Discussion concerning the drafted Anti-monopoly Law will be
included in the agenda of the twenty-ninth session of the tenth
National People's Congress (NPC) Standing Committee that meets from
August 24 to 30.
This is the third discussion; the second meeting concluded in
June. Many legislators revealed that if nothing goes wrong, the law
would be approved this time.
Much controversy has swirled around the Anti-Monopoly Law for
the last 13 years. China began drafting its first Anti-Monopoly Law
in 1994.
The first draft of the law was submitted by the NPC last June.
This June's second draft has greatly improved upon the first
draft.
Shang Ming, head of the Regulations and Decrees Division of the
Ministry of Commerce, said that the second draft is relatively
perfect. He does not anticipate making any major changes to the
third draft.
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But this does not mean that the dispute has ceased. Many
controversial issues still exist: how to supervise the monopolistic
SOEs (state-owned enterprises), how to design enforcement agencies
and how to ascertain the responsibility in cases of administrative
abuse. Export cartel exemptions are also in question. Clearly,
problems will continue to materialize long after the draft becomes
law.
The administration of SOEs
Many new rules have been incorporated into the general
principles of the second draft of the law. The most eye-catching
legality is the seventh item concerning large SOEs.
The rule affirms that those industries, under the jurisdiction
of the state and related to the economic lifelines and the security
of the state, together with similar industries accorded special
privileges according to the nation's laws, will have their legal
business rights protected by the state.
Simultaneously, the state will supervise and regulate their
business behaviors and prices in order to protect the consumers'
interests and accelerate technological progress.
Huang Yong, a member of the elite group drafting the law and
also a law professor at the University of International Business
and Economics, commented, "Allowing state controlled and state
protected industries dominance clouds supervisory rights regarding
competitive behavior of such monopolistic SOEs. The goal to protect
consumer's interest becomes impossible to achieve."
Yong noted that, if one took into consideration the domination
of state assets, then as a matter of course market access laws
should be strengthened. Other competitive operational behaviors,
such as rejecting trades, package sales and various additive
unreasonable conditions, should also be included in the
Anti-monopoly Law.
Another key controversy is the relationship between the
Anti-monopoly Law and other sector laws.
The second article of the first draft says that if the other
laws have different rules regarding monopolistic behavior, such
laws prevail. The 44th article states that if the other
administrative departments do not investigate or supervise a case
of monopolistic behavior, then the anti-monopoly administration may
intervene in such a case. They should first solicit related
departments before taking action.
The second draft cancels the right for the anti-monopoly
administration to intervene if the other administrative departments
do not investigate or supervise alleged monopolistic behavior.
This could cause monopolistic SOEs to be excluded from the
domain of anti-monopoly committees or anti-monopoly enforcement
organs, Huang said.
The proposed Anti-monopoly Law is also likely to be overridden
by many other sector laws.
Shi Jianzhong, another member of the specialist group of the
draft law and a law professor at the China University of Political
Science and Law, said that the Anti-monopoly Law should be the
foundation of other sector laws. These other laws should not be in
conflict with the Anti-monopoly Law.
How to frame the enforcement agencies
The second draft reserved the provision that the anti-monopoly
committee and anti-monopoly enforcement organ both be designated as
enforcement agencies.
The State Council will separately stipulate the constitution,
workflow, detailed duties and jurisdiction of the committee.
Currently, the enforcement organ constitution also remains
pending.
But lawmakers seek to establish an independent, specialized and
authoritative enforcement organ directed against monopolies. The
fact that different agencies have overlapping jurisdiction in cases
of monopolistic practices has invited confusion in the enforcement
process.
To set up the enforcement agencies is anything but easy since
many of them will likely be tied into different interest
groups.
"Devising future enforcement standards and assessing the real
power of these policies will depend on the enforcement agencies'
constitutions. The process will take time and effort," an expert
surmised.
How to ascertain the responsibility for administrative
abuse
"How can the law ascertain who is responsible for the abuse of
power?"
The legal articles concerning administrative abuse hit some
snags, when this question was raised.
The second draft stipulated that serious cases should be
referred to its own higher administration authority.
"In such a setting, the anti-monopoly committee and its
enforcement organ would exist in name only if the case were
transferred to a higher authority instead of directly to them,"
Huang asserted.
Compared with the Anti-Unfair Competition Law enacted years ago,
the articles concerning administrative monopolies showed no signs
of enlargement in the second draft.
Export cartel exemption
The public downplays the gravity of "cartel exemption".
The second draft stipulated seven kinds of monopolistic
agreements exempt from the law cited in Article 15. They are exempt
providing that these agreements do not prohibit free market
competition and benefit the consumers. Even if foreign trade
frictions arise in these monopoly agreements they cannot be
restricted.
An industry insider explained that the to-be-hatched law will
target vicious price manipulation, but it excludes export-price
fixing arrangements with business associations. The insider added:
"The cartel exemption is helpful in evading any anti-dumping
investigations conducted against China. But in the interim price
fixing protocols reached by domestic exporting enterprises will be
much more likely to get battered by overseas anti-monopolies."
(China.org.cn by Chen Lin and He Shan August 23, 2007)
