the market.

In the electric power industry, gas industry, communications industries and railway transport, it is necessary to carry out a number of transformations that will help solve the problems described above:

Regulated and unregulated activities should be kept as separate as possible under existing economic, social and political conditions. Separating accounts and balance sheets is a minimum requirement, but a better solution may be to create separate enterprises for each activity, operating on an open contract system. First of all, it is necessary to separate production functions from transport and separation functions. It is necessary to highlight auxiliary activities (repair, construction, mechanical engineering, etc.), which, although usually have a specialized focus, can be carried out on competitive principles. Social infrastructure enterprises need to be transformed in the same way.

Regulated activities should be characterized by openness of information to regulatory authorities, which will make it possible to set prices (tariffs) at a level high enough to ensure normal profitability and, accordingly, attract new investments.

Potentially competitive segments of industries must be identified and reorganized in order to create a real competitive environment. Thus, in the electric power industry, independent diversified companies should be formed that could directly compete in the wholesale market. Similar positive changes are already observed in the field of international telephone communications. In the future, a competitive environment can be created in the gas industry.

Competition can develop in the above areas only if appropriate conditions are created by regulatory authorities. Thus, producers of electricity and natural gas need open, non-discriminatory access to transport systems, and international and intercity operators need open and equal access to public networks. The task of regulators is to ensure such free access for all potential market participants. Licensing procedures that define barriers to entry into relevant markets must also be open and non-discriminatory.

The mechanism of corporate and shareholder management of companies operating in areas of natural monopoly must be reconstructed. Currently, the federal government owns a majority stake, but often its role as owner is nominal, and the administration manages enterprises without regard to the interests of the owner. In market economies, shareholders or their representatives, the board of directors, have a decisive influence on the development of an enterprise development strategy. This mechanism allows regulators to participate in the process of rate of return on invested capital). Low levels of corporate and shareholder governance reduce the ability of regulators to influence the behavior of enterprises. Effective corporate-shareholder decision-making through determining the permitted price level (or management) assumes that the owners of enterprises have a strong interest in orienting the company's management to maximize profitability and shareholder capital under existing regulatory conditions. Of course, privatization has a certain impact on corporate-shareholder management. However, after full privatization, and before its conduct, corporate shareholder management can become more effective only if it attracts strategic investors through the sale or transfer of large blocks of shares to those individuals or organizations that will be interested in strict control over the work of managers. Use of debt. capital can also lead to an increase in the efficiency of corporate and shareholder management, so creditors will be interested in the financial recovery of the enterprise.

The investment process must be brought into line with the requirements of a market economy. In almost all sectors of natural monopolies, investment is financed primarily through rising tariffs. Currently, industry investment and stabilization funds are not an effective means of financing investments and are often used irrationally. Tariff financing of investments should be sharply reduced, and companies should be encouraged or even forced to use debt and equity capital.

In all sectors of natural monopoly, further improvement of the pricing mechanism is necessary. In the gas industry, prices must be differentiated taking into account the cost of delivering natural gas to different regions. It is also necessary to differentiate railway tariffs by region, stopping the centralized redistribution of income between railways. Cross-subsidization of preferential users at the expense of enterprises, used in all sectors of natural monopolies, must be stopped. Subsidies that are deemed necessary (for example, for low-income groups of the population) should be provided from federal or local budgets, and not at the expense of other consumers of relevant resources and services.

It is necessary to liquidate holding companies aimed at exercising administrative control at the federal level and centralized redistribution of income and profits of enterprises. This will require further development of the appropriate legal, institutional and regulatory frameworks.

In all sectors of natural monopolies, it is necessary to reduce costs and increase business efficiency, for which purpose create incentives to reduce unnecessary employment, as well as to eliminate inefficient industries.

STATE REGULATION OF NATURAL

MONOPOLY ABROAD.

