China due to launch natinal anti-monopoly agency

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Last updated at: (Beijing Time) Monday, January 12, 2004

China due to launch natinal anti-monopoly agency

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A national anti-monopoly administration will be set up in line with the anti-trust law to implement uniform competition rules for the Chinese market, said a senior official with the drafting panel of the code.

The agency will be established directly under the State Council, said the official who declined to be named.

The decade-long drafting of the law is expected to close this year and it will be submitted to the National People's Congress for review, he said.

The drawing up of such a law is part of China's commitment to the World Trade Organization (WTO).

Drafting of the anti-trust law started since 1994, but there have been numerous revisions because of controversies, according to the official.

The drafting panel is composed of officials in related departments and legal experts.

According to the draft code, the new anti-trust administration's portfolio mainly includes policy-making, giving and withdrawing approvals on affairs related to anti-monopoly matters, probing competition-related activities of major enterprises and handling cases that violate the anti-trust law.

He elaborated that the anti-monopoly authority under the State Council will have the power to determine a threshold of Large-Scale Combination.

"If the business enterprises involved in a consolidation have a combined annual sales turnover that exceeds the threshold determined, then the combination requires the authority's approval to proceed," he said.

The administration has the mandate to decide whether to approve a large-scale corporate acquisition within 90 work days after receiving the application.

It is also responsible for regularly publishing a list of operators which have "a dominant market share.".

Members of the agency will be selected from professionals with wide experience in economics and law, according to the official.

Lu Fu, a professor from the China University of Political Science and Law, said the key issue for the future is whether the proposed authority will have sufficient power and independence to deal with monopolies.

"The two elements are important to challenge the practices of some government departments that obstruct competition," he said.

The power is also necessary when dealing with enterprises with dominant market power who often possess of strong lobbying power, said the professor who has studied China's legislation on competition for years.

However, a press officer from a multinational company, who spoke on the condition of anonymity, expressed concern about the legislation.

"The company has been keeping an eye on the law drafting, which we fear will entitle the government to limit foreign companies' performance in China," she said.

She said the company has expressed its concerns at a conference held by the Ministry of Commerce to collect views from multinationals on the draft.

"We expect the proposed authority can treat the foreign and State companies fairly as we know the central government itself is supporting the form of big domestic conglomerates," she said.

But the official from the drafting panel shrugged off these worries, saying that the legislation is not to target foreign multinationals but to guarantee a fair competitive environment.

In a move to rein in administrative monopolies, a big problem for foreign companies in China, the law has devoted a special chapter to regulate government-related monopolistic activities, he added.

In comparison to worry-laden foreign investors, local private companies are buoyed up by the news.

Jin Yongsheng, vice-president of the Zhejiang-based Yongsheng Fertilizer Co Ltd, expected it to unlock some regional markets.

"The county-level government often orders the farmer to buy fertilizers produced by a factory in the county, although mine is cheaper,'' he said.

But he expected the authority has enough local branches and manpower to tackle the small issues.

Source: China Daily

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