Shang Ming, head of the Ministry of Commerce's new antitrust office, said at a Wednesday press conference that the antitrust law now being drafted will help to guarantee a fair and orderly market.
Shang, who is also the chief of the ministry's department of treaties and law, said the new legislation -- dubbed an "economic constitution" by legal professionals -- is expected to improve the country's competition legislation substantially.
Laws currently on the books include the Law Against Unfair Competition, the Price Law and the Law on Tendering and Bidding.
The draft antitrust law contains articles regulating monopoly agreements, abuse of dominant market status, large-scale consolidations and administrative monopolies. The draft has been submitted to the State Council's Legislative Affairs Office and distributed to various departments and local governments for comments, said Shang.
The law is on the legislative agenda of the 10th National People's Congress, whose tenure ends in 2008, but the draft requires further revision.
Concerns about the absence of an antitrust law are widespread. A report by the State Administration for Industry and Commerce in May indicated that some multinational companies are abusing their dominant positions in order to eliminate competition.
Shang said that the adoption of an antitrust law is not solely for the purpose of checking business monopolies: administrative monopolies, a major irritant for foreign companies in China, must also be reined in. A special chapter in the law is devoted to regulation of government-related monopolies.
Administrative monopolies and local protectionism are serious problems in China and threaten the establishment of a national market economy.
Local governments have a huge stake in fostering local enterprises, their main sources of tax and other revenue. Many have erected barriers that keep outsiders from entering local markets.
A researcher at the Institute of Legal Studies of the Chinese Academy of Social Sciences indicated that Shang's press conference was notable as the first official statement by the Ministry of Commerce on the drafting of the law.
The ministry set up the antitrust office in September to improve legislation and strengthen investigations.
The office, a temporary mechanism, is responsible for helping to draft the law, conducting investigations and discussing antimonopoly issues with international bodies and representatives.
The drafting of the antitrust law has dragged on for a decade, slowed by controversial issues and numerous revisions.
The specific department to be responsible for the law's implementation has yet to be decided. The Ministry of Commerce may be the most suitable authority, but the State Administration of Industry and Commerce also has a stake since it oversees the implementation of the Law Against Unfair Competition.
(China Daily October 28, 2004)