China’s Anti-Monopoly Law
The First Five Years
Edited by
Adrian Emch
David Stallibrass
Published by:
Kluwer Law International
PO Box 316
2400 AH Alphen aan den Rijn
The Netherlands
Website: www.kluwerlaw.com
Sold and distributed in North, Central and South America by:
Aspen Publishers, Inc.
7201 McKinney Circle
Frederick, MD 21704
United States of America
Email: [email protected]
Sold and distributed in all other countries by:
Turpin Distribution Services Ltd
Stratton Business Park
Pegasus Drive, Biggleswade
Bedfordshire SG18 8TQ
United Kingdom
Email: [email protected]
Printed on acid-free paper.
ISBN 978-90-411-4121-7
© 2013 Kluwer Law International BV, The Netherlands
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without written permission from the publisher.
Permission to use this content must be obtained from the copyright owner. Please
apply to: Permissions Department, Wolters Kluwer Legal, 76 Ninth Avenue, 7th Floor,
New York, NY 10011-5201, USA. Email: [email protected]
Printed and Bound by CPI Group (UK) Ltd, Croydon, CR0 4YY.
Summary of Contents
List of Editors and Contributors
v
Preface
xxxvii
List of Abbreviations
xli
Chapter 1 General Introduction
1
1 An Overview of Chinese Competition Policy: Between Fragmentation and
Consolidation
HUANG Yong & Richean Zhiyan LI
3
Chapter 2 Background and Context
13
2 The Multiple Hands: Institutional Dynamics of China’s Competition Regime
HAO Qian
15
3 Policy Objectives of Public Enforcement of the Anti-Monopoly Law:
An Assessment of the First Five Years
Wendy NG
35
4 The Role of China’s Unique Economic Characteristics in Antitrust
Enforcement
DENG Fei & Gregory K. LEONARD
59
Chapter 3 Monopoly Agreements and Abuse of Dominance
75
5 The Relationship between the Anti-Monopoly Law and the Price Law
LI Qing
77
6 Anti-Cartel Law and Enforcement in China: A Survey
XUE Qiang & YANG Xixi
83
xvii
Summary of Contents
7 Analyzing Information Exchanges between Competitors under the
Anti-Monopoly Law
Thomas J. HORTON & Jenny Xiaojin HUANG
95
8 Resale Price Maintenance and the Anti-Monopoly Law
Dennis LU & TAN Guofu
119
9 Refusal to Deal in China: A Missed Opportunity?
Sébastien EVRARD & ZHANG Yizhe
135
10 Pricing Abuses under the Anti-Monopoly Law
Janet HUI & Stanley WAN
149
Chapter 4 Merger Control
165
11 China Merger Control Practice: A Comparative Analysis
François RENARD & Michael EDWARDS
167
12 Merger Remedies in China: Substance and Procedure
FENG Yao & SUN Zhaoqiu
195
13 Joint Ventures under Chinese Merger Control Rules
ZHANG Xingxiang
215
Chapter 5 Government Restrictions to Competition
229
14 Between Business and Government: The Addressees of Obligations
under the Anti-Monopoly Law
Adrian EMCH & Andy HUANG
231
15 The Uneasy Relationship between Antitrust Enforcement and
Industry-Specific Regulation in China
MENG Yanbei
259
16 Judicial and Administrative Remedies against Administrative Monopoly:
Cases and Analysis
XU Shiying & ZHANG Baisha
271
Chapter 6 Litigation
287
17 Taking a Close Look at the Supreme People’s Court’s Guidance for
Private Antitrust Litigation
ZHU Li
289
18 Private Rights of Action under the Anti-Monopoly Law – The First Five
Years
James H. JEFFS
307
19 Administrative and Civil Litigation under the Anti-Monopoly Law
Lester ROSS & Kenneth ZHOU
317
xviii
Summary of Contents
Chapter 7 International Dimension
335
20 Chinese Companies’ Navigation of Outbound Investment
Ninette DODOO & BAI Yong
337
21 Effectiveness of Technical Assistance in Capacity Building on
Competition Law and Policy: The Case of China
Stanley WONG
357
Chapter 8 Cross-Cutting Issues
375
22 SAIC’s Antitrust Enforcement Practice: The Progress Made in the
Past Five Years
YANG Jie
377
23 Enforcement Divergence and the Chinese Economy
David STALLIBRASS
389
24 Monopolistic Conduct versus “Entity Bribery”
Nathan G. BUSH
405
25 Vertical Restraints under the Anti-Monopoly Law
Marc WAHA & ZHAO Jingjing
425
26 The Application of the Anti-Monopoly Law in the Context
of Intellectual Property Rights
WANG Xianlin
447
Chapter 9 Outlook
465
27 The China Telecom and China Unicom Case and the Future of Chinese
Antitrust
WANG Xiaoye
467
Appendix: Anti-Monopoly Law of the People’s Republic of China
487
Table of Legislation
509
Index
513
xix
1 An Overview of Chinese Competition
Policy: Between Fragmentation and
Consolidation
HUANG Yong & Richean Zhiyan LI
§1.01
INTRODUCTION
