Chinese Law Prof Blog

Editor: Donald C. Clarke
George Washington University Law School

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Thursday, August 30, 2007

China passes Antimonopoly Law

On Aug. 30, the Standing Committee of the National People's Congress passed the Antimonopoly Law, to come into effect on Aug. 1, 2008.

Here are some links to texts of the law as passed. Occasionally mistakes happen and web sites post versions that aren't quite the final version, so use with care.

Below is an email sent to the Chinalaw list by member Paul Jones with more information.

Earlier today in Beijing the 29th Session of the Standing Committee of the 10th National People’s Congress voted to adopt China’s new 反垄断法 (Fan Longduan Fa) or Anti-Monopoly Law to come into force on August 1, 2008.

China Daily (in English): http://www.chinadaily.com.cn/china/2007-08/30/content_6069209.htm

Xinhua Net (New China News Agency – English): http://news.xinhuanet.com/english/2007-08/30/content_6632075.htm

Shanghai Daily (English): http://www.shanghaidaily.com/sp/article/2007/200708/20070830/article_329316.htm

China Radio International (English): http://english.cri.cn/2946/2007/08/30/189@268088.htm

Copies of the draft presented to the Standing Committee last Friday, August 24, 2007 have become available together with hurried translations, but the version presented was amended in the clause by clause reading of the Bill on Sunday, August 26, 2007:

Xinhuanet (in Chinese): http://www.npc.gov.cn/zgrdw/common/zw.jsp?label=WXZLK&id=371097&pdmc=110106

Among the amendments made were provisions to strengthen the prohibition on anti-competitive behavior by industry associations. Fines for such behavior were set at 500,000 RMB and in serious cases the industry association can be disbanded.

Legal Daily (in Chinese): http://www.npc.gov.cn/zgrdw/common/zw.jsp?label=WXZLK&id=371090&pdmc=110106

Xinhuanet (in Chinese): http://www.npc.gov.cn/zgrdw/common/zw.jsp?label=WXZLK&id=371097&pdmc=110106

This is a reaction to the July 25, 2007 across the board price hikes for instant noodles, a Chinese staple, by members of the International Ramen Manufacturers Association. This in turn led to an investigation by the National Development and Reform Commission under China’s existing legislation regarding price-fixing, the 价格法 (Jiage Fa) or Price Law, and pending the outcome of the investigation prices have returned to pre-July 25th levels. The Wall Street Journal had an interesting article on the cause of the price increase and the reaction.

Beijing Review (in English): http://www.bjreview.com.cn/quotes/txt/2007-08/30/content_74250.htm

Wall Street Journal (subscription required): http://online.wsj.com/article/SB118832631704811224.html

Today’s Wall Street Journal carries an article anticipating the adoption of the law and identifying concerns regarding enforcement.

http://online.wsj.com/article/SB118841110654812379.html?mod=hps_asia_whats_news

The article states that the law does not specify which government agency will be the main antitrust enforcer. I am not sure of the author’s basis for that statement. Articles 9 & 10 of the draft presented last Friday read (in translation):

“Article 9

The Anti-monopoly Committee under the State Council performs the following functions:

(i)    Making competition policies;

(ii)   Organizing the investigation and assessment of the market competition status as a whole and publicizing an assessment report;

(iii)   Making and publishing the anti-monopoly guidelines;

(iv)   Coordinating the anti-monopoly administrative enforcement work; and

(v)  Other functions assigned by the State Council.

The structure and protocol of the Anti-monopoly Committee shall be developed by the State Council   

Article 10

The Anti-monopoly Enforcement Authority designated by the State Council (Anti-monopoly Enforcement Authority) is responsible for the enforcement of the anti-monopoly law.

The Anti-monopoly Enforcement Authority, if appropriate, may empower corresponding government agencies at the provincial, autonomous region, and municipal level to be responsible for anti-monopoly enforcement activities in accordance with this Law.”

I have seen no suggestion that these were significantly amended. The State Council is roughly equivalent to a cabinet in a parliamentary system and the heads of the various ministries and departments are members of the Council. Accordingly I read this provision as saying that no one Ministry, such as the Ministry of Commerce, will administer the law. Rather it will be a new authority and that the State Council will resolve issues between the ministries with respect to the actions of the new authority.

Readers should note that all translations require the translator(s) to make imperfect choices. Accordingly a translation is also an interpretation of a law. The Chinese version is the only authoritative version of the law and it should be read in the context of China’s political and cultural structure. It should also be remembered that China has a civil law legal system, primarily modeled on the German legal system.

Today’s Wall Street Journal article also makes the point that many areas of dispute with respect to the new law have been deferred rather than resolved. In my opinion this is correct, and is an approach often used in Chinese law-making. It is quite consistent with a civil law approach to legislation. The general principles that have been agreed upon are set out in the law and other still contentious issues are moved into State Council “Tiaoli” and Ministerial “Ban Fa” (types of regulations) at least until a consensus is reached.

Accordingly before August 1, 2008 we should expect the release regulations clarifying many of the outstanding concerns (hopefully). The discretion of the administrators that the Wall Street Journal talks about is likely to be further limited before the law comes into force.

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