The new Chinese anti-monopoly law: a survey of a work in progress

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Author: Xiaoye Wang
Date: Fall 2009
From: Antitrust Bulletin(Vol. 54, Issue 3)
Publisher: Sage Publications, Inc.
Document Type: Article
Length: 13,255 words
Lexile Measure: 1800L

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The Anti-Monopoly Law (AML) of the People's Republic of China was promulgated at the 29th Session of the Standing Committee of the 10th National People's Congress (NPC). (1) As a competition law scholar and a passionate advocate of the adoption of anti-monopoly legislation in China during the past two decades, (2) I have mixed feelings about the new law. Although the anti-monopoly legislative process was long and convoluted, it has always been my strong belief that China needs an anti-monopoly law and would enact one sooner or later. Anti-monopoly law is a pillar of the market economy, and this has been recognized over the past century in many countries. Competition and the market mechanism are fundamental to strengthening the Chinese economy. An anti-monopoly law is necessary to prohibit monopolistic conduct and facilitate a free and fair competition environment for undertakings by creating a level playing field. The AML enactment indicates that China has chosen the market as a fundamental mechanism to allocate resources instead of the previous system of administrative dictates. Therefore, the law's passage should be deemed as a landmark in China's legal and economic reform and development process.

This article outlines the process of the AML legislation, explains the objectives of the law and the institutional architecture of public enforcement and the role of private suits, and considers the special problems of dealing with governmental anticompetitive behaviors and the interface between the implementation of the AML and regulation in some regulated sectors. The article then comments on the substantive provisions of the AML with respect to horizontal and vertical restrictions on competition, merger regulation, and abuses of dominance. Finally, some conclusions are offered on the influences of the law on the Chinese economy and the challenges in the enforcement of the AML.

I. HISTORICAL REVIEW OF CHINESE ANTI-MONOPOLY LEGISLATION

China was a centrally planned economy until the late 1970s. Under that regime, the term "competition" had a pejorative ideological meaning and was regarded as a capitalist monster? The Third Plenary Session of the Eleventh Central Committee of the Communist Party of China in 1978 heralded an era of economic reform. The reform has since then delivered more efficiency, unlocked the people's potential, and changed the traditional hostile attitude toward competition. The Interim Provisions for Promoting and Protecting Competition in the Socialist Economy, issued by the State Council on October 17, 1980, was the first normative document to protect competition and regulate government monopolies in China. (4) The Interim Provisions stipulated that "in economic activities, with the exception of products exclusively managed by state-designated departments and organisations, monopolization or exclusive dealing is not allowed." (5) Economic reform has accelerated since 1992 after the Fourteenth National Congress of the Communist Party of China (CPC). (6) In 1993, the Second Amendment to the 1982 Constitution stated that "the State implements socialist market economy." Under these conditions, China needs to establish a market order that supports and protects fair and free competition.

Prior to the AML, China dealt with competition-related issues through...

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Gale Document Number: GALE|A213223479