The Standing Committee of the National People's Congress
(NPC), China's top legislature, on Thursday adopted the
anti-monopoly law to ensure fair competition and regulate market
order.
The law, which began to be drafted 13 years ago, will come
into effect on Aug. 1, 2008.
The law requires foreign purchases of Chinese companies to go
through national security checks.
"As well as anti-monopoly checks stipulated by this law, foreign
mergers and acquisitions of domestic companies or foreign capital
investing in domestic companies' operations in other forms should
go through national security checks according to relevant laws and
regulations if the cases are related to the issue," it reads.
Foreign companies have begun to acquire major state-owned
enterprises or companies with famous brands in recent years,
arousing concerns about China's economic security.
China has already established a basic national security check
system for foreign mergers and acquisitions.
Foreign investors should apply for approvals from the Ministry
of Commerce (MOC) if their purchases of domestic companies affect
national economic security, take place in key sectors or cause a
transfer of the operating rights of famous domestic brands,
according to a regulation issued by the MOC along with five other
government organs last year.
Before that, only mergers and acquisitions worth more than
US$100 million needed MOC checks and approvals.
The government will strengthen examination and supervision of
foreign merger operations affecting major enterprises in sensitive
sectors and issue policies to improve the system for admitting
foreign-invested industries by the end of 2010, according to the
National Development and Reform Commission (NDRC).
The law, with eight chapters and 57 provisions, bans
monopolistic agreements, such as cartels and other forms of
collusion, and provides for investigation and prosecution of
monopolistic practices, while protecting monopolistic agreements
that promote innovation and technological advance.
The law prohibits monopolies from wielding their dominant status
in market to curb competition, fix prices, enforce package sales,
and refuse or enforce trade.
All companies seeking mergers or acquisitions would have to
notify the anti-monopoly law enforcement departments if the actions
meet the standard set by the State Council.
China planned to stipulate anti-monopoly law as early as in
1994.
Experts said China's socialist market economy has turned to be
mature over more than one decade, and in current market
circumstances, the introduction of an anti-monopoly law is
imperative.
(Xinhua News Agency August 30, 2007)