It has been five years since the Anti-Monopoly Law (AML) took effect on August 1,
2008.1 During these years, China took the time to develop its competition policy from
scratch, and quickly attracted much attention due to the country’s significant economic
power. One may not agree with all the decisions made under the new set of policy, but
one may not ignore the consequences brought by it, either. This article reflects upon
the historical and contemporary ramifications, and attempts to map out a sensible
direction for the Chinese competition community to consider.
§1.02
WHAT WERE THE EXPECTATIONS FIVE YEARS AGO?
When the Chinese government decided to enact the AML, it must have had high hopes
of the value of this new policy tool. The enactment of the AML was a remarkably long
march that took 13 years: the first bill was drafted back in 1994 by one of the
government agencies, but that bill did not go anywhere and was buried and forgotten.
Then, all of a sudden, the project re-gained momentum and started to roll again in
2003, and was ultimately accomplished in 2007.2 Because legislative records are rarely
open to the public in China, we do not know what caused this shift. But it was clear that
a political decision had been made, probably one at the top leadership level, to have
this law in place. Otherwise, it could hardly be explained why this decade-long uphill
1.
2.
Anti-Monopoly Law of the People’s Republic of China, [2008] Presidential Order No. 68, Aug.
30, 2007.
Zhenguo Wu, Perspectives on the Chinese Anti-Monopoly Law, 75 Antitrust L.J. 76–78 (2008).
3
§1.02
HUANG Yong & Richean Zhiyan LI
battle with no imminent end in sight in 2003 was relatively quickly completed within
four years.
Whatever expectations that the Chinese leaders had in mind, one of them must be
related to the country’s economic reform. Since the late 1990s, the priority of each
Chinese administration had been to build a market economy and integrate China into
the world trade system. The Chinese government had worked hard on this mission, and
it wanted its efforts to be recognized. Though China became a World Trade Organization (WTO) member in 2001, it had not been perceived by major trading partners as a
full market economy, which had greatly disadvantaged it in trade disputes involving
anti-dumping and countervailing measures. Recognition of full market economy status
therefore became an important task,3 and it was natural to draw lessons from the
not-so-different experiences of the “Asian tigers” like Japan and South Korea. At that
time, one critical factor in their development was that these countries engaged in an
ambitious plan of economic modernization, which included the enactment of a
comprehensive competition statute and the formulation of a fully fledged competition
policy. In recognition of those achievements, the countries were acknowledged as
proper market economies. The idea might have been that this would convince
outsiders of the nation’s commitment to uphold fair rules underpinning a market
economy.
What about the expectations of the Chinese people? Though the Chinese government’s political authority and legitimacy are not built upon representation and
election, it nevertheless responds to people’s basic needs (particularly the desires for
wealth and prosperity). The key to China’s dazzling economic growth in the past three
decades has been the tacit “growth in exchange for stability” agreement between the
ruling party and the Chinese people. While the “Chinese people” are increasingly
fragmented and polarized due to the enormous wealth disparity and the inequality of
opportunities, they can still be divided into three major groups: the intellectuals, the
business elites and the general public, each having different expectations from the
coming competition policy. Mainstream thought leaders truly believed in the value of
economic democracy, and believed that a competitive market was an important step
towards that goal, though their individual knowledge about modern antitrust jurisprudence differed significantly among each other due to different degrees of sophistication
and exposure to the outside world. They spared no efforts in advocating for a
comprehensive competition statute and accompanying policy. Those who could
articulate the ideas in a politically acceptable way finally had their opinions heard by
the decision makers.4
3.
