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)