All businesses in China, regardless of their ownership status, are equally subject to the Anti-monopoly Law which was promulgated in August. The law will be effective as of August 1, 2008; and preparations will be made for its execution.
Mr. Zhao Xiaoguang, an official with the Legislative Affairs Office of the State Council, at a seminar held by the J. Mirrlees Institute of Economic Policy Research, Peking University, stressed that there is a "no exemption” policy for natural monopolies – all state-owned enterprises in China – from the Law. Their business activities are under the watch of the Law, and their monopolistic behaviors will be punished according to the Law. An anti-monopoly review of mergers and acquisitions (M&A) will be made by and among state-owned enterprises.
Zhao said that out of 8 million enterprises, more than 5.6 million were in corporate operation. He said this was a reflection and result of the development of China's market economy.
Several things must be done before the Law's implementation. According to Zhao, the State Council will define the composition and operation of the anti-monopoly committee; and appoint an enforcement agency and delegate responsibilities.
The M&A subject to anti-monopoly review will be decided by the State Council. Zhao said both international practices and the true status of China's industries would be taken into account. A higher level of consolidation within more scattered industries will promote the economy of scale, encourage innovation and meet consumer demand. For highly competitive industries, meanwhile; increasing concentration through M&A will be more likely to arouse concerns of possible dominance and monopolistic behaviors.
However, it is unrealistic to have a separate standard for each industry. Neither would it be easy to have a "one-size-fits-all” standard. Zhao said research is still underway on this issue.
Zhao added that more professional input would be necessary for the implementation of the Law. The Law involves legal and economic knowledge. Economic analysis will be necessary in formulating guidelines and enforcement of the Law, in order to give more impetus to economic development.
Specifically, economic perspectives will be important in defining the relevant market; analyzing monopolistic behaviors; and judging the damage caused by certain types of competition.
By People's Daily Online
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