Domestic and foreign-invested businesses will benefit from China's future anti-monopoly legislation, said a National People's Congress (NPC) Standing Committee official, who declined to be named, on Tuesday. "The primary basis for anti-monopoly legislation is to ensure that market competition does not stall."
He said all enterprises are left in very difficult situations once one group corners the market.
China does not have a unified anti-monopoly law at the moment, but has specific references scattered among other laws that ban such a situation, the official said.
The country has implemented a series of laws and regulations to ensure fair market competition, including a code outlawing unfair competition in 1993 and a price law in 1997.
The creation of the anti-monopoly law has been put on the legislative agenda of the 10th NPC in its five-year tenure, which ends in 2007. But the official refused to reveal the timetable for the legislation.
Some foreign-invested businesses have been becoming a little uneasy in the wake of a recent report that warned that foreign business giants are building monopolies in China.
After a year of investigation, the State Administration for Industry and Commerce's Fair Trade Bureau published a report entitled, "The Competition-restricting Behavior of Multinational Companies in China and Possible Countermeasures."
The report provided specific examples, such as Microsoft's operating system software and Tetra Pac's packaging materials. Each holds a 95 percent share of its respective market.
Eastman Kodak, which already held more than 50 percent of China's roll film market, is expected to further consolidate its dominance after taking 20 percent of its sole major Chinese rival, Lucky Film.
According to the report, some transnational companies have been using their dominant roles in technology, brand recognition, capital and management to suppress competitors and maximize profits from the Chinese mainland.
On the eve of the release of WPS97, the report cited, a set of computer programs developed by a Chinese company, a multinational hurriedly brought forward its versions of similar products at much lower prices. Certain multinationals tend to purchase the exclusive promotion rights at supermarkets during peak seasons. And some companies set different prices for the same kinds of products, with the Chinese goods costing twice as much as the equivalents in their countries of origin.
The report also indicates that companies that own rights to advanced technology or other intellectual properties squeeze the market is by refusing to sell their services or products to Chinese companies.
Some multinationals carry out sweeping mergers and acquisitions to absorb their major competitors, reducing the number of companies until just a few multinationals are left standing.
The report lists a number of industries where free competition may be threatened by multinationals. The list includes software, photosensitive materials, mobile phones, cameras, vehicle tires and soft packaging.
The potential monopoly-makers named in the report argue strongly against it.
"Monopoly means control, but Kodak is absolutely not in control," Beijing News quoted Ye Ying, vice-president of the Eastman Kodak, as saying. "Having the largest market share dose not necessarily mean you have a monopoly.
Ye pointed out that Lucky, Fuji, Konica and Agfa are also operating in the Chinese market. Also, there is no price manipulation going o, said Ye. Consumers can choose any brand they wish.
Microsoft reportedly stated that responded that anything the company does in China is in line with Chinese laws and regulations.
Refusing to comment on the report itself, the anonymous NPC official said China's anti-monopoly law will "definitely treat all enterprises equally."
Wang Xiaoye, an law professor at the Chinese Academy of Social Sciences, said: "The purpose of the anti-monopoly law is to safeguard the rights of enterprises to have free competition in the market, increase their efficiency and expand social welfare."
The legislation will play a key role in the establishment, improvement and regulation of the market, which is especially important for transitional economies like China, said Huang Yong, a law professor at the University of International Business and Economics.
"It is a natural result of China's progress in building its market economy," he said, adding that there is no need for the foreign-invested companies to panic.
"The law will only come into effect when someone is cornering the market and restricting competition."
Huang said China is also in urgent need of the law so it can cooperate with other countries in guarding against monopolies under the World Trade Organization banner.
Both Huang and Wang agree that China needs an independent agency to enforce the law in the future.
Huang said the agency should organize experts in marketing, economics and statistics, and other professionals, as they will need to do a great deal of basic research to determine precisely what activities constitute monopolistic practices.
"It would be very dangerous to say that one particular activity has allowed a group to corner the market without a thorough investigation," he said.
(China Daily June 2, 2004)