Constraints on Convergence in Chinese Antitrust

• Author: Nathan Bush
• Published date: 01 March 2009
• Date: 01 March 2009
• DOI: http://doi.org/10.1177/0003603X0905400104
• Subject Matter: Article

Constraints on convergence

in Chinese antitrust

BY NATHAN BUSH*

I. INTRODUCTION

On August 1, 2008, the new Antimonopoly Law of the People’s

Republic of China (AML) took effect.1Although many other transi-

tion and developing economies preceded China in adopting compre-

hensive competition statutes, the magnitude, dynamism, and

political significance of the Chinese economy (and an epic thirteen-

year drafting process) distinguish the AML. Its enactment under-

scored the central government’s commitment to implement antitrust

rules which are, at minimum, analogous to those of advanced indus-

trialized economies.

THE ANTITRUST BULLETIN:Vol. 54, No. 1/Spring 2009 :87

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* Partner, O’Melveny & Myers LLP, Beijing, PRC.

AUTHOR’S NOTE: I gratefully acknowledge the comments and assistance of Ning Qiao,

Kathy Yang, Yue Bo, Fay Zhou, and Zhaofeng Zhou. The views expressed herein are

solely mine and should not be attributed to my firm or any of its clients.

1See Fanlongduan Fa [Antimonopoly Law] (promulgated by the Standing

Comm. Nat’l People’s Cong., Aug. 30, 2007, effective on Aug. 1, 2008), available at

http://www.npc.gov.cn/zgrdw/common/zw.jsp?label=WXZLK&id=371229&

pdmc=11006. An unofficial English translation is available as an appendix to

Nathan Bush, The PRC Antimonopoly Law: Unanswered Questions and Challenges

Ahead, ANTITRUST SOURCE, Oct. 2007, http://www.abanet.org/antitrust/at-source

/07/10/Oct07-Bush10-18f.pdf. References and quotations herein are based on

this English translation.

© 2009 by Federal Legal Publications, Inc.

The extent to which Chinese competition policy will actually

converge with the principles and practices of foreign jurisdictions,

however, remains uncertain. Divergent views of the proper goals

of the AML persist throughout the Chinese establishment, with no

consensus in sight. Although the AML plainly incorporates foreign

antitrust doctrines, the text leaves ample room for Chinese

antitrust to promote consumer welfare, innovation, and efficiency

through the competitive process, to gravitate towards populism,

protectionism, or industrial policy, or to oscillate between goals as

political circumstances demand. Even if the enforcement authori-

ties seek to advance “default” antitrust rules consistent with pre-

vailing international practices, competing policies and political

interests may often override them. Given the dynamics and opac-

ity of Chinese policymaking, administrative decisions, and judicial

rulings, it may be difficult to distinguish the progressive develop-

ment of China’s “default” antitrust rules from episodes of politi-

cized decisionmaking.

China’s emerging antitrust regime was further obscured by the

onset of the worldwide financial crisis in late 2008, which quickly

overshadowed the launch of the AML. The flow of international

mergers and acquisitions subsided, and the Chinese government—

like other governments—shifted its focus to economic stimulus and

stabilization efforts. Nevertheless, hints at the future course of Chi-

nese antitrust may be found in recent rulemakings and in decisions to

clear conditionally the acquisition of Anheuser-Busch Companies Inc.

by InBev NV/SA and to block the acquisition of the Huiyuan Fruit

Juice Company Ltd. by the Coca-Cola Company.2

88 :THE ANTITRUST BULLETIN:Vol. 54, No. 1/Spring 2009

2See Shangwubu Gonggao [Notice [2008] No. 95 of the Ministry of

Commerce] (issued by Ministry of Commerce, Nov. 18, 2008, effective the

same day), available at http://fldj.mofcom.gov.cn/column/print.shtml?/ztxx

/200811/20081105899216 [hereinafter InBev/AB Notice]; Shangwubu Gonggao

[Notice [2009] No. 22 of the Ministry of Commerce] (issued by Ministry of Com-

merce, Mar. 18, 2009, effective the same day), available at http://fldj .mofcom

.gov.cn/aarticle/ztxx/200903/20090306108494.html?3695772507=1142016402

[hereinafter Coke/Huiyuan Notice].

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II. CHINA’S EVOLVING COMPETITION POLICY

A. A brief summary of a lengthy legislative effort

The AML reflects almost two decades of intermittent drafting and

debate intertwined with China’s broader economic reforms.3Pervasive

central planning largely obviated antitrust rules throughout much of

the history of the People’s Republic of China (PRC). The gradual rein-

troduction of market competition in the 1980s prodded proposals in

1988 for new measures addressing both competition policy and unfair

trade practices, but they were rebuffed as premature.4When the Anti-

Unfair Competition Law was eventually enacted in 1993, it focused on

trademark and trade dress protection, deceptive trade practices, trade

libel, commercial bribery, and bid-rigging.5Although it also contained

rudimentary rules against predatory pricing and tying, administrative

penalties for these offenses were conspicuously omitted.6

The AML’s drafting officially commenced in 1994 with the for-

mation of a working group drawn chiefly from the now-defunct

State Economic & Trade Commission (SETC) and the State Adminis-

tration for Industry and Commerce (SAIC), the body responsible for

enforcing the Anti-Unfair Competition Law.7Scholars and officials

from other ministries and the Legislative Affairs Committee of the

National People’s Congress (NPC) also participated.8The working

CONVERGENCE IN CHINESE ANTITRUST :89

3See Shang Ming, Antitrust in China—A Constantly Evolving Subject,

COMPETITION LAW INT’L., Feb. 2009, at 4.

4See Youngjin Jung & Qian Hao, The New Economic Constitution in China:

A Third Way for Competition Regime?, 24 NW. J. INT’LL. & BUS. 107, 112 (2003).

5See Fanbuzhengdang Jingzheng Fa [Anti-Unfair Competition Law]

(promulgated by the Standing Comm. Nat’l People’s Cong., Sept. 2, 1993, effec-

tive Dec. 1, 1993), arts. 5, 8, 9–10, 13–15, available at http://tfs.mofcom.gov.cn

/aarticle/date/i/s/200503/20050300027909.html. (Translation available by

subscription at http://www.chinalawinfo.com.) See also Shang Ming, supra

note 3, at 5.

6See Anti-Unfair Competition Law, arts. 11–12.

7Wang Xiaoye, Issues Surrounding the Drafting of China’s Anti-Monopoly

Law, 3 WASH. U. GLOBAL STUD. L. REV. 285, 285 (2004).

8See MARK WILLIAMS,COMPETITION POLICY AND LAW IN CHINA, HONG

KONG, AND TAIWAN 172–73 (2005).

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