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Domestic and foreign-invested businesses will benefit from China's future anti-monopoly legislation, a senior legislative official said Tuesday.
The National People's Congress (NPC) Standing Committee official, who refused to be identified, said: "The primary basis for anti-monopoly legislation is to ensure that competition in the market does not stall."
He said all enterprises are left in very difficult situations once one group corners the market.
China does not have a single anti-monopoly law at the moment, but has specific regulations scattered among other legislation that ban such an outcome, the official said.
And 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.
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.
However, some foreign-invested business have been becoming a little uneasy in the wake of a recent report that warned that foreign business giants were building monopolies in China.
After a year of investigation, the State Administration for Industry and Commerce's fair trade bureau came up with the report entitled "The Competition-restricting Behavior of Multinational Companies in China and Countermeasures."
The report gave specifics. For instance, Microsoft's operating system software and Tetra Pac's packaging materials each have 95 percent shares of the Chinese market.
Eastman Kodak, which formerly held more than 50 percent of China's roll film market, is expected to further consolidate its market dominance after taking 20 percent of its sole major Chinese rival, Lucky Film Corp.
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 programmes developed by a Chinese company, a multinational hurriedly brought forward its version of the same kinds of products at much lower prices.
In addition, certain multinationals tend to purchase the exclusive promotion rights of supermarkets during peak seasons, barring the supermarkets from displaying other brands.
Some companies also set different prices for the same kind of products, with the Chinese goods costing twice as much compared with their countries of origin.
According to the report, another way that companies which own advanced technology or other intellectual properties squeeze the market is by refusing to sell their services or products to Chinese companies.
To ensure dominance, some multinationals carry out sweeping mergers and acquisitions to absorb their major competitors.
It reduces the number of competing companies until a few multinationals are left standing, the report says.
It lists a number of industries where free competition may be threatened by multinationals. The list includes software, photosensitive material, mobile phones, cameras, tyres and soft packaging.
However, those allegedly pushing for monopolies have argued strongly against the report.
"Monopoly means control, but Kodak is absolutely not in control," Beijing News quoted Ye Ying, vice-president of the Eastman Kodak Co, as saying.
"Having the largest market share dose not necessarily mean you have a monopoly."
The Chinese market had many other examples, she said, such as Lucky, Fuji, Konica and Agfa.
And there is no price manipulation within the market. Consumers can choose any brand they wish, Ye said.
Microsoft reportedly stated that whatever 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 anti-monopoly 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 safeguarding 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 compose experts in marketing, economics and statistics, and other professionals as they will need to do a lot of basic research to determine 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)
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