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Tue, Feb 01, 2005 - Page 12 News List

Foreign threat spurs Chinese monopoly law

MARKET SHARE In the face of the strengthening market positions of foreign firms, Beijing is moving quickly to finalize a long-delayed anti-monopoly law

AFP , BEIJING

China's glacially slow effort to introduce an anti-monopoly law is suddenly being sped up by concerns that multinationals are getting to dominate key markets, state media said yesterday.

Officials have agonized over the fine details of the rules for nearly two decades, but the idea of Microsoft-style juggernauts rolling ashore has lent the process a new sense of urgency, the China Business Weekly reported.

"Politically, the threat of foreign monopolies may be the justification for having the law," said Mark Williams, an expert on anti-monopoly law at Hong Kong Polytechnic University and author of an upcoming book on the subject.

"But in reality it may well be used as a protectionist engine. It may well be applied against foreign entrants to the market but domestic state monopolies are unlikely to be investigated or sanctioned," he said.

With the new-found anti-foreign momentum, the draft could be turned into law by the end of this year if the process goes smoothly, the China Business Weekly said, without giving sources.

It cited increasing concerns that multinationals have gained control of certain industries in China, adding that a law is now "desperately" needed to rein in their power. For example, Microsoft's Windows operating system and Tetra Pac's packaging materials both hold a 95-percent share of the Chinese market, the newspaper said.

Eastman Kodak, which has a large share of the roll-film market, has strengthened its position even further with the recent purchase of 13 percent of the shares in its only Chinese rival, Lucky Film Corp, the report said.

Preparation work for the anti-monopoly law began as early as 1987 but has never moved beyond the drafting stage, with the main reasons for the slow pace being the existence of state monopolies in areas such as insurance.

Government departments also wield monopoly-style power in some industries by coercing people to buy commodities from certain operators, the report said.

The draft currently in circulation will address this issue head-on by paying special attention to administrative monopolies, the newspaper said, without providing further details.

Another obstacle that has kept the anti-monopoly law in limbo is the issue of who will be in charge.

There is widespread consensus, even among Chinese officials, that the best solution would be a powerful stand-alone agency, preferably at the ministerial level, to enforce compliance.

"Obviously, an independent and powerful administrative or quasi-judicial agency is more suitable than several anti-monopoly offices in separate departments," said Huang Yong (黃勇), a law professor at Beijing's University of International Business and Economics.

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