China's Anti-Monopoly Law: History, Application, and Enforcement

• Author: Thomas Brook
• Position: Law Student in the University of Victoria's JD program
• Pages: 31-48

ARTICLE

CHINA’S ANTI-MONOPOLY LAW:

HISTORY, APPLICATION, AND

ENFORCEMENT

By Thomas Brook*

CITED: (2011) 16 Appeal 31-48

I. INTRODUCTION

e growth of a competitive market economy is straining the socialist ideologies upon

which the People’s Republic of China was founded. Nothing illuminates this tension bet-

ter than China’s recent struggle to implement its Anti-Monopoly Law (AML). is strug-

gle has created a unique Chinese structure behind the AML’s pro-competition facade.

e AML promotes a market economy on China’s terms. Vague concepts in its articles,

such as the protection of “public interest” give government agencies signicant deference

on when and how to enforce decisions.e text of the AML also indicates that China will

continue to promote socialist ideologies while attempting to strengthen its market econ-

omy.But perhaps the most striking dierences between the AML and competition legis-

lation in other market economies come from outside the text itself.ese dierences only

become apparent once the legal environment surrounding the AML is illuminated.As

such, thispaper explores the AML through two of these environmental inuences: the lack

of an independent and experienced judiciary, and the political inuence of State Owned

Enterprises (SOEs).It is hoped that this exploration will determine whether the AML rep-

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* Thomas Brook is a Law Student in the University of Victoria’s JD program. He completed an engineering degree

with distinction at the University of Victoria and has worked as a professional engineer and business manager

for 10 years prior to entering law school. He has summered at Fasken Martineau Dumoulin LLP in Toronto and

will be articling with Faskens starting in the summer of 2011.

1. The People’s Republic of China is abbreviated as “China” throughout.

2. Anti-Monopoly Law of the People’s Republic of China (AML), Presidential order No. 68 (Approved by the

Standing Committee of the National People’s Congress on Aug. 30, 2007 and effective Aug. 1, 2008),online:

Ministry of Commerce of the People’s Republic of China .cn/pub/FDI_EN/Laws/Gener-

alLawsandRegulations/BasicLaws/P020071012533593599575.pdf>

3. Bruce Owen, Su Sun, and Wentong Zheng,“China’s Competition Policy Reforms: The Anti-monopoly Law and

Beyond” (2008-2009)75 Antitrust LJ 233, at page 237; andZhenguo Wu, “Perspectives On The Chinese Anti-

Monopoly Law” (2008-2009) 75 Antitrust LJ 73, at page 77.

4. See for example: AML, supra note 3 at Articles 1, 15, and 28.

5. See: AML, supra note 3 at Articles 1 and 4.

resents a sword bravely defending competition or a twig bending at the whim of the Chi-

nese Communist Party (CCP).

is exploration is divided into four sections. Following this introduction, the legislative

history, in regards to competition law in China, is discussed to elucidate the origins of the

AML.e AML is then summarized and ve areas where it has diverged from competition

law in Western democracies are explored. is divergence is further investigated through

the review of civil cases and government agency decisions.Finally, this exploration is con-

cluded with an assessment of the AML’s enforceability.

II. HISTORICAL DEVELOPMENT OF THE AML

To understand the AML and its application it is important to understand the legal envi-

ronment in which the AML was created.Law in China is oen seen as a tool for organiz-

ing government activity rather than as a method of balancing the interests of citizens with

the interests of the State.A majority of articles within China’s Constitution, for example,

simply describe the structure of state agencies. Traditionally, the protection of private in-

terests, whether personal or business, has not been a priority within Chinese law.is con-

textual background is important to keep in mind when considering how the AML, which

focuses on the protection of private interests, was created.As stated by Salil Mehra and

Meng Yanbei, the AML “is a dramatic change for China’s legal system [. It has been] un-

dertaken with a view towards the paths taken by other nations [but does not] necessarily

[follow] those paths.”

China’s path originated with Deng Xiaoping’s (邓小平) reformation of the country’s

planned economy soon aer his rise to power in .Early reforms included the imple-

mentation of a “‘responsibility system’ [that] allowed farmers to privately retain and sell

agricultural products.” is limited allowance for competition reignited a long history of

Chinese commercialism and quickly lead to the creation, by the mid ’s, of thousands

of local enterprises.

Perhaps more importantly, Deng Xiaoping created a series of special economic zones that

allowed foreign companies to form joint ventures with SOEs in designated geographic lo-

cations. is, in turn, led to a signicant increase in foreign investment and trade.

As investment grew and competition became entrenched within the Chinese economy,

concern increased over anticompetitive practices.is concern gave rise to discussion

within the CCP, beginning as early as the mid ’s, of the need for a comprehensive com-

petition law. Although the draing of the AML began in the mid ’s it was not until

6. Jianfu Chen, Chinese Law: Context and Transformation (Leiden, the Netherlands:Brill 2008), at 77.

7. Constitution of the People’s Republic of China (中华人民共和国宪法)(Adopted December 4, 1982, amended

March 14, 2004), online: National People’s Congress

.

8. Chen, supra note 7 at 77.

9. Salil Mehra and Meng Yanbei, “Against Antitrust Functionalism: Reconsidering China’s Antimonopoly Law”,

(2008) 49 Virginia Journal of International Law 379, at 390.

10. Mark William, “Foreign Investment in China: Will the Anti-Monopoly Law be a Barrier or a Facilitator” (2010)

45 Texas Int’l L J 127, at 128.

11. Ibid.

12. William, supra note 11 at 128-130.

13. Ibid.

14. H. Stephen Harris, “The Making of an Antitrust Law: The Pending Anti-Monopoly Law of the People’s Republic

of China” (2006)7 Chi J Int’l L 169, at 174.

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