An Anti-Monopoly Law for China—Scaling the Walls of Protectionist Government Restraints

Competition Policy and Antitrust

Article Snapshot

Author(s)

Eleanor Fox

Source

Antitrust Law Journal, Vol. 74, 2007

Summary

The author analyzes China’s anti-monopoly law and suggests interpretations that will increase its effectiveness.

Policy Relevance

China’s anti-monopoly law targets administrative abuses but it isn’t enforced very stringently. The law provides less protection than the U.S. and European Union’s laws but its adoption is encouraging for freeing the economy.

Main Points

  • China has adopted a major law that will likely anchor its markets in a pro-competitive environment. This law especially targets provincial and local governments’ attempts to erect barriers to trade with other provinces.
     
  • Unfortunately, the new law does not have strong remedial effect and thus even if enforced might not promote much competition.
     
  • Moreover, State Owned Enterprises (SOEs) are often found in strategic sectors, which are basically exempted from the anti-monopoly law and this also reduces the effectiveness of the anti-monopoly law.
     
  • In comparison to the U.S. there are fewer protections in China. The U.S. Constitution’s Commerce Clause prohibits states from hindering interstate commerce and the Sherman Antitrust Act also provides protection.
     
  • In comparison, the European Union protects member states from anti-competitive measures even more stringently than the United States and China.
     
  • China can address regional blockage, the state component of trade associations, and state owned monopolies through interpretations of the anti-competitive law.
     
  • China’s initial efforts to contain state abuses of power to prevent monopoly have met obstacles both public and private, but there is the possibility of building on the foundation of the law in the long term.
     

 

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