Wang Xiaoye :Anti-monopoly law awaited

2002-07-08

China needs an anti-monopoly law to effectively check restraints on market competition, safeguard the healthy development of the national economy and better protect the interests of consumers.

Wang Xiaoye, a professor of anti-monopoly law from the Chinese Academy of Social Sciences, made this appeal to national legislators when she lectured on basic knowledge of anti-monopoly legislation at the end of last month.

The professor of China's top think tank said anti-monopoly legislation aims to check monopolies and other activities restraining competition and protect the rights of every party in the market to participate in market competition.

She further explained that competition helps balance market demand and supply, optimize allocation of social resources, promote economic and technical development by washing out enterprises with low efficiency, and finally protect the interests of consumers.

But Wang said the market economy itself does not have a system to oversee just and free competition and enterprises are always inclined to restrict competition to reduce commercial pressure and risks.

Wang said under the fledging market economy in China, activities restraining competition such as enterprises jointly setting limits on price, production quantity and sales and segmenting the market are not rare.

Administrative restrictions on competition, with local protectionism in particular, is still rampant, she added.

In 1998, eight major domestic producers of picture tubes for colour television sets jointly set a limit on their production quantity when the price of colour televisions dived lower and lower as domestic supply apparently exceeded market demand.

Some local governments set different barriers of market access for products from other provinces to protect their local enterprises.

"All these need to be tackled by an anti-monopoly law," Wang said, adding China is now at the right time to draft such a legislation.

China has broken up the price monopoly formed under the planned economy, diversified the ownership structure of its enterprises and given more and more operational autonomy to State-owned enterprises through economic reform in the past two decades.

The domestic economy further integrated with the global trade system after China officially became a member of World Trade Organization (WTO) in December, Wang said.

Since 1980, when it enacted its first regulation on anti-monopoly, China has enforced 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.

But those laws and regulations could not settle all problems that came with the development of the market economy, such as inappropriate purchases or the mergers of enterprises of some trades, Wang said.

The law outlawing unfair competition seeks fairness in the marketplace. It punishes enterprises which grab an advantageous position over other enterprises by unlawful means such as counterfeiting products, using false advertisements and stealing commercial secrets. The law functions under the prerequisite that competition exists in the market.

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 law will therefore play a bigger role in promoting and protecting competition, Wang said.

It could be seen from the status of the legislation in some developed market economies, she added.

The anti-monopoly law is called the "charter for free enterprises" in the United States, "economic constitution" in Germany and "the core of economic legislation" in Japan.

The anti-monopoly law has been listed on the legislative agenda of the top legislature, the Standing Committee of the National People's Congress.

It will play a vital role in the elimination of monopolies and the establishment and improvement of a socialist market economy, said Li Peng, chairman of the committee.

Li revealed related departments are busily working on a draft of the law.

"We will work out an anti-monopoly law which not only suits the development needs of the country but is also consistent with international practices, especially the rules of the WTO," Li said.

Wang suggested that China break up monopolies in all industrial sectors, as in most developed countries, including those tightly controlled by the government such as telecommunications, electricity, natural gas and the railways sector.

She said China could fulfil the commitments it made when entering the WTO and help enterprises in these sectors improve their productivity, service quality and management to benefit all consumers.

Wang also suggested domestic and foreign companies be treated equally in future legislation.

"Any monopoly activity by foreign countries would do great harm to the Chinese market," she said.

http://www.chinadaily.com.cn/en/doc/2002-07/08/content_126909.htm