Monopoly law moves step closer to reality

PUBLISHED : Monday, 26 June, 2006, 12:00am
UPDATED : Monday, 26 June, 2006, 12:00am

The National People's Congress Standing Committee has started the first reading of the controversial Anti-Monopoly Law which took 12 years to draft and sparked fears among foreign investors about access to the mainland market.

However, a top law-drafting official from the State Council gave an assurance the law was only aimed at ensuring fair competition for domestic and foreign players, and at curbing market manipulation by government departments and agencies.

Chen Qingtai , director of the Legislative Affairs Office, was quoted by the China Youth Daily as saying monopolies had emerged in some industries and districts, while some government agencies were using their influence to limit and eliminate competition.

He said the law would prohibit any monopoly agreements and those that had been signed would be invalid after the promulgation of the Anti-Monopoly Law.

However, exemptions could be given if operators could prove a monopoly fostered innovation and efficiency in small- and medium-sized business.

The start of the deliberation process - after the State Council agreed 'in principle' with the draft of the law - implies the authorities have reached consensus in disputed areas such as who should act as a watchdog against monopolies after years of delays caused by opposition from government departments and state enterprises.

Mr Chen said the government would set up a national-level commission under the State Council to implement the law.

And the State Council would set up an anti-monopoly commission to lead and co-ordinate anti-monopoly work, according to a report in the official Guangming Daily.

A key concern among scholars was over the implementation of the law, as many government departments and agencies have vested interests in many industries.

While the full text of the draft presented to the Standing Committee was not made public, the Guangming Daily report quoted Mr Chen as saying there was a specific chapter targeting 'administrative monopolies', or government activities which restricted fair market competition. Any restrictions that prevented operators from other regions or overseas from setting up branches in local areas will also be banned under the law.

Zhang Xinzhu , director of the Research Centre for Regulation and Competition under the Chinese Academy of Social Sciences, said it was naive to think that one law could weed out local protectionism, government corruption and other forms of administrative monopolies.

Meanwhile, the Standing Committee yesterday also began to review a draft Supervision Law. Committee members were quoted as saying the draft legislation was 'basically mature' and they suggested speeding up the amendment process so that it would be ready for promulgation soon.