4.
See, for example, Stephen Green, China’s Quest for Market Economy Status, Oct. 6, 2004, Assn.
Asian Research, http://www.asianresearch.org/articles/2259.html (accessed Mar. 1, 2013).
For example, in 2005, Professor Xiaoye Wang, one of the most prominent competition law
scholars in China, was invited to the Standing Committee of the National People’s Congress
and gave a lecture to the leading lawmakers there on competition law. The lecture made
headlines in major state-owned newspapers and TV networks. In China, a move like this is a
clear sign of top political leaders’ endorsement over a particular policy matter. See, for example,
media report, http://www.gov.cn/jrzg/2005-10/27/content_85413.htm (accessed Mar. 1,
2013).
4
An Overview of Chinese Competition Policy
§1.02
The private business sector generally applauded the legislative proposal, because
it had been suffering for a long time (and is still suffering) from state-sponsored
restraints of trade (called “administrative monopoly” in China) and systematic and
institutional discrimination when competing with state-owned enterprises (SOEs). For
them, “monopoly” was almost a synonym of “state monopoly,” and so they were
longing for the AML to constrain the state-owned sector and create a level-playing field
for them. The Chinese general public was in line with the private entrepreneurs on this
issue, since the state monopolies led to unreasonable price regulation imposed by
biased government regulators, meaning fewer choices (when it comes to fuels, utilities
and a host of other daily necessaries, no choice at all) and higher prices. In addition, the
average Chinese also hoped that the government could put together a tough policy to
crack down on all types of collusion/monopolization that tended to force consumers to
pay excessive prices—irrespective of whether they were perpetuated by state-owned,
private or foreign firms. Some of these demands were accepted by the legislators with
no difficulty,5 while others were met with strong resistance and were reflected in the
law in an unsatisfactory manner in the end.6
In turn, the SOEs of course strongly hoped to mitigate the impact of the AML as
much as possible. However, they also saw the new law as an opportunity to further
their interest. In their views, and sadly also in the views of many other interest groups,
foreign companies were the true monopolists since they “dominated” the Chinese
market with superior financial and technological strength. If China needed a competition policy at all, they believed, the right policy should be to deter foreign monopolists.
Such a belief was quite popular at the time under the flag of economic patriotism, and
it sounded particularly tempting when linked with Chinese SOEs’ occasional failed
attempts to expand abroad due to host countries’ national security concerns—a typical
“tit for tat” logic, even though “national interest” is largely irrelevant to pure
competition law.7 Finally, an SOE provision made its way into the AML, saying that
SOEs operating in sectors of strategic importance to the national economy or operating
a state-chartered monopoly business are both protected and regulated by the law, and
may not harm consumer interests.8 This provision triggered numerous and vastly
conflicting interpretations in the following years.
In short, China’s competition law enactment was driven by a mix of very different
desires from the Chinese government and the Chinese people, and it was at last
accomplished by strong political will. All these expectations had an impact in the
formation of China’s competition policy in the coming years.
5.
6.
7.
8.
A handy proof was the inclusion of two provisions policing trade associations’ anti-competitive
conduct. This was triggered by a private price collusion among instant noodles manufacturers
which was publicized at a very late time spot during the legislative process; nonetheless, the
legislators were quick in response, cut the red-tapes and added the provisions into the bill and
ultimate enacted them. See Yong Huang, Pursuing the Second Best: the History, Momentum, and
Remaining Issues of China’s Anti-Monopoly Law, 75 Antitrust L.J. 130 (2008).
The law against administrative monopoly was such a notable frustration. It was taken in and
out of the bill several times, and finally stayed in the law but with significantly softened
remedies. See id., 131.
