IDRC Forum in KyotoApril 13, Challenges in Enforcing Chinese Antimonopoly Law Prof. Dr. Wang Xiaoye Chinese Academy of Social Sciences

IDRC Forum in KyotoApril 13, China adopted Antimonopoly Law China has adopted Antimonopoly Law on August 30, This Law will be in force on August 1, China ’ s antimonopoly legislation is under the pressure of international society, in particular after its entrance of WTO; but it is also spontaneous with China ’ s pro-market reform. Chinese AML has two characters. First one is that it absorbed the experiences from developed competition Laws. Second one is that it reflects the China’ special political and economic situation.

IDRC Forum in KyotoApril 13, The Experiences of Developed Regimes introduced into Chinese AML Effect doctrine in Art. 2; Leniency policy in Art. 46; Commitment system in Art. 45; The substantial Law based on three pillars: -Prohibition of monopolist agreements; -Prohibition of abusive conducts; -Control of M&A. Exemption in Arts. 15, 28. Prohibition of Abusive conduct based on Intellectual property in Art. 55.

IDRC Forum in KyotoApril 13, Provisions with Chinese Characters Encouragement of M&A in order to realize economic scale (Art. 5); Specialized protection of State-owned Economy (Art. 7); Competition policy harmonized with socialist market economy (Art. 4); National security review over M&A involved with Foreign investors (Art. 31); Prohibition of Administrative Monopoly (Art.8, Chapter 5).

IDRC Forum in KyotoApril 13, Challenges in Enforcing Chinese AML –Conflicted Legislative Goals Multiple goals of the Law: “This law is for the purposes of prohibiting monopolistic conduct, safeguarding fair competition, improving economic efficiency, protecting the interests of consumers and public interests…” The business operators may obtain exception from the law if their monopoly agreements or transactions are for the purpose of achieving the public interest. The state-owned large companies may be easier exempted based on public interests. The legislative goals inconsistent with each other will be a challenge for the enforcement agency.

IDRC Forum in KyotoApril 13, – Separated enforcement Agencies According to the statement by State Council, NDRC, SAIC and MOFCOM have jurisdiction over anticompetitive conducts. NDRC and MOFCOM are actually important bodies to implement industrial policy. The position of the antimonopoly agencies under NDRC and MOFCOM are lower then ministry, therefore they will be difficult to be independent. Antimonopoly Commission will also be difficult to be independent, due to the fact that the Commission is composed of the principals of relevant departments and organs of the State Council. Its mission is to harmonize the anti-monopoly agencies, regulators, and relevant institutions.

IDRC Forum in KyotoApril 13, –Administrative Monopoly Administrative monopoly refers to abusive behaviors by governments to restrict competition. According to Art. 51, the jurisdiction over administrative monopoly is in the hand of the government at higher lever. How to prohibit administrative monopoly is not only a matter related AML. In this regard, China needs to deepen its economic reform, and implement its political reform. But in an environment with widespread administrative monopoly, it will be difficult for the antimonopoly authority to combat against monopolistic conducts by the privates.

IDRC Forum in KyotoApril 13, Relationship between Antimonopoly Agencies and Regulators In China there is regulator in almost every industry related to national economic lifeline and state security, for example Telecom, Railway, Electricity, Banking, Insurance and so on. The regulation consists normally of the regulation related anti-competitive conducts, there must be parallel jurisdiction over the restrictions of competition in these areas. The regulator normally is not independent of the regulated enterprises. The parallel jurisdiction will bring about the conflict between antimonopoly agencies and regulators.

IDRC Forum in KyotoApril 13, Lacks of Operational Rules Chinese AML consists only of 57 Articles, and most provision is too simple to be operational. Chinese Law-maker should formulate guidelines or detailed rules of almost every area, inclusive of relevant market, horizontal agreement, vertical agreement, abuse of dominant position, merger control, abusive conducts involved IP and so on. Therefore the adoption of AML is only the first step for AML legislation. In order to realize the effective implement of AML, China has still a long and arduous way to go.

IDRC Forum in KyotoApril 13, Conclusion Even the critical issues surrounding China’s AML, the promulgation of the law still should be deemed as a milestone, because it is an important step directed at the socialist market economy. There are phases each system must transit. Therefore, I make confident predictions about the challenges that Chinese AML will face in its early years. But I am also confident that China's growing and developing economy requires a strong watchdog to keep free and fair competition, and the economic globalization is the important motive force for Chinese lawmaker to establish an effective antimonopoly system in the near future.

IDRC Forum in KyotoApril 13, 谢谢 ! Thank you very much!