Anti-monopoly legislation on the way
By Dai Yan (China Daily)
Updated: 2004-06-18 08:37

Experts say there are many stipulations in laws and regulations to counter monopoly in China in the absence of an anti-monopoly law, but implementation is ineffective because of the lack of a powerful authority.

Relevant provisions are scattered through the Law against Unfair Competition, Price Law, Bid and Tender Law and other department rules, said Wang Xiaoye, a professional of anti-monopoly legislation from the Chinese Academy of Social Sciences.

He said China adopted the Pricing Law in December 1997, which stipulates that a business operator should not collude with others to manipulate the market price.

Violators would be fined, their business operations suspended, or their business licences revoked permanently.

Provisions in the Law Against Unfair Competition prohibited the abuse of dominant positions, Wang said.

For example, a business operator should not, for the purpose of forcing out competitors, sell commodities at prices lower than cost. The business operator also should not, against the will of the purchasers, conduct a tie-in sale of commodities or attach any other unreasonable conditions to such a sale.

Department rules also provide detailed stipulations against monopoly, Wang said.

For example, the Ministry of Commerce could refuse acquisitions by foreign-funded companies in the case of monopoly. But existing anti-monopoly law is ineffective in conducting enforcement because of insufficient power, she said.

Anti-monopoly policing, which often involves large enterprises and the government, demands that anti-monopoly law enforcers possess sufficient independence and authority, Wang said.

Besides, most of the regulations were issued by the State Council, or its ministries or commissions, and lacked legal authority. Some regulations did not contain provisions on legal responsibility and lacked operational clout, she said.

A report issued by the Fair Trade Bureau of the State Administration for Industry and Commerce (SAIC), which claims certain multinational companies who command dominant positions in the market are using their advantageous positions to curb competition, is causing a stir in China.

The multinationals concerned say that they are not curbing competition and it is hard to judge that they are in a dominant position just by market share.

Wang said it was common practice in the world to determine dominant position by market share.

In the draft of China's anti-monopoly law, it states that if a business operator occupies one half of the market, two business operators occupy more than two-thirds of the market, or three occupy three-fourths of the market for a given commodity, such business operators occupy a dominant market position.

Wang said China's entry to the WTO, which brought in many transnational corporations, has pushed the country to speed up its anti-monopoly legislation.

The adoption of an anti-monopoly law will serve as an important tool for China to check the influence of multinationals, Wang said.

Of course, as in any other country, the adoption of an anti-monopoly law was not solely for the purpose of checking foreign monopoly power, Wang said.

All competitors, domestic or foreign, State-owned or private, occupy equal positions under the rules of market competition, she said.

However, compared with Chinese enterprises, multinationals possess an advantageous position in terms of capital and technology. They can dominate the market more quickly, Wang said.

Anti-monopoly law would play an important role in creating a fair and free environment for competition, she said.

A draft of China's anti-monopoly law has been submitted to the Legislative Affairs Office of the State Council, says an official from the Ministry of Commerce.

The law has been listed on the legislation agenda of the 10th National People's Congress, but the draft still needs revision despite a 10-year drafting period already, he said.