Fairly or not, the competitive market is recognized as the effective organization of modern economics. However, due to imperfect information, the existence of externalities, so-called public goods and a number of other factors, perfect competition is not a natural state of markets. Moreover, the functioning of a number of markets on a competitive basis is impossible or ineffective, that is, a high degree of monopolization becomes natural for them. It goes without saying that a change in technology can weaken or undermine a natural monopoly. Thus, the active development of wireless and satellite communications will eliminate the monopoly on wire communications, especially long-distance communications. The existence of a natural monopoly makes one single producer technically efficient. Experience, however, shows that abuse of its monopoly position in the form of inflated costs and/or inflated profits often negates higher technical efficiency. Moreover, this abuse is often quite difficult to recognize from the outside due to the fact that the real efficiency of the activities of a single producer is known only to himself, in other words, a monopoly of information is added to the natural monopoly. Due to the special socio-economic importance of these industries and the high probability of abuse of a monopoly position in them, they were the primary targets for nationalization. Moreover, in a number of countries (Great Britain, France, etc.), enterprises of the same industry (railroads, telephones, gas, etc.) were united into single sectoral state corporations. Informal procedures often prevailed in their regulation by the government.

1. competition for a monopoly market

Competition for a monopoly market is organized in the form of a competition (auction). Its winner acquires the exclusive right to produce nationwide or on the local market. Effective competition for entry into a monopoly market cannot be organized in every monopoly market. In particular, it is limited by the high size and irreversible nature of the costs of participating in the competition, which therefore should be fully or partially compensated by the state. Competition for the market of natural monopoly industries exists in 37 countries 1 . In France, this practice dates back more than a century. Back in 1882, a contract was concluded in Paris with the Perrier brothers, who pledged to supply water to this city for 15 years. Currently, about 70% of the population is supplied with water by private companies 2 .

The winner of the competition gets the opportunity to operate on a lease or concession basis. More common is a lease, in which the assets (network, etc.) are either owned by the state or created at its expense, and are maintained and managed by a private company. With a concession, a private company invests in the development and maintenance of the network from its own (or borrowed, which in this case does not matter) funds. Contracts are concluded for various periods, which, as a rule, are longer, the more funds the company invests in production. Typically, the concession period is sufficient to fully recoup the investment, after which the system can be purchased by the state. Concessions are typical for organizing water supply, railway transportation, and telephone communications. In principle, competition for a concession should be less than for a lease, since here participation in the competition is determined by the participant’s own capital or access to credit. Repeated competitions usually do not lead to replacement of tenants. Thus, in France, water supply contracts are constantly renewed with the same companies. This is not surprising, since they have significant advantages in competition for markets (more complete information, established reputation, “approach” to the persons organizing the competition, etc.).

The transfer of production to concession or lease does not mean that the function of the state is reduced here only to compliance by the opposing party with the terms of the contract. It is also impossible to do without some intervention from the regulatory body in the event of unforeseen or unaccounted for circumstances in the contract. Often the degree of natural monopolization of production is overestimated with all the ensuing consequences. In a vertically integrated company, the features of a natural monopoly are inherent in only one of the production facilities concentrated within its framework. Thus, it includes railway tracks operated by companies, but not rolling stock; telephone wire channels, but not transmitting devices; pipelines, but not compressor equipment. Competition is impossible in the first, but not in the second types of activity. However, to organize effective competition in railway transportation, telephone communications, water supply, etc. access to networks is required, the owners of which provide these services themselves and resist competition. It is not surprising that competition is rare here. Companies that own networks can discourage rivals by granting access to networks or charging such a high price for it that potential competitors will be forced to abandon their intentions. One solution may be to force the organizational separation of network services and delivery of final products - through complete separation from the company or separate accounting. After all, the owner of the network, who is not represented on the final product market, is no longer interested in driving away its users. This, in fact, is often done, especially during privatization. In a number of countries, the unified electric power complex was fragmented along functional lines into local energy distribution companies, manufacturing companies and the national energy system. Something similar is carried out in relation to railways - the maintenance of track facilities is separated from the organization of transportation, which is transferred on a competitive basis for a period that depends on the payback of the rolling stock. But disintegration may not always be the best solution. An alternative to disintegrating a company is to control the fees it charges for network access. It is generally believed that, unlike other industries, a company does not have to assume marginal cost of the last unit of output because, due to high fixed costs and economies of scale, marginal costs are reduced. It is therefore common to charge network access fees depending on demand, in other words, to increase them during peak periods. Most American regulators authorize such actions, and a similar practice is envisaged for the British gas industry. The disintegration of vertically integrated utility companies and control over fees for the use of their networks promotes competition in industries adjacent to natural monopolies. Regulation of the activities of companies directly in the markets of natural monopoly industries occurs in accordance with two different models. One of them is based on regulation of the rate of profit, the other - regulation of tariffs.

