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Top-level Commission to Combat Monopolies
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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 Commerce.


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 powers."


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 Cao.


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 telecommunication sector.


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 in China.


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 profit abroad.


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 it's approved.


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 Partnership Law.


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 failed.


"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 sectors.


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 months.


(China Daily, Xinhua News Agency June 26, 2006)

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