Id., 122–133.
AML, Art. 7.
5
§1.03
§1.03
HUANG Yong & Richean Zhiyan LI
POLICY DIRECTION STILL UNCLEAR AFTER FIVE YEARS OF
IMPLEMENTATION
Much to the outside world’s disappointment, after enforcing the AML for half a decade,
China’s competition policy is still vague and under-developed. This is largely due to the
highly complicated nature of the specific institutional arrangement and the overly
strong impediment created by China’s industrial policy.
It is well known that China has chosen a decentralized model of competition law
enforcement. The Ministry of Commerce (MOFCOM), the National Development and
Reform Commission (NDRC) and the State Administration for Industry and Commerce
(SAIC) are responsible for merger review, combating price-related monopolistic conduct and non-price monopolistic conduct (including administrative monopoly), respectively. On top of the three enforcement agencies, the Anti-Monopoly Commission
was established to “organize, coordinate and guide anti-monopoly work,” including
“studying and formulating competition policy.”9 The Anti-Monopoly Commission is
chaired by a Vice Premier of the Chinese government, with ministers or vice ministers
from a dozen “member agencies” (currently 16, including the three AML enforcement
agencies.) According to its mission statement, the Anti-Monopoly Commission operates through meetings only. It does not undertake any specific enforcement activities.10
So far, it only has two permanent internal organs: a secretariat office (currently set up
within MOFCOM, but soon to be separated as an arm’s length directorate), and an
advisory panel consisting of scholars and industry experts. It is supposed to be a high
level platform for the Chinese cabinet to decide on competition policy matters.
However, in the past five years, the Anti-Monopoly Commission basically has not
issued any public policy instrument or decision.11
Neither have any of the three enforcement agencies articulated their competition
policy in a systematic way. MOFCOM by tradition specializes in trade and in-bound
investment regulation. NDRC is transforming from a central planner of industrial
development in the command economy era to a more modern role, but still focuses on
organizing industrial development. Their limited knowledge and expertise in the
antitrust field are not the only difficulties in fashioning a set of sensible competition
policy. The biggest challenge comes from the inherently conflicting roles that both
authorities have to play in developing competition policy and industrial policy at the
same time.
The idea of “industrial policy” in China was first raised in its 5th Five-Year Plan
back in 1986. Since then, the term “industrial policy” has been officially adopted by the
government in all types of policy instruments. The whole idea of developing an
industrial policy is to implement a state-orchestrated economic development scheme,
using political and fiscal leverage to support growth in sectors which the Chinese state
9.
10.
11.
Id., Art. 9.
Xinhua News, State Council Issued Anti-Monopoly Commission’s Work Rules, http://
news.xinhuanet.com/newscenter/2008-09/13/content_9973716.htm (accessed Mar. 1, 2013).
As an exception that confirms the rule, the Guidelines on the Definition of the Relevant Market
were issued in the name of the Anti-Monopoly Commission.
6
An Overview of Chinese Competition Policy
§1.03
deems important or worthwhile and to cure market failure with state intervention (or
at least that is what the government would hope or believe).12 Obviously, industrial
policy is an allocation of economic resources across different sectors imposed by the
government.13 This policy goal runs into direct conflict with competition policy, which
requires the market to allocate resources, and will inevitably put the Chinese competition authorities in a dilemma.
The conflict between the dual roles that MOFCOM and NDRC play is best
illustrated by the AML’s export cartel exemption. In 2003, before the adoption of the
AML, China had submitted a formal communication to the WTO, explaining its
understanding of hard-core cartels in the export business. It believed that, “excessive
competition” in certain industries would be harmful to developing countries in certain
developing stages. Therefore, China urged the WTO to give developing members
sufficient flexibility under future multilateral competition law frameworks, including
exemptions for small and medium-size businesses.14 China went further to suggest
that, considering the fact that developing members’ effective participation in globalization had been impeded by host countries’ access restrictions and that they had been
in a weak position in terms of technology transfer, future international competition law
regimes should focus on export cartels maintained by developed members.15 International cartels would only occur in developed countries and not in low-income and
least-developed nations, China said.16 As the sole competent authority for regulating
the export business, this position paper was obviously prepared by MOFCOM.