In both cases, regulation is carried out by special agencies. In the USA, these functions are entrusted to the Federal Communications Commission, the Federal Interstate Transportation Commission, etc., as well as the corresponding state authorities. In the UK, control over industries where the potential for the emergence of a monopoly position, and therefore its abuse, is actually or potentially great, has been created by the Office of Telephone Communications, Gas Supply, Water Supply and Electricity Supply.

The principles of regulation vary depending on the choice of the central control parameter, the way it is set, the frequency of review and many other substantive and procedural factors.

2. regulation of the rate of profit.

In the United States, until recently, the dominant practice for regulating natural monopolies was to limit the rate of profit, carried out on the basis of a markup on costs. Companies were allowed to earn net after-tax income within certain limits. Under such a system, all aspects of company activity - tariffs, investments, profitability - are subject to detailed legal regulation by government agencies. The tariff structure is designed to avoid unfair and unfair discrimination. Hence, the tariff must be set for each type of sale or nature of service, which usually requires a breakdown of total costs based on some principle, for example, production volumes, sales volumes, direct costs, profits received, etc. The approved tariff usually remains in effect until the company requests a revision, which usually occurs if profit margins become insufficient. Moreover, enterprises receive permission not only to increase tariffs, but also to change their structure, and in some cases even to reduce them. The tariff approval procedure varies from state to state. Typically a company will calculate operating costs incurred, capital employed and the cost of capital for an agreed period (usually the last 12 months) for which complete data is available. The state-appointed Tariff Board verifies its own evidence against the company's proposals. The parties can either discuss their differences and come to an “agreement”, which must be approved by the regulator, or refer the matter to an administrative court. Litigation, if it comes to it, has almost all the features of a judicial procedure. The judge's report, prepared as a result of the litigation, goes to a commission (the Office of Public Utilities), which makes the final decision. A company that disagrees with a decision can file an appeal in an appellate court, a state court, or even the Supreme Court if the dispute is about the application of Federal law. However, most often, instead, she begins to work on preparing the documentation necessary to submit a new request for a tariff revision to the Tariff Council. The tariffs determined during the quasi-judicial procedure are valid until they are revised at a new hearing.

The tariff determination procedure consists of three stages - identifying current costs, investments and setting the rate of return on investments.

Determining current costs is not limited to a purely technical operation. Most state commissions have developed a uniform accounting system that is mandatory for all companies. The commissions ensure that companies do not incur unnecessary costs by over-purchasing, charging high wages, or failing to source cheaper goods and services.

Investment Valuation- one of the most difficult aspects in this model of regulation of public utility enterprises. Capital investments can be valued in different ways - at acquisition prices minus depreciation; in equipment restoration prices; finally, in the prices of restoration of services, and not of the equipment that produces these services. In practice, regulatory authorities give preference to valuing capital at acquisition prices, since determining its replacement cost is very difficult. Depreciation is carried out based on the standards prescribed by the regulator. The problem of evaluating investments does not end there; the question arises of what part of the investment was made justifiably, and therefore can be included in the base on which the permitted rate of return is calculated, and what part cannot. Funds spent on unnecessary, inefficiently constructed structures and unnecessary equipment are completely or partially excluded from the base for calculating the rate of return. True, for a long time the scale of such non-accounting was relatively small. After the energy shock of the 1970s, regulators tightened the requirements for including investments in the base for calculating the rate of return. They began to actively practice assigning costs to future periods; checking the feasibility of investments; rejecting investments as unnecessary; their revaluation to competitive prices.

Assets are included in the regulatory base, on which profit can be accrued subject to;

firstly, if the assets themselves were recognized as “used and useful”

secondly, if the decision to acquire (create) them - at the time of adoption and on the basis of information available at that time - is justified.

Acceptable Profit determined based on expert judgment. Its lower limit is the price of capital, and the upper limit is the return on investment with the same degree of risk in enterprises of competitive industries. Calculating the value of the acceptable rate of profit involves solving a mass of seemingly purely technical issues: what should be included in the price of capital and the price for this particular company or the industry average, its past or expected future value, as when calculating profits, taxes must be taken into account - actually paid or accrued for payment, etc.

