Constraints on convergence in Chinese antitrust

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Author: Nathan Bush
Date: Spring 2009
From: Antitrust Bulletin(Vol. 54, Issue 1)
Publisher: Sage Publications, Inc.
Document Type: Article
Length: 22,181 words

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On August 1, 2008, the new Antimonopoly Law of the People's Republic of China (AML) took effect. (1) Although many other transition and developing economies preceded China in adopting comprehensive competition statutes, the magnitude, dynamism, and political significance of the Chinese economy (and an epic thirteen-year drafting process) distinguish the AML. Its enactment underscored the central government's commitment to implement antitrust rules which are, at minimum, analogous to those of advanced industrialized economies.

The extent to which Chinese competition policy will actually converge with the principles and practices of foreign jurisdictions, however, remains uncertain. Divergent views of the proper goals of the AML persist throughout the Chinese establishment, with no consensus in sight. Although the AML plainly incorporates foreign antitrust doctrines, the text leaves ample room for Chinese antitrust to promote consumer welfare, innovation, and efficiency through the competitive process, to gravitate towards populism, protectionism, or industrial policy, or to oscillate between goals as political circumstances demand. Even if the enforcement authorities seek to advance "default" antitrust rules consistent with prevailing international practices, competing policies and political interests may often override them. Given the dynamics and opacity of Chinese policymaking, administrative decisions, and judicial rulings, it may be difficult to distinguish the progressive development of China's "default" antitrust rules from episodes of politicized decisionmaking.

China's emerging antitrust regime was further obscured by the onset of the worldwide financial crisis in late 2008, which quickly overshadowed the launch of the AML. The flow of international mergers and acquisitions subsided, and the Chinese government-like other governments--shifted its focus to economic stimulus and stabilization efforts. Nevertheless, hints at the future course of Chinese antitrust may be found in recent rulemakings and in decisions to clear conditionally the acquisition of Anheuser-Busch Companies Inc. by InBev NV/SA and to block the acquisition of the Huiyuan Fruit Juice Company Ltd. by the Coca-Cola Company. (2)


A. A brief summary of a lengthy legislative effort

The AML reflects almost two decades of intermittent drafting and debate intertwined with China's broader economic reforms. (3) Pervasive central planning largely obviated antitrust rules throughout much of the history of the People's Republic of China (PRC). The gradual reintroduction of market competition in the 1980s prodded proposals in 1988 for new measures addressing both competition policy and unfair trade practices, but they were rebuffed as premature. (4) When the Anti-Unfair Competition Law was eventually enacted in 1993, it focused on trademark and trade dress protection, deceptive trade practices, trade libel, commercial bribery, and bid-rigging. (5) Although it also contained rudimentary rules against predatory pricing and tying, administrative penalties for these offenses were conspicuously omitted. (6)

The AML's drafting officially commenced in 1994 with the formation of a working group drawn chiefly from the now-defunct State Economic & Trade Commission (SETC) and the State Administration for Industry and Commerce (SAIC), the body responsible for enforcing the Anti-Unfair Competition Law. (7) Scholars and officials from other ministries and the Legislative Affairs Committee of the National People's...

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Gale Document Number: GALE|A205460052