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Anti-monopoly Law Adopted
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The Standing Committee of the National People's Congress (NPC), China's top legislature, on Thursday adopted the anti-monopoly law to ensure fair competition and regulate market order.

The law, which began to be drafted 13 years ago, will come into effect on Aug. 1, 2008. 

The law requires foreign purchases of Chinese companies to go through national security checks.


"As well as anti-monopoly checks stipulated by this law, foreign mergers and acquisitions of domestic companies or foreign capital investing in domestic companies' operations in other forms should go through national security checks according to relevant laws and regulations if the cases are related to the issue," it reads.


Foreign companies have begun to acquire major state-owned enterprises or companies with famous brands in recent years, arousing concerns about China's economic security.


China has already established a basic national security check system for foreign mergers and acquisitions.


Foreign investors should apply for approvals from the Ministry of Commerce (MOC) if their purchases of domestic companies affect national economic security, take place in key sectors or cause a transfer of the operating rights of famous domestic brands, according to a regulation issued by the MOC along with five other government organs last year.


Before that, only mergers and acquisitions worth more than US$100 million needed MOC checks and approvals.


The government will strengthen examination and supervision of foreign merger operations affecting major enterprises in sensitive sectors and issue policies to improve the system for admitting foreign-invested industries by the end of 2010, according to the National Development and Reform Commission (NDRC).


The law, with eight chapters and 57 provisions, bans monopolistic agreements, such as cartels and other forms of collusion, and provides for investigation and prosecution of monopolistic practices, while protecting monopolistic agreements that promote innovation and technological advance.


The law prohibits monopolies from wielding their dominant status in market to curb competition, fix prices, enforce package sales, and refuse or enforce trade.


All companies seeking mergers or acquisitions would have to notify the anti-monopoly law enforcement departments if the actions meet the standard set by the State Council.


China planned to stipulate anti-monopoly law as early as in 1994.


Experts said China's socialist market economy has turned to be mature over more than one decade, and in current market circumstances, the introduction of an anti-monopoly law is imperative.


(Xinhua News Agency August 30, 2007)

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