The company's allowable profit is calculated on all capital, whether it is used or not, subject to the efficient use of labor resources, production methods and pricing principles. The main argument for this regulatory model is that it protects producers by ensuring that costs and investments are justified and that services are paid fairly. However, even at this point, central to this model, its effectiveness is called into question. According to critics, the model encourages a cost-based pricing regime - setting a tariff based on actual costs allows costs to be passed on to consumers. The disadvantages of the cost-plus-profit regulatory model are the disruption of incentives for capital investment, the encouragement (if a company operates in markets with varying degrees of competition) of shifting costs from one market to another, and the lack of incentives to expand the range of services provided. Under certain conditions, namely when the allowable rate of return on capital exceeds the price of capital, there is an incentive to overinvest. According to a number of experts, the American regulatory system has a number of shortcomings.

1. a trend toward increased regulation driven by frequent, lengthy, and highly publicized meetings of the Public Utility Boards.

2. The quasi-judicial regulatory system is expensive for both companies and regulators.

3. low efficiency of judicial consideration of complex economic issues; “compliance of regulators due to fear that a ban on increasing tariffs would result in cutting off the company from the capital market. As a result, regulators largely follow their lead when determining profit margins and tariffs.

4. lack of mechanisms to stimulate efficiency improvements.

Although the validity of these reproaches is questionable, in the United States there has been a move away from this regulatory model.

3. regulation of the upper tariff limit (deflator-X)

Since the second half of the 80s, after a series of privatizations of natural monopoly companies in the UK, the practice of regulating tariffs in the absence of strict restrictions on the rate of profit has developed. At the end of the decade, she began to gain recognition in the United States. The essence of this model is to establish for an agreed upon period (4-5 years) a formula for calculating the annual tariff, which contains a deflator and the so-called productivity increase factor (X). Tariff restrictions are reviewed periodically, after a specified period (4-5 years), but extraordinary revisions are also possible. An extraordinary revision of the tariff formula is equivalent to a change in the license on the basis of which manufacturers operate. By agreement with the license holder, its terms and conditions may be changed at any time by the regulatory authority. If the holder disagrees, the regulator may refer the matter to the Commission on Monopolies and Mergers (CMC). The terms of the license can only be changed if the CMC recognizes that the company's actions are contrary to the “public interest.” The construction of the calculation formula breaks down into a number of points.

Establishment of the object of regulation

The nature of setting the price limit (term, absolute or

relative value)

Definition of X

Possibility to shift costs

There are two main approaches to the object of price regulation.

In industries with a wide range of services provided, the tariff is not regulated for each of them, but for a combination, a basket. This simplifies the calculation procedure and facilitates cross-subsidization. In the UK gas and water industry, the average price of a basket of services is regulated, which is formed in accordance with the actual structure of their provision in the previous year. In the US, AT&T services are grouped into 3 baskets in order to prevent cross-subsidization of certain types of services. The first basket includes services for households and small businesses. The second basket includes about 800 services. The third basket combines other services for entrepreneurs - private telephone networks and various types of data transmission.

In industries with a single product or providing primarily personal services, income limits are fixed per unit of product or per person served (client).

The formula for calculating the marginal tariff is usually established for the medium term - 4-5 years. In conditions of inflation, and given its chronic nature for the modern economy, always, fixing the absolute value of the price (tariff) is inappropriate from the point of view of both consumers and producers. If possible, the tariff should be fixed not in absolute, but in relative prices.

The value of X is determined based on estimates of future demand, the volume of capital investment, the amount of profits from other unregulated activities, the likelihood of cost reductions and productivity growth, as well as investment needs.

The ability of producers to shift costs depends on whether they are “controllable”, depending on the actions of companies, or not. “Uncontrollable” costs can be transferred into prices in whole or in part, but “controllable” ones cannot.

In integrated industries, tariff limits are set separately for different types of services. This regulatory model has a number of advantages.

Firstly, the focus is on the most important parameter for the consumer - the price level.

Secondly, transparency and, as a result, ease of tracking and adoption.

Third, simplifying the regulatory process for companies and regulators. The company can change the level and structure of tariffs according to a given formula, and the regulator does not have to participate in the grueling procedures of revising prices and detailed consideration of the investment program.

Fourth, stimulating efficiency. Manufacturers are guaranteed that efficiency gains will continue between revisions.