The paper’s conclusion was premature. In 2005, a class of American plaintiffs
filed an antitrust complaint in a federal court in New York, charging four Chinese
vitamin C manufacturers for setting floor prices and limiting exports to the United
States, thus artificially inflating vitamin C prices there. The plaintiffs were seeking USD
54 million in damages. In defense, the vitamin makers argued that this was not a
private cartel, but rather a government-mandated export cartel. The defendants further
claimed that they were legally required to set price standards or face governmentsanctioned penalties limiting their export capabilities. Their position was supported by
MOFCOM which officially petitioned the New York court on the defendants’ behalf. By
Chinese New Year 2013, after nearly a decade of pre-trial legal wrangling and
settlements, two defendants were to stand trial soon, and a former MOFCOM official
was scheduled to appear before the court to testify why and how MOFCOM ordered
such an export cartel.17
12.
13.
14.
15.
16.
17.
Bin Sheng, A Political and Economic Analysis of the Chinese Foreign Trade Policy, Shanghai
Sanlian Press & Shanghai People’s Press 192 (2002).
Xiaojuan Jiang, Industrial Policy in an Economic Transition Time, Shanghai Sanlian Press &
Shanghai People’s Press 16 (1996).
World Trade Org., Working Group on the Interaction between Trade and Competition Policy,
WT/WGTCP/W/241 Jul. 25, 2003 (03-3981), paras 1–4.
Id., para. 6.
Id., para. 7.
Marieke Breijer, Vitamin C trial begins in New York, Global Competition Rev., Feb. 26, 2013,
http://www.globalcompetitionreview.com/news/article/33109/vitamin-c-trial-begins-newyork/ (accessed Mar. 1, 2013).
7
§1.04
HUANG Yong & Richean Zhiyan LI
This ironic case illustrates not only the short sightedness of predicting a change
of tide in globalization, but also illustrates the “split personality” of Chinese competition law enforcers. For many years, China’s development has depended heavily upon
exports, and so protecting export companies from troubles had been the Chinese
government’s primary job. This is supposed to be the reason why MOFCOM imposed
a floor price for exported vitamin C drugs—trying to help Chinese exports avoid
anti-dumping charges. Indeed, exempting export cartels from antitrust liability is
written in the AML.18 MOFCOM very likely did this in the belief that it was doing a good
and lawful deed, only to find out that its best intent still fell afoul of the competition
laws of another nation.
As for the other member agencies of the Anti-Monopoly Commission, they do not
seem to be in a position to develop a clear competition policy for China, either. SAIC is
primarily a consumer protection agency and the enforcer of China’s unfair practices
law. This role is highly likely to give rise to both an “identity problem,” as well as a
legal problem in enforcing these two distinctive bodies of laws. This situation is similar
to the controversy surrounding section 5 of the Federal Trade Commission Act in the
United States. The other 13 members of the Anti-Monopoly Commission are not
experienced in competition law and policy either. Among them, there are the setters of
China’s financial policy (the Ministry of Finance, the China Banking Regulatory
Commission, the China Securities Regulatory Commission, the China Insurance Regulatory Commission and the Central Bank), sector regulators (the Ministry of Transport,
the Ministry of Industry and Information Technology and the State Electricity Regulatory Commission) and the owner of the 110+ gigantic SOEs (the State-Owned Assets
Supervision and Administration Commission). None of these government bodies can
be expected to support a sector-neutral or ownership-neutral competition policy.
Indeed, many of them are not allowed to support “competition neutrality” because
their statutory obligations mandate that they assist in avoiding that the firms they
regulate are driven out of business by their competitors. This illustrates the second
facet of the policy conflict: it is ironic to expand the competition policy forum to include
the half-minded peer government departments. But if they were not included, pure
competition policy might never be taken seriously at all. Unless and until a strong and
powerful decision-making body is established, China’s competition policy will not be
able to stand firm.
