The New Chinese Anti-Monopoly Law: A Survey of a Work in Progress

• Author: Xiaoye Wang
• Published date: 01 September 2009
• Date: 01 September 2009
• DOI: http://doi.org/10.1177/0003603X0905400303
• Subject Matter: Article

The new Chinese Anti-Monopoly Law:

A survey of a work in progress

BY XIAOYE WANG*

The Anti-Monopoly Law (AML) of the People’s Republic of China

was promulgated at the 29th Session of the Standing Committee of

the 10th National People’s Congress (NPC).1As a competition law

scholar and a passionate advocate of the adoption of anti-monopoly

legislation in China during the past two decades,2I have mixed feel-

ings about the new law. Although the anti-monopoly legislative

process was long and convoluted, it has always been my strong belief

that China needs an anti-monopoly law and would enact one sooner

or later. Anti-monopoly law is a pillar of the market economy, and

this has been recognized over the past century in many countries.

Competition and the market mechanism are fundamental to strength-

ening the Chinese economy. An anti-monopoly law is necessary to

prohibit monopolistic conduct and facilitate a free and fair competi-

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* Professor of Law of the Chinese Academy of Social Sciences, Advisor

to the Anti-Monopoly Legislative Panel of the National People’s Congress

and the State Council of the People’s Republic of China.

AUTHOR’S NOTE: I thank Professors Mark Williams and Toshiaki Takigawa for their

valuable comments and suggestions.

1See China Adopts Anti-Monopoly Law, XINHUA NEWS AGENCY (Aug. 30,

2007), available at http://news.xinhuanet.com/english/2007-08/30/content

_6632075.htm.

2I was honored to lecture on antitrust law twice for the Standing Com-

mittee of the Ninth and Tenth National People’s Congress of the P.R. China.

© 2009 by Federal Legal Publications, Inc.

tion environment for undertakings by creating a level playing field.

The AML enactment indicates that China has chosen the market as a

fundamental mechanism to allocate resources instead of the previous

system of administrative dictates. Therefore, the law’s passage should

be deemed as a landmark in China’s legal and economic reform and

development process.

This article outlines the process of the AML legislation, explains

the objectives of the law and the institutional architecture of public

enforcement and the role of private suits, and considers the special

problems of dealing with governmental anticompetitive behaviors

and the interface between the implementation of the AML and regu-

lation in some regulated sectors. The article then comments on the

substantive provisions of the AML with respect to horizontal and ver-

tical restrictions on competition, merger regulation, and abuses of

dominance. Finally, some conclusions are offered on the influences of

the law on the Chinese economy and the challenges in the enforce-

ment of the AML.

I. HISTORICAL REVIEW OF CHINESE

ANTI-MONOPOLY LEGISLATION

China was a centrally planned economy until the late 1970s.

Under that regime, the term “competition” had a pejorative ideologi-

cal meaning and was regarded as a capitalist monster.3The Third Ple-

nary Session of the Eleventh Central Committee of the Communist

Party of China in 1978 heralded an era of economic reform. The

reform has since then delivered more efficiency, unlocked the peo-

ple’s potential, and changed the traditional hostile attitude toward

competition. The Interim Provisions for Promoting and Protecting Compe-

tition in the Socialist Economy, issued by the State Council on October

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3Until 1980, competition was still interpreted as “rivals between manu-

facturers, under private ownership, for the purposes of acquiring economic

interests.” Competition was deemed as the origin of the “anarchism of manu-

facturing” in the capitalist world. It was believed that a “national economy

can only be developed in a rational and planned approach under the socialist

system which is based on public ownership. Under the socialist conditions,

the rule of competition and anarchism of manufacturing stop to function.”

See I DICTIONARY OF POLITICAL ECONOMICS 597–99 (Xu Dixin ed., 1980).

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17, 1980, was the first normative document to protect competition

and regulate government monopolies in China.4The Interim Provi-

sions stipulated that “in economic activities, with the exception of

products exclusively managed by state-designated departments and

organisations, monopolization or exclusive dealing is not allowed.”5

Economic reform has accelerated since 1992 after the Fourteenth

National Congress of the Communist Party of China (CPC).6In 1993,

the Second Amendment to the 1982 Constitution stated that “the State

implements socialist market economy.”7Under these conditions,

China needs to establish a market order that supports and protects

fair and free competition.

Prior to the AML, China dealt with competition-related issues

through a series of laws and regulations. The enactment of the Anti-

Unfair Competition Law 1993 (AUCL) was the first major step for-

ward in establishing a Chinese competition law system.8The AUCL

incorporated provisions that address unfair trading practices and cer-

tain types of restrictive agreements, abuse of dominance, and admin-

istrative monopoly.9The Price Law 1997 prohibits “unfair price

activities,” including collusion to control market price, impeding the

interests of other business operators or consumers, selling products

SURVEY OF THE NEW CHINESE LAW :581

4See Guowuyuan Gongbao [Official Gazette of the State Council], No.

487, available at http://www.competitionlaw.cn/n214c32.aspx [hereinafter

Interim Provisions]. See Wang Xiaoye, The Prospect of Antimonopoly Legislation

in China,W

ASH. U. GLOBAL STUD. REV. 201, 216–17 (2002).

5Interim Provisions, supra note 4, at art. 3.

6The Report of the Fourteenth Central Committee of the Communist

Party of China stated that “the objective of China’s economic reform is to

establish socialist market economy.” The report is available in Chinese at

http://news.xinhuanet.com/ziliao/2003-01/20/content_697148.htm.

7See CONSTITUTION art. 15 (1982) (P.R.C.).

8Anti-Unfair Competition Law (promulgated by the Standing Comm.

Nat’l People’s Cong., Sept. 2, 1993, effective Dec. 1, 1993. The law in Chinese

is available at http://www.chinalawinfo.com.

9See Anti-Unfair Competition Law, arts. 6, 23 on forced transactions by

public utilities; arts. 7, 30 on administrative monopoly; art. 11 on below-cost

sales; art. 12 on tying; and arts. 15, 27 on bid rigging.

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