The deflator X model is less susceptible to cost inefficiency and the tendency to overstate capital intensity. Since the company has the right to capture all profits, it has incentives to increase productive efficiency resulting from unlimited profit maximization. If X is correctly specified, part of the expected increased efficiency will be passed on to consumers in the form of lower prices. However, this regulatory model is believed to increase the likelihood of underinvestment. The possibility of fluctuations in the rate of profit here is much greater than with a model that establishes an acceptable rate of profit. Therefore, according to some researchers, during periods when profits are high, the regulator may be tempted to tighten tariffs, and in periods of low demand and low profits, on the contrary, to weaken them. Taking into account that profits are associated with investments and that possible actions of regulatory authorities are known to the manufacturer, the latter can limit investments in order to avoid partial expropriation of profits. The deflator-X model does incentivize efficiency because the firm captures all the cost savings. However, the stimulating effect largely depends on the nature of the price revision and the rigidity of X. The uncertainty of the criteria for the revision of X provokes an increase in the price of capital and inhibits investment. The uncertainty of the criteria for revising X has negative aspects, since it establishes a clear feedback between cost reductions and (possible price reductions. When the value of X is fixed, increasing the company’s efficiency becomes not voluntary, but forced. There is no longer any need to count on its own initiative - short-term benefits of increasing profits for the increase in efficiency and reduction in costs can be offset by more stringent X and thereby lower prices in the subsequent period, and even moreover, provoke a decrease in the current period. In addition, the stimulating effect of such regulation is relatively large when a tariff revision is not planned soon, but with. as the moment of revision approaches, it decreases to zero. In other words, as the moment of revision approaches, the company has reasons to underestimate the results of its activities in order to achieve a more “gentle” pricing regime for itself. The value of X largely depends on the information that the authorities have. If a regulated firm has an “information monopoly” in an industry, it will be impossible to establish the reasonableness of its costs and profits. This problem can be solved if the company operates in a local market, which makes it possible to use the performance indicators of one company as a criterion for evaluating another. The counterargument to the thesis of transparency and flexibility of regulation (when setting tariffs for a basket of services) is that cross-subsidization is allowed here, which can cause inefficient allocation of factors of production, aimed at suppressing competitors.

4. unity and differences of regulatory models.

The described models have much in common. Both reflect a bargaining process between the company and the regulator. The principles for constructing systems are identical - both here and here the basis is taken to determine the company’s income sufficient for its development. The difference is that in one case, the rate of profit (maximum) is controlled by means of tariffs, in the other - it is fixed only at the “input” (that is, minimization of costs on which profit is calculated is stimulated). Fixing the pricing regime (formula) does not eliminate the need to calculate the rate of profit. To determine the value of X, the volume of investment and the rate of profit are first established, and only then, on the basis of these estimates, restrictions on price growth in a given area are fixed relative to the general price dynamics. Additional difficulties in both models arise due to the diversification of firms' activities, which makes it very difficult to distinguish between regulated and unregulated activities. This problem can be solved by separating regulated activities into an independent company. Price regulation, like profit regulation, has negative consequences. By fixing the upper price limit, profit growth can be achieved by reducing the quality of services. Therefore, such regulation inevitably requires quality control by establishing a service standard. The differences between these two models are obvious.

1. “deflator X” is set for a predetermined, although sometimes adjustable period depending on circumstances (4-5 years). When regulating the rate of profit, such a period is not fixed. The company can request a new tariff at any time, and do this as often as allowed by the established procedure.

2. in contrast to the practice of fixing the rate of profit, where the basis of calculations is the actual data of past periods, “deflator-X” is based on forecast estimates. This could be seen as an advantage if the predictions always came true.

3. With the “deflator X” model, the company has greater freedom to achieve the adjustable parameter. When regulating the rate of profit, elements of flexibility arise less frequently and only in connection with a revision of the principles of asset valuation, determining the base on which the rate of profit is calculated, accounting for work in progress, etc.

4. When establishing a relative marginal tariff, many aspects of the relationship between the regulator and the regulated company are taken beyond the scope of clear legal procedures, and, therefore, their resolution depends entirely on the will of the former. The intensity of control over natural monopolies here is largely determined by the policy of the regulatory body, and the latter by the professionalism and objectivity of its leader.