§1.04
THE NEED FOR SPECIALIST, CONSOLIDATED ENFORCEMENT
At the moment of writing this article, by Chinese New Year 2013, China’s political elites
were gathering in Beijing to select the group of people among them to rule the country.
The new administration will serve for a five-year term, setting the new direction for the
world’s second largest economy and its 1.3 billion people. What can we, or should we,
expect them to do when it comes to competition policy?
18.
AML, Art. 15(6).
8
An Overview of Chinese Competition Policy
§1.04
First of all, the biggest hope for change in the next five years is that the new
Chinese administration will accept the suggestion long made by competition professionals and scholars inside and outside of China: to consolidate the current enforcement powers into the hands of a single agency with sufficiently high political rank.
While independence of political influence is the most ideal situation for a competition
authority, this is unlikely to be achieved in China any time soon, and indeed it may not
be desirable in China’s case: political independence will probably mean a lack of
political power. This is the cost of path dependence that is worthy to pay for a young
Chinese antitrust agency. Otherwise, its policy will be overshadowed by other much
more powerful political forces. As for a consolidated agency, this is hardly controversial in terms of efficiency and cost control, which are common concerns in almost every
jurisdiction in the world that has a split enforcement regime. However, consolidation
is particularly important for China’s competition system for the following reasons.
In the past five years, many competition officials in China have been facing a
difficult choice in their career path: to stay or to go. Since 2008, headcounts in the three
antitrust agencies have grown considerably at the ministerial level (MOFCOM has
created a new bureau to handle merger reviews, with about 35 staff; NDRC has
expanded one of its existing bureaus to 20 staff; and SAIC has a similar budget but is
still in the process of filling vacancies). At the provincial level, there are at least twice
as many further new posts being created. Nonetheless, the total number of antitrust
officials in this country is still very limited compared with other jurisdictions. The
shortage of manpower not only constrains the agencies’ capability in handling cases,
but also becomes something of a glass ceiling for the group of young and promising
technocrats. After five years of services, many of them have been stuck in the post
within their agency, with no hope of further promotion (their bosses are also relatively
young—at least too young for retirement). Under such a situation, talented technocrats
will have to transfer to posts outside of their agency, or simply quit. This will soon
cause a remarkable loss of experienced officials, and a waste of resources, too, as new
staff will need expensive retraining. It will also be unfair for the business community
because their cases might not be handled in the way they deserve. Having a consolidated enforcement agency can alleviate this problem by offering more posts (particularly senior posts) and a more stable career path to retain talent. Certainly, this logic
may not go without challenge for the new administration, because other ministries may
also raise similar arguments to request additional employees. However, if the new
leadership understands the complexity of handling competition matters, the difficulties
in accumulating sufficient knowledge and analytical skills, and the high opportunity
cost that antitrust technocrats have to pay (competition professionals outside the
public sector are under-supplied and therefore really well paid in this country;
however, unlike other jurisdictions, China does not have a “revolving door” for
government officials to switch between private jobs and civil service), giving the
competition authority special treatment is worthwhile. This will also be helpful to
minimize the risk of rent-seeking.
Another special benefit for China to have a consolidated antitrust enforcement
authority is the greatly enhanced self-esteem and confidence among Chinese competition technocrats, hence a more powerful strength for internal advocacy inside the
9
§1.04
HUANG Yong & Richean Zhiyan LI
Chinese government. This is not just about better jobs or more political leverage.
Competition enforcers around the world, including Chinese ones, are not merely
government officials but professionals, and professionals need to stay together as a
community to uphold their common principles, to peer-review their professional
judgments, and to resist undue influences and pressures. Currently, the decentralized
Chinese enforcers have to work exceptionally hard to prove they are worth the budget
for conducting expensive economic modeling, legal analysis and market testing, to
persuade their superiors who all too often are skeptical about competition concerns,
and to advocate for recognition of China’s competition law with much more powerful
colleagues preaching national champions and state capitalism. Sometimes such efforts
may well be met by hostile responses from other fractions inside the government, as
evidenced by NDRC’s ongoing investigation against two dominant SOE broadband
carriers—China Telecom and China Unicom.19 If the three antitrust agencies can be
consolidated, they might be able to better combine their strength and put together more
solid evidence, a more convincing theory, and at last a stronger case to withstand and
rebut the criticisms. This is perhaps the most needed reform for the competition
professionals inside the Chinese government.
