China is to set up a top-level commission to help stop
companies building monopolies.
The commission will handle these issues according to the draft
anti-monopoly law made public on Saturday.
Composed of senior government officials, law experts and
economists, the commission aims to guarantee fairness and authority
in the enforcement of any new law.
Cao Kangtai, director of the Legislative Affairs Office of the
State Council, announced the upcoming formation of the commission
in a speech delivered to the Standing Committee of the National
People's Congress (NPC) on Saturday.
Committee members will review the draft law, which has been
prepared over more than 10 years, during the six-day session which
concludes on Thursday.
Currently, several government departments are responsible for
dealing with anti-monopoly affairs, including the Ministry of
Commerce and the State Administration for Industry and
The establishment of the commission is expected to better
co-ordinate law enforcement by these departments.
The draft law, with 56 articles in eight chapters, focuses
mainly on banning companies from signing deals which create
monopolies, abusing their dominant market status or seeking
unreasonable mergers or acquisitions.
For example, when considering such deals, all companies with the
exception of financial bodies like banks and insurance companies
will be required to inform the authorities if the total turnover of
all parties involved exceeds 1.2 billion yuan (US$150 million).
The anti-monopoly law will encourage mergers that are conducive
to economic development and market competition but opposes
practices which are designed to create monopolies, said Cao.
The law will also forbid government departments abusing
administrative power to restrict competition.
The draft law tags six practices as "abusing administrative
For instance, local governments are not allowed to issue
discriminative rules preventing products from other regions
entering local markets.
Meanwhile, intellectual property rights shouldn't be used as an
excuse to seek monopolies, according to the draft law. Some large
companies have been caught using these rights to restrict
competition and block technological innovation, according to
Although Cao did not say what kind of influence the new laws
would place on these sectors, analysts believe they'll curb, to
some extent, the creation of monopolies.
China already has a number of laws and regulations which are
designed to deal with monopoly issues such as the Law against
Unfair Competition, a Price Law and rules governing the
But with a vibrant market economy China required laws dedicated
to monopoly issues, said Cao.
Chinese lawmakers resumed on Sunday a debate on a legislative
amendment that could allow foreigners to enter legal partnerships
However, concerns were raised in the Standing Committee of the
NPC that partnerships involving foreigners could result in the
purchase of China-registered intellectual property rights for
Legal experts believe that the draft amendment to the
Partnership Law, which defines "partner" as a company or an
individual, could usher in a new form of foreign investment, if
The draft amendment which states that, "foreign entities or
individuals should comply with the relevant Chinese regulations
when establishing a partnership in China" changes the 1997
Experts told the Standing Committee that existing general
partnership law required all partners to assume unlimited liability
for the debts of a firm. However, creditors' interests could be
harmed due to cases where foreign partners had no other business
interests in China or where their personal assets were held abroad,
making it hard to retrieve funds to cover losses if a partnership
"At present, foreign venture capital outweighs that of domestic
counterparts, so we should study carefully the nature of foreign
capital in China and how it's used," said lawmaker Lu Ming.
Some foreign venture capital was used to buy Chinese-developed
scientific innovations with intellectual property rights to China's
detriment, Lu said.
However, fellow lawmaker Chen Zhangliang said, "We cannot deny
foreign entities the right to form partnerships in China just
because there are difficulties."
China-foreign partnerships could even promote the development of
innovation in China, said Chen.
Experts believe the amendment could benefit partnerships within
traditional industries and boost the high-tech and service
In China's legislative system a bill can become law after it
passes, usually, three rounds of hearings at the national
legislature. The Standing Committee of the NPC meets every two
(China Daily, Xinhua News Agency June 26,