The purpose of state legal regulation is to maintain and, if necessary, balance the balance of interests of subjects of natural monopolies and consumers.

Functions and powers of bodies regulating natural monopolies.

Only the bodies regulating natural monopolies are empowered to make decisions on inclusion in the register of natural monopoly entities or exclusion from the register. The formation and maintenance of a register of natural monopoly entities, in respect of which state regulation and control is carried out, is the first initial function of the bodies regulating natural monopolies.

The Federal Law “On Natural Monopolies” does not say anything about who establishes the procedure for maintaining the register of natural monopolies. Nothing is said about this in the provisions on individual federal executive authorities that regulate the activities of natural monopolies. Obviously, the procedure for maintaining the register should be established by the bodies regulating the activities of natural monopolies themselves. Since a subject of a natural monopoly, as a rule, produces not only natural monopoly goods, but also carries out other business activities, the register in any case must accurately and comprehensively indicate what specific type of its economic activity is subject to state regulation and control.

Bodies regulating natural monopolies make decisions that are binding on subjects of natural monopolies on the introduction of regulation, on the application to the subject of a natural monopoly of specific regulatory methods provided for by law, including on setting prices (tariffs). The decisive role here is played by the decision to apply regulatory methods, which entails the inclusion of a natural monopoly entity in the register and the introduction of a control mechanism.

The Federal Law “On Natural Monopolies” establishes two specific methods (the use of other methods is not permitted):

1. Bodies regulating natural monopolies may apply price regulation, carried out by determining (establishing) prices (tariffs) or their maximum level.

In many countries, the prices of natural monopolies at the first stage of liberalization were directly regulated by the state. But in conditions of high inflation and sharp changes in relative prices, the revision of tariffs and prices did not keep pace with rising costs, and the practice of regulating pricing according to various formulas was adopted, and at the same time the privatization or commercialization of natural monopolies began to be carried out.

The state does not have the right to use price regulation in market relations, because according to Art. 424 of the Civil Code of the Russian Federation, the execution of the contract is paid at the price established by agreement of the parties. And only in cases provided for by law, prices (tariffs, prices, machines, etc.) established or regulated by authorized state bodies are applied. This exclusive right is granted to the bodies regulating natural monopolies. This method logically follows directly from the concept of natural monopoly, an essential element of which is inelastic prices for its goods. Price regulation itself is carried out by establishing either a fixed price, or a maximum price level (tariffs), or maximum coefficients for changing prices (tariffs) for goods produced (sold) by a natural monopoly entity.

As a rule, pre-selected pricing schemes are used:

A. Marginal cost method. It lies in the fact that the state requires (and controls) that the price set by the monopolist be equal to its marginal costs. This ensures an effective volume of production and consumption of natural monopoly products from a national economic point of view, which often leads to losses and the need to subsidize the monopoly with public funds.

b. Average cost method consists in the fact that all of the monopolist's profits, with the exception of normal ones, are withdrawn (that is, the price is equal to average costs). This method can give a result in which too little product is produced compared to what is necessary for the efficient functioning of the economy as a whole, and, on the other hand, does not create an interest in minimizing costs: the monopolist knows in advance that his expenses will be compensated.

V. Price ceiling method usually leads to product shortages.

d. Subsidizing natural monopolies. Many market economies use this method to a moderate extent, sticking to the marginal cost option. The essence of the practice of cross-subsidization is that some consumers of a natural monopoly's products receive them, but at lower prices, at the expense of others, who actually bear an additional burden. Industrial enterprises, which actually subsidize preferential tariffs for the population, find themselves in the most difficult situation.

The disadvantages of this practice are that it significantly limits the development potential and competitiveness of Russian industry; in contradiction to economic logic (the cost of the product of natural monopolies for large wholesale buyers is lower than for individual consumers); imposing on natural monopolies functions of social policy that are unusual for them.

It is not surprising that the social effectiveness of this kind of tax on industrial consumers is extremely low: the subsidy is distributed not according to need, but according to the volume of consumption of the service. This means that the most prosperous segments of the population receive more than the least protected, for whom, in fact, such assistance should be intended.

However, there is no best scheme for all conditions that would ensure the trouble-free implementation of society's goals - the production of the required volume of products at minimal costs. As a rule, a system of measures that includes a combination of elements of private ownership and government control through the establishment of strict pricing rules is effective.

