Beijing, Dec. 28 (Reuters): China may introduce a controversial anti-monopoly law to challenge domestic and multinational companies’ market power as early as next year, the country’s legislature announced today.
The National People’s Congress will consider a draft Anti-monopoly Law next year, along with legislation to deal with state assets, unfair competition, and corporate taxes, the NPC’s standing committee said, according to the official Xinhua News Agency.
The NPC is a largely ceremonial Parliament, but it is also charged with examining and passing major laws. It may approve the proposed legislation or send it back to the government for changes.
The law has been in gestation for over a decade and it could affect industries such as energy and technolgy.
Some investors see the measure as a potential ram for opening up parts of the economy still in state hands. In September, the Organisation for Economic Cooperation and Development said it could help promote fairer competition. “The proposed anti-monopoly law should cover a much wider range of anti-competitive activities than do current laws,” it said in a report on China’s economy.
But multinationals and foreign business associations have voiced misgivings about the law and and contend it could be used to force them to give up valuable technology and markets.
While multinationals are reluctant to publicly discuss the proposed law, in private, many executives say previous drafts left too much leeway for taking away intellectual property set tests for mergers and acquisitions that were too stringent.
The American Bar Association and other groups have lobbied for changes in the draft law. It may be foreign multinationals ' not China’s state conglomerates ' that are the initial targets of the law.
“China’s most conspicuous market leaders ' and hence most promising targets for anti-trust enforcement ' are foreign,” wrote Nathan Bush, a Beijing-based lawyer with ’Melveny & Myers LLP, in a recent commentary on the proposed law.
“Although the draft law does not distinguish foreign and domestic firms, its initial targets are likely to be foreign firms with prominent positions in Chinese markets.”
Chinese government agencies have accused multinationals of unfairly exploiting technological assets, including patents, to dominate markets and deter Chinese competitors. Chinese press reports on the proposed law have named Microsoft and Intel as potential targets.
The editor-in-chief of the Beijing News ' a tabloid that has often reported on official missteps and misdeeds ' was removed on Wednesday in what observers said was a move to strengthen Communist Party control over the media.
The reasons for Yang Bin’s dismissal are unclear.
Early in December, South Korean regulators used anti-monopoly legislation to fine Microsoft $32 million for bundling together software.
Washington is also keeping a close eye on the Chinese legislation, an official of the US Trade Representative said in a recent interview. The US will assess whether any legislation violates China’s commitments to the World Trade Organisation, said Tim Stratford, the USTR official responsible for China.