China is to set up a top-level commission to help prevent
companies building monopolies.
The cabinet-level special commission will handle anti-monopoly
affairs, according to the draft anti-monopoly law made public on
Saturday.
Composed of senior government officials, law experts and
economists, the commission aims to guarantee fairness and authority
in the enforcement of the anti-monopoly law.
Cao Kangtai, director of the Legislative Affairs Office of the
State Council, announced the upcoming formation of the commission
in a speech delivered to the Standing Committee of the National
People's Congress (NPC) on Saturday.
Committee members will review the draft law, which has been
prepared over more than 10 years, during the six-day session, which
concludes on Thursday.
Currently, several government departments are responsible for
dealing with anti-monopoly affairs, including the Ministry of
Commerce and the State Administration for Industry and
Commerce.
The establishment of the commission is expected to better
co-ordinate law enforcement by these departments.
The draft law, with 56 articles in eight chapters, mainly
focuses on banning companies from making monopolistic agreements,
abusing their dominant market status, or seeking unreasonable
mergers or acquisitions.
For example, when seeking mergers or acquisitions, all companies
with the exception of financial bodies such as banks and insurance
companies should inform authorities if the total turnover of all
parties involved exceeds 1.2 billion yuan (US$150 million).
The anti-monopoly law will encourage mergers that are conducive
to economic development and market competition, but oppose
practices with the purpose of seeking monopolies, said Cao.
The law will also forbid government departments abusing
administrative power to restrict competition.
The draft law tags six practices as "abusing administrative
powers."
For instance, local governments are not allowed to issue
discriminative rules preventing products from other regions
entering local markets.
Meanwhile, intellectual property rights should not be used as an
excuse to seek monopolies, according to the draft law. Some large
companies have been caught using intellectual property rights to
restrict competition and block technological innovation, according
to Cao.
Although Cao did not say what kind of influence the law will
generate on these sectors, analysts say their monopolistic
behaviours will be curbed to some extent.
China already has several laws and regulations to deal with
monopoly issues, such as the Law against Unfair Competition, Price
Law and telecommunication rules.
But with a market economy, the country needs a law dedicated to
monopoly issues, said Cao.
(China Daily June 26, 2006)