View China's antitrust law enforcement objectively
- By Yu Xiang
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E-mail China.org.cn, September 22, 2014
Using the antitrust law to curb anti-competitive behavior and increase the economic efficiency of markets is a popular practice in western countries, especially in the U.S. and Europe. As early as 1890, the United States passed its first competition law, the Sherman Act. The Sherman Act attempted to outlaw the restriction of competition by large companies, who co-operated with rivals to fix outputs, prices and market shares, initially through pools and later through trusts. Europe had its competition law in the 1920s. Germany enacted its first anti-cartel law in 1923 and Sweden and Norway adopted similar laws in 1925 and 1926 respectively. Nowadays, China is using western countries' way to deal with market failures, which is what western countries hope to see and which deserves encouraging.
Thirdly, launching antitrust probes is not designed to protect the domestic market. If it were, it would be hard to explain why China established the Shanghai free trade zone, which is meant to open up more economic sectors to competition and test changes such as currency liberalization, market-determined interest rates, and free trade. China's Premier Li Keqiang has reassured foreign investors that foreign capital is still welcome and that they would be treated equally as their local counterparts. The Chinese government will do what it promises.
Finally, promoting consumer welfare becomes a new duty for government bodies like the NDRC. The cartel and other anti-competitive activities have done harm to China's fair market environment and have already incurred sizeable consumer dissatisfaction. Already, Chinese consumers are paying much higher prices on the same products than their U.S. and European counterparts. Thus, launching antitrust probes is warmly welcomed by ordinary Chinese citizens.
China's antitrust law enforcement is undeniably at the initial stage. There is a lot China should learn from the U.S. and European experiences for further improvement. Specifically, the following three aspects should be focused on:
Improve antitrust efficiency. The micro-economic objective of the regulators should focus on protecting the rights of consumers. The antitrust law enforcement should let consumers benefit from the investigations. The macro-economic objective is to improve the efficiency of the Chinese economy and to ensure fair competition. Launching antitrust probes in a campaign-oriented way is harmful in the long run.
Encourage consumers and enterprises to file lawsuits against monopoly firms. The launching of an investigation should be based on well-grounded complaints and evidence.
Increase investigative transparency. Investigation procedure should be transparent to the public, especially when the cases are related to state-owned enterprises. In order to reduce suspicion and criticism of regulators' handedness and partiality, all cases should be settled openly and with disclosure of wrongdoings in the media.
In short, there are reasons to believe that China's market environment purified through antitrust probes is helpful for foreign and Chinese companies to compete in a fair market. Ultimately, foreign and Chinese consumers will all benefit from this healthy competition in the Chinese market.
Yu Xiang is an Associate Fellow at the China Institutes of Contemporary International Relations.
This article was first published at chinausfocus.com To see the original version please visit http://www.chinausfocus.com/finance-economy/view-chinas-antitrust-law-enforcement-objectively/
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