Review of Industrial Organization, 2012
This paper examines how Chinese law balances consumer and firm interests in antitrust enforcement.
China generally enforces antitrust law in a manner that suggests it has consumer interests in mind, although data are scarce and somewhat conflicted.
- China established antitrust regulations in the Anti-Monopoly Law (AML) in 2007. The law was a response to antitrust issues that accompanied the development of free markets in China.
- Typically, antitrust regulators consider how a merger will affect consumers and firms, and permit it to proceed (or not) on this basis.
- There are several ways for an antitrust regulator to consider consumer and firm interests:
- The United States ignores firm interests and considers only consumer welfare—that is, the net benefit that a merger will produce for consumers.
- Canada considers both firm and consumer welfare, weighting consumer welfare more heavily.
- European Union nations mostly consider consumer welfare, although they also act to protect inefficient incumbent firms.
- In China, AML explicitly aims to protect consumers and producers, make it easy for firms to enter into competition with other firms, encourage technological advancement, and generally help China develop economically.
- China’s main antitrust regulator tends to act in a manner that would be consistent with an antitrust regulator focused on consumer welfare. However, not much data is available.
- Other agencies in China seem to act in opposition to this standard, issuing interpretations and expansions of AML that are more supportive of firm welfare.