Monday, September 29, 2008

Against Antitrust Functionalism: Reconsidering China's Antimonopoly Law

Posted by D. Daniel Sokol

Salil Mehra, Temple University - James E. Beasley School of Law and Yanbei Meng, Renmin University of China have forthcoming Against Antitrust Functionalism: Reconsidering China's Antimonopoly Law.

ABSTRACT: China's new Antimonopoly Law (AML) has been predominantly greeted with doubt about its practical enforceability. In particular, numerous commentators have questioned how the AML can effect change in the government-backed anticompetitive restraints that it targets. However, these doubts are in part the product of a kind of "antitrust functionalism," in which it is assumed that antitrust goals are uniform across nations and that mechanisms for enforcement must also be universal. We argue that China's plan for dealing with so-called "administrative monopolies," especially local and regional trade barriers, may have surprise successes. In part, the AML provides the possibility of an internal free trade agreement - albeit one with exit options closed. By creating a regulatory space for discussion on internal barriers, the AML could help foster a cooperative solution to the "prisoner's dilemma" of beggar-thy-neighbor local and regional government action. The potential dynamic could resemble the self-enforcing nature of international trade liberalization. Additionally, the AML can help spark a "competition culture" that may lead to greater consideration of the anticompetitive effects of government action at all levels, including the central government. That is not to say that the AML will be perfect; however, it could well be a significant step in the right direction.

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