The second biggest expectation upon China’s competition policy makers is that
they should better separate their concerns over industrial development from their
concerns over competition. As a sovereign state, China has all the right to consider
whatever factors it deems important when formulating its competition policy. To name
a few, the AML has already mentioned the public interest,20 strategic industrial
development and national security,21 small and medium-sized businesses, recession,
export and a host of other concerns.22 Many of these non-competition policy concerns
actually stem from China’s belief that it is a developing economy and needs to take
measures to sustain its economic growth, and that these may well clash with
competition policy and therefore demand special and differentiated treatment from
developed countries.23 In the mind of the Chinese political leaders, growth is still the
most imminent task, and is the only way to solve all the problems facing them.24
However, the outside world might have a different view on this argument today.
What they are seeing is a large number of Chinese SOEs on the international stage
buying up raw materials, out-bidding infrastructure projects and predating local
competitors. These SOEs receive state subsidies and benefit from artificially low costs.
The outside world fears that the mighty Chinese state capitalism is eroding their own
19.
20.
21.
22.
23.
24.
See generally, Fiona Chau, China Telecom, Unicom under antitrust probe, China Daily, Nov. 10,
2011.
AML, Art. 1.
Id., Art. 7.
Id., Art. 15.
See China’s 2003 communication to the WTO; Bin Sheng, A Political and Economic Analysis of
the Chinese Foreign Trade Policy, Shanghai Sanlian Press & Shanghai People’s Press 192 paras
8–11 (2002).
According to the outgoing Premier Jiabao Wen, “development is still the key to solving all our
problems.” See China Daily, China’s Wen Takes Bow Leaving a Promising Nation, Mar. 6, 2013,
http://www.chinadaily.com.cn/china/2013npc/2013-03/06/content_16280917.htm
(accessed Mar. 1, 2013).
10
An Overview of Chinese Competition Policy
§1.05
competition rules and their market economies. These worries may well be exaggerated,
but China needs to understand that not all countries share its view about the relation
between industrial development and competition. If China is seen as a spoiled kid in
the competition world, distorting competition in its trade partners’ markets while
preventing trade partners’ companies from accessing the China market on unconvincing competition grounds, it will run a great risk of starting a new round of trade battles.
Just as the Vitamin C case suggests, failure to respect the competition laws of other
jurisdictions may in the end frustrate Chinese firms’ robust development.
The best way to help the outside world dismiss their fears is to clearly separate
non-competition factors from competition concerns when applying the AML, preferably by industrial policymakers and by competition agency (or agencies), respectively.
Even if these different parts of analysis must continue being done by the antitrust
agency (or agencies), then at least two distinctive parts should be stated separately. For
the emerging Chinese antitrust technocrats, the worst situation is that they are forced
to bend the competition rules to accommodate industrial policy calls, thereby undermining the outside world’s trust and confidence in them.25
§1.05
CONCLUSION
While China has a proper antitrust law with the AML, it does not have a coherent
antitrust policy—a consistent narrative that motivates the law, guides enforcers, and
gives clarity to businesses and the outside world. Given the decision-making process
that led to the AML’s promulgation and the divided nature of the subsequent
enforcement regime, the lack of an overarching policy is not surprising.
However, this lack of consistency undermines the credibility of the regime,
makes it harder to enforce and diminishes its effect. Powerful interests within China do
not feel sufficiently threatened by the competition regime, and observers from outside
China are distrustful of what can look like an unpredictable and political beast.
The best way to solve this is the creation of a specialist consolidated antitrust
enforcement body that is well resourced, well advised and placed in an influential
position within China’s economic governance structure. Without this, it will be hard
for the Chinese antitrust regime to develop from the promising youth of today to the
authoritative adult it needs to become.
25.
This passage was inspired by a discussion with Professor Eleanor Fox of the New York
University School of Law in the summer of 2011. The authors acknowledge their gratitude.
11