2. Determination of consumers subject to mandatory servicing and (or) establishment of a minimum level of provision for them in the event that it is impossible to fully satisfy the needs for a product produced (sold) by a natural monopoly entity. The need for its use is directly determined by the nature of natural monopolies. The goods produced in them are often objectively limited in their resources, or even completely exhaustible (full use of explored deposits, reduction in production, etc.). This circumstance allows subjects of natural monopolies to selectively, at their own discretion, sell goods to some consumers and deprive other consumers of these goods. Government intervention is designed to protect the interests of all consumers.

Also, the bodies regulating natural monopolies make decisions to change or terminate regulation in relation to specific subjects of natural monopolies if the established grounds for this no longer exist, for example, if an opportunity has opened up for the development of competition in the market for the relevant goods. And just as the decision to introduce regulation serves as the basis for including a natural monopoly entity in the register, so on the basis of the decision to terminate regulation it is excluded from the register.

Issues related to the introduction, change or termination of regulation of the activities of a natural monopoly entity can be considered on the basis of proposals from federal executive authorities, executive authorities of constituent entities of the Russian Federation and local governments, public consumer organizations, their associations and unions, and economic entities. Further, the body regulating a natural monopoly has the right to apply only those regulatory methods that are provided for by the Federal Law “On Natural Monopolies” and other federal laws.

The decision is made on the basis of an analysis of the activities of a particular subject of a natural monopoly, taking into account the stimulating role of regulatory methods. In this case, the reasonableness of the costs is assessed and the following are taken into account:

Costs of production (sales) of goods, including wages, cost of raw materials and materials, overhead costs;

Taxes and other payments;

The cost of fixed production assets, the investment requirements necessary for their reproduction, and depreciation charges;

Projected profit from the possible sale of goods at different prices (tariffs);

The distance of various consumer groups from the place of production of goods;

Compliance of the quality of manufactured (sold) goods with consumer demand;

Government subsidies and other government support measures.

The body regulating a natural monopoly, when making a decision on the application of methods for regulating the activities of a particular subject of a natural monopoly, is obliged to consider the information provided by interested parties about the activities of this subject of a natural monopoly.

The main method of regulating the activities of natural monopoly entities is setting prices (tariffs) or their maximum level. Therefore, information that reveals the composition of production costs, which are the main factor in determining the price of a product, is especially significant. It is advisable to take into account not only the existing structure and cost of production costs, but also to provide for their dynamics in the future, changes in prices for individual cost components (cost of raw materials, etc.). Understating costs, and hence prices, will inevitably make the production of goods unprofitable.

Another function of the bodies regulating natural monopolies is to submit, in accordance with the established procedure, proposals to improve legislation on natural monopolies. The developed recommendations for improving the current legislation are sent by the bodies regulating natural monopolies to the Government of the Russian Federation. The same function, but only on issues of improving antimonopoly legislation, was performed by the former State Antimonopoly Committee of the Russian Federation.

Making a decision on the use of control and regulation methods, and therefore on inclusion in the register, is the result of a lot of preparatory work. Errors here must be completely excluded, since they will inevitably cause illegal restrictions on the activities of an economic entity that is not at all related to natural monopolies.

In order to avoid mistakes and their negative consequences, it is important to comply with established procedures for considering issues of introducing, changing or terminating regulation of a natural monopoly entity. The natural monopoly entity must be notified of the review date in advance by the relevant natural monopoly regulatory body. When the body regulating a natural monopoly considers the issues of introducing, changing or terminating the regulation of a subject of a natural monopoly, a representative of this subject of a natural monopoly has the right to be present. Those persons who made a proposal to introduce, change or terminate the regulation of the activities of a natural monopoly are also invited to take part in the consideration of the issue. By decision of the regulatory body, an independent economic assessment may be carried out.

Decisions on introducing, changing or terminating regulation or refusing a proposal made are made no later than six months from the date of receipt of the proposal. In this case, the refusal or partial refusal to accept the proposal made must be motivated.

Within the limits of their competence, the bodies regulating natural monopolies carry out the function of monitoring compliance with the Federal Law “On Natural Monopolies”. The rest of the activities of natural monopoly entities are controlled by federal antimonopoly authorities.

