Draft law aims to hold back monopolies
By Jiao Xiaoyang (China Daily)
Updated: 2005-01-12 07:55

A senior Ministry of Commerce (MOFCOM) official rebuked media speculation over a new law that aims to curb the actions of monopolies who stamp out competition.

A Beijing newspaper recently said the legislation had reached stalemate as MOFCOM, the State Administration for Industry and Commerce and the National Development and Reform Commi-ssion were "vying for a leading role" in drafting the code dubbed the "economic constitution."

But an official from MOFCOM's department of treaty and law said the report was "unfounded," and that MOFCOM already sent a finished draft to the State Council in March. The next step is to put the draft in front of lawmakers with the Standing Committee of the National People's Congress (NPC).

The draft law contains articles which would regulate monopoly agreements, any abuse of dominant market status, large-scale mergers and administration-backed mono-polies.

Curbing monopolies has been one of MOFCOM's key assignments since the NPC formed the ministry in 2003, although it did ask related State Council departments and local governments for comments on the draft, he said.

"Any new legislation would not affect existing monopolies unless they sought to trample market competition by taking advantage of a monopoly status," said Huang Yong, law professor of the University of International Business and Economics.

Huang said some sensation-seeking media reports that said the law would target big multinationals had obviously missed the point.

But he said there were a number of problems with the draft, which may lead to pitfalls when it eventually comes to implementing it in law.

One major concern is that the draft falls short of naming a specific agency to rule on monopoly cases exclusively. Instead, it entitles MOFCOM to deal with mergers and administrative acquisitions, the State Administration for Industry and Commerce to look into monopoly agreements and any abuse of market dominant positions, and the National Development and Reform Commission to supervise price agreements and bid rigging.

"It needs effective co-ordination to deal with monopoly cases which often involve protectionist local governments or giant companies. Obviously an independent and powerful administrative or quasi-judicial agency is more suitable (for the job) than several anti-monopoly offices in separate departments," said Huang.

The State Administration for Industry and Commerce warned in a report in May that some multinational companies were abusing their dominant positions in the Chinese market to curb competition, and pressed for early legislation.

The law is on the legislative agenda of the 10th NPC, whose tenure ends in 2008. China's legislative procedure allows the State Council to propose laws to the top legislature, whereas the drafts are often written by ministries concerned.

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