Wang Wei

Provisions of the Antitrust Law that define its scope of application reveal the Antitrust Law’s status as an "economic constitution" for a free market economy, while provisions on exceptions (or exemptions) create a balance between national economic and social development objectives and antitrust laws. This paper puts forth various opinions regarding the scope of application and adjustment mechanisms that might be used to govern China’s Antitrust Law. These opinions take into consideration international antitrust practices and legislation as well as the practical problems that China faces in developing its Antitrust Law system.

I. The Scope of Application of China’s Antitrust Law: the Law Should Be Applied Universally

As the "economic constitution" of a market economy, antitrust law is essentially applicable to all economic sectors and business activities within a country. Even activities that take place beyond national borders must be subjected to Antitrust Law (i.e. laws shall have "extra-territorial effect"), if such activities cause any restriction to or impact on domestic markets. The application of extra-territorial effect is, of course, subject to the principles of international law, international cooperation in enforcement, and the foreign policies and strategies of relevant countries. As a result, the various Antitrust Laws in most countries only provide guidelines for actual practice.

The Antitrust Law should apply to all industries and sectors not only including those involved in the production and selling of commodities, but also those involved in modern services and cultural industries, such as finance, medicine, education, publishing and athletics. Especially in this age of rapid technological progress, relaxed regulation and stimulated competition, the scope of Antitrust Law should gradually extend to encompass natural monopolies and public utilities.

The Antitrust Law should be compatible to any responsible entity, which impedes or affects competition, including enterprises, associations, practitioners (such as lawyers, accountants and doctors) and to governmental departments or units that impede or affect competition through illegal or unjust administrative measures.

As can be seen, the Antitrust Law should be applied universally and not only to a particular sector, region or enterprise sector.

II. China’s Antitrust Law Should Not Explicitly Cover Too Many Exceptions

While the principle of universal application is essential, in order to achieve harmony between the Antitrust Law and other economic policies, social development objectives and public interests, Antitrust Laws in most countries provide for the arrangement of certain exceptions under certain circumstances.

It should be noted that, during the practical application of Antitrust Laws, different countries have adopted multiple models for implementation scope and exceptions and exemptions. Even in the same country, the contents and exemption model often changes to conform to necessities at different stages of development. For instance, Japan provided for 100 exceptions, through industrial policies and legislations, during its high-speed growth period; now, it only retains a little over 30 exceptions. Provisions on exception should not remain static, but should be dynamically adjusted to accommodate different needs. The common practice in other countries is to provide for certain exceptions directly in the anti-trust law, while further exceptions are provided in related laws or are determined subjectively according to specific procedures.

Exceptions directly provided for in the Antitrust Laws of most countries are focused into two categories. The first covers agreements entered into or collective activities conducted by trade union, or unions of employees, involving issues of hiring, salary or intellectual properties. The second category covers exceptions, which are provided to certain organizations, such as fishing or agricultural ones, which may restrict competition in an effort to cooperate or standardize. At this stage of development, when China’s Antitrust Law remains largely underdeveloped, China may benefit from adopting certain aspects of foreign antitrust regulation. It is suggested that the Antitrust Law at this stage should not provide very explicit exceptions. Instead, the law can expressly highlight the partial restriction of competition that springs from the necessary protection of intellectual property, the environment and syndication rights. Other exceptions should be added, and current exceptions deleted or modified, on an ongoing basis during the implementation of the Antitrust Law.

III. Adjustment Mechanism Should Be Established for the Application Scope of the Antitrust Law to Make it Balance with Other Social and Economic Development Objectives

Since exceptions which may be directly provided in the Antitrust Law are limited, for the time being, many tasks remain as reform and opening continues. Antitrust law still has to allow for the social and economic development and reform policies and, in many respects, it is of great importance to establish a dynamic set of adjustment mechanisms for application scope of the antitrust law.

Internationally, the mechanisms meant to adjust the scope of application of Antitrust Laws are established procedurally and legislatively. The EU has established exceptions, conditions and procedures for certain industries and sectors through special laws and regulations, in addition to expressprovisions provided in its Competition Law. This practice not only provides room for dynamiccoordination between Antitrust Laws and other social and economic objectives, but also avoids a great number of difficulties that might arise during the implementation process when legislation and procedural decisions must be coordinated.

Besides clear provisions regarding exceptions in the Antitrust Law, it is of no less importance to provide for procedures and rules for granting exceptions, which define conditions, approval processes, responsible authorities and terms of validity. This prevents government bodies and interested organizations from abusing these exceptions and causing improper competitive interference. Generally, procedural rules for exceptions fall into the following categories.

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