Domestic and foreign-invested businesses will benefit from
China's future anti-monopoly legislation, said a National People's
Congress (NPC)
Standing Committee official, who declined to be named, on Tuesday.
"The primary basis for anti-monopoly legislation is to ensure that
market competition does not stall."
He said all enterprises are left in very difficult situations
once one group corners the market.
China does not have a unified anti-monopoly law at the moment,
but has specific references scattered among other laws that ban
such a situation, the official said.
The country has implemented a series of laws and regulations to
ensure fair market competition, including a code outlawing unfair
competition in 1993 and a price law in 1997.
The creation of the anti-monopoly law has been put on the
legislative agenda of the 10th NPC in its five-year tenure, which
ends in 2007. But the official refused to reveal the timetable for
the legislation.
Some foreign-invested businesses have been becoming a little
uneasy in the wake of a recent report that warned that foreign
business giants are building monopolies in China.
After a year of investigation, the State Administration for
Industry and Commerce's Fair Trade Bureau published a report
entitled, "The Competition-restricting Behavior of Multinational
Companies in China and Possible Countermeasures."
The report provided specific examples, such as Microsoft's
operating system software and Tetra Pac's packaging materials. Each
holds a 95 percent share of its respective market.
Eastman Kodak, which already held more than 50 percent of
China's roll film market, is expected to further consolidate its
dominance after taking 20 percent of its sole major Chinese rival,
Lucky Film.
According to the report, some transnational companies have been
using their dominant roles in technology, brand recognition,
capital and management to suppress competitors and maximize profits
from the Chinese mainland.
On the eve of the release of WPS97, the report cited, a set of
computer programs developed by a Chinese company, a multinational
hurriedly brought forward its versions of similar products at much
lower prices. Certain multinationals tend to purchase the exclusive
promotion rights at supermarkets during peak seasons. And some
companies set different prices for the same kinds of products, with
the Chinese goods costing twice as much as the equivalents in their
countries of origin.
The report also indicates that companies that own rights to
advanced technology or other intellectual properties squeeze the
market by refusing to sell their services or products to Chinese
companies.
Some multinationals carry out sweeping mergers and acquisitions
to absorb their major competitors, reducing the number of companies
until just a few multinationals are left standing.
The report lists a number of industries where free competition
may be threatened by multinationals. The list includes software,
photosensitive materials, mobile phones, cameras, vehicle tires and
soft packaging.
The potential monopoly-makers named in the report argue strongly
against it.
"Monopoly means control, but Kodak is absolutely not in
control," Beijing News quoted Ye Ying, vice-president of the
Eastman Kodak, as saying. "Having the largest market share dose not
necessarily mean you have a monopoly." Ye pointed out that Lucky,
Fuji, Konica and Agfa are also operating in the Chinese market.
Also, there is no price manipulation going on, said Ye. Consumers
can choose any brand they wish.
Microsoft reportedly stated that anything the company does in
China is in line with Chinese laws and regulations.
Refusing to comment on the report itself, the anonymous NPC
official said China's anti-monopoly law will "definitely treat all
enterprises equally."
Wang Xiaoye, an law professor at the Chinese Academy of Social
Sciences, said: "The purpose of the anti-monopoly law is to
safeguard the rights of enterprises to have free competition in the
market, increase their efficiency and expand social welfare."
The legislation will play a key role in the establishment,
improvement and regulation of the market, which is especially
important for transitional economies like China, said Huang Yong, a
law professor at the University of
International Business and Economics.
"It is a natural result of China's progress in building its
market economy," he said, adding that there is no need for the
foreign-invested companies to panic.
"The law will only come into effect when someone is cornering
the market and restricting competition."
Huang said China is also in urgent need of the law so it can
cooperate with other countries in guarding against monopolies under
the World Trade Organization banner.
Both Huang and Wang agree that China needs an independent agency
to enforce the law in the future.
Huang said the agency should organize experts in marketing,
economics and statistics, and other professionals, as they will
need to do a great deal of basic research to determine precisely
what activities constitute monopolistic practices.
"It would be very dangerous to say that one particular activity
has allowed a group to corner the market without a thorough
investigation," he said.
(China Daily June 2, 2004)