Thursday, September 3, 2009
Can the PRC’s New Anti-Monopoly Law Stop Monopolistic Activities: Let the PRC’s Telecommunications Industry Tell You the Answer
Posted by D. Daniel Sokol
Grace Li, University of Technology, Sydney explores Can the PRC’s New Anti-Monopoly Law Stop Monopolistic Activities: Let the PRC’s Telecommunications Industry Tell You the Answer.
ABSTRACT: A new PRC Anti-Monopoly Law (AML) was enacted on August 30, 2007 and took effect on August 1, 2008. The new AML is a milestone in Chinese economic policy. It will reorganise the competition paradigm in many Chinese domestic sectors. PRC’s telecommunications sector had undergone a number of major reforms in the past two decades. These reforms include one fundamental regulatory restructuring and three signiﬁcant market reorganisations. As a result, the PRC telecommunications industry has developed by an astonishingly fast speed. In May 2008, the PRC State Council initiated a large telecommunications reform in both regulatory domain and market restructure. This reform has created a mega-telecommunications regulator, and merged six telecommunications players into three giant operators. All these were done 3 months prior to the country’s AML become effective. Against this background, this paper studies the new AML and its various provisions in relation to antimonopoly and anti-competitive conducts and attempts to validate those provisions against the recent PRC telecommunications reform. Part 1 provides an introduction of the telecommunications industry in China, including its regulatory framework and its market arrangement. Part 2 studies the 13-year long law making history of the new AML and highlights some of the major aspects of this act. Part 3 analyses the recent telecommunications reform in China. Part 4 analyses the interplay between the AML and the recent telecommunications reform. In conclusion, the paper argues that the recent telecommunications reform constitutes an administrative monopolistic conduct in the telecommunications market, which clearly breached provisions set in chapter 5 of the AML. As a result, the AML is unlikely to effectively foster competition in China’s telecom industry. Moreover, if this situation is not addressed by the PRC government in a timely manner, it would undermine the sustainability of the telecommunications industry and challenge the effectiveness of the AML.