If a natural monopoly entity has a market share of more than 35% of a product, then, in addition to the register maintained by the body regulating natural monopolies, it also includes the corresponding register of business entities maintained by the federal antimonopoly authorities. Thus, a subject of a natural monopoly can be listed simultaneously in both registers.

Federal antimonopoly authorities also independently make decisions to impose fines and administrative penalties on natural monopoly entities for violations of antimonopoly legislation. The exception is the adoption of decisions to impose fines and administrative penalties for violations of the established pricing procedure for goods of natural monopolies. If the antimonopoly authorities, when checking the pricing of goods of natural monopolies, identify the use of unreasonable prices not established by federal and regional bodies regulating the activities of natural monopolies, they report them to the relevant body regulating natural monopolies. The body regulating natural monopolies, in turn, is advisable to inform the federal antimonopoly authorities about violations of antimonopoly legislation identified by it or that have become known to it by subjects of natural monopolies, the response to which is within the competence of these authorities.

The implementation of control powers opens up great opportunities for the bodies regulating natural monopolies to make a fruitful contribution to reforming the economy and increasing the efficiency of the functioning of natural monopolies.

Bodies regulating natural monopolies have the right:

Send mandatory orders to subjects of natural monopolies to stop violations of the Federal Law “On Natural Monopolies”, including to eliminate their consequences, to conclude contracts with consumers subject to mandatory servicing, to make changes to concluded contracts, and to transfer profits to the federal budget received by them as a result of actions that violate this Federal Law;

Send to executive authorities and local self-government bodies mandatory instructions to cancel or amend acts adopted by them that do not comply with the specified Federal Law, and (or) to stop violations of it;

Make decisions on imposing a fine on a natural monopoly entity;

Bring to administrative liability in the form of a warning or a fine the heads of natural monopolies, officials of executive authorities and local governments in cases provided for by this Federal Law;

File a claim in court, as well as participate in the consideration in court of cases related to the application or violation of the Federal Law “On Natural Monopolies”;

Exercise other powers established by federal laws.

The grounds for consideration of cases related to actions (transactions) controlled by regulatory authorities are statements of business entities, consumers, public consumer organizations, their associations and unions, representations of executive authorities, local government bodies and the prosecutor's office. Bodies regulating natural monopolies have the right to consider cases on their own initiative on the basis of media reports and other materials at their disposal indicating violations of the Federal Law “On Natural Monopolies”.

For the bodies regulating natural monopolies, certain guarantees have been established for the performance of the functions assigned to them. Executive authorities regulating natural resources can be liquidated only if there is an opportunity to develop competition in the relevant product market and (or) if the nature of demand for the goods of natural monopoly subjects changes. Reports on the liquidation of bodies regulating natural monopolies and the grounds for making such a decision are published in the media. Employees of bodies regulating natural monopolies have the right of unimpeded access to information on the activities of natural monopoly subjects available to executive authorities and local governments, as well as to natural monopoly subjects. At the request of the bodies regulating natural monopolies, subjects of natural monopolies, executive authorities and local governments are obliged to provide reliable documents, written and oral explanations and other information. Information that constitutes a commercial secret and was received by the natural monopoly regulatory body is not subject to disclosure.

The work of bodies regulating the activities of natural monopolies is based on democratic principles, in an atmosphere of wide publicity. On the decisions they made to introduce, change or terminate regulation of the activities of natural monopoly entities, as well as on the inclusion and exclusion of natural monopoly entities from the register, on the methods used to regulate the activities of natural monopoly entities and on specific indicators and requirements for The authorities regulating natural monopolies must communicate this through the media. Regulatory bodies for natural monopolies annually publish a report on their activities. Also, all cases of application of liability for violations of the federal law “On Natural Monopolies” must be reported through the media, and decisions on cases related to violations of this Federal Law must be published in the media in full no later than a month from the date of their adoption .

It is extremely important that both the financial report and the concept of industry development, including the target rate of profit of monopoly enterprises, the level of dividends, methods of reducing costs and directions of investment, are published and publicly discussed by specialists. Secrecy in the activities of enterprises, which the state, on behalf of society, protects from competition and mandates a monopoly, cannot be justified by any reference to commercial secrets. This will be a kind of litmus test showing the seriousness of the intentions and actions of the new structures.