Download Competition Law in China: Economic Structures, Regulations, and Attitudes and more Slides Competition Law and Policy in PDF only on Docsity! Competition Law in China: A Brief Introduction Docsity.com Overview 1. Introduction 2. Economic Structure Before 1978 3. Post Reform Economic Structure 4. Regulatory Structure in China 5. Attitudes of China’s Policy Maker towards Competition 6. China’s Current Competition Law and Policies 7. Features of China’s Draft Anti-Monopoly Law Docsity.com • The inefficiency of central planning was repeated in the industrial sector; • All enterprises state-owned before the 1978 reform; • Plans for the production and distribution at all enterprises; Prices for all goods and services; • Worker assigned to enterprises and guaranteed lifetime employment; • Priority given to heavy industry, and terrible waste and inefficiency resulted. Docsity.com • Before 1978, China’s economy dominated by the state; Private enterprises’ negligible role; • According to CSSB, In 1978, private enterprises =0.2% industrial output; State- and collectively owned =the rest of the economy; • Competition motivated by profits condemned as a system of corrupt capitalist systems. Docsity.com 3. Post Reform Economic Structure • In 1978, Deng initiated economic reforms; • Started in rural areas; • Household responsibility system; • Township and Village Enterprises grew quickly and started to compete with SOEs; Docsity.com • 99% of the enterprises in China are small or medium in size, with most of them funded by private investment; • According to CSSB (updated in 2004), China’s SMEs =55.6% of the country’s GDP, 74.7% of industrial production value added, 58.9% of retail sales, 46.2% of tax revenues and 62.3% of exports. • But the largest enterprises in China are still SOEs in such industries as electricity, railroads, aviation, telecommunication, and banking, where the state maintains de facto monopolies or dominant firms. Docsity.com 4. China’s Regulatory Structure • Government regulation and competition policy as alternative ways to control the economy; • China’s regulatory being transformed to one more compatible with the requirements of a market economy; • China’s need for government regulation; • Strategic choice to retreat from non-essential industries and other regulatory reforms; • Administrative monopolies in China; • Dealing with the problem of administrative monopolies as one of the major goals of China’s draft anti-monopoly law. Docsity.com 5. Attitudes of China’s Policy Maker towards Competition • Law enforcement depending on prevailing attitude towards competition; • China’s ambivalent attitude toward competition; • Problem created by administrative monopolies and challenges posed the M&A of domestic businesses by MNCs; • Small and medium sized firms concerns. Docsity.com • Article 52 describes how a hearing is conducted when the authority thinks the merger will probably result in undue concentration so as to impede competition or prejudice consumers’ interests. • Article 53: five conditions relating to merging parties’ assets, sales, and market share inside China under which mergers outside China should be reported to China’ MofCOM and SAIC for competition policy review. Allows China to intervene in Mergers outside China. • Allows China to intervene in mergers outside of China. Docsity.com Provisional Rules for Prevention of Monopoly Pricing (by SDRC, effective November 11, 2003) • Prohibits the abuse of ‘market dominance’ and infers it through ‘market share in the relevant market, substitutability of relevant goods, and ease of new entry’. • Not specify how relevant market is defined or how the inference of market dominance can be actually made; • Prohibits also price coordination, supply restriction and bid rigging; • Prohibits government agencies from illegally intervening in price determinations. (What would be legal price intervention is not clear); • Could lead to improper government intervention when there is not a competition issue. Docsity.com 7. Features of China’s Draft Anti- Monopoly Law • Efficiency objective; • Definition of monopoly; • Collusions among enterprises; • Market definition; • Publication of decisions; • Concentration Ratios • Monopoly pricing; Docsity.com
