Since October 2008, Private oil companies in China have been urging one another to take advantage of the Anti-Monopoly Law（AML） to secure a stable supply of oil and avoid over-reliance on the country’s two major oil producers for survival. They want new policies to create a level playing field. Currently they depend on the oil supplies of the China National Petroleum Corporation (CNPC) and the China Petroleum and Chemicals Corporation (Sinopec) as they are forbidden by law to extract or import their own.
It was recently reported the AML would finally protect China’s small private oil firms from the monopoly practices of CNPC and Sinopec. Afterwards, select Chinese lawyers stated they will petition the government or take judicial proceedings due to the abuse of dominance of giant oil companies.
Chapter 3 of AML, stipulates the abuse of dominant market position in detail. Though if the private oil companies want to complain of CNPC’s or Sinopec’s abuse of dominance, they have a long journey ahead.
According to the law:
First, they must prove CNPC or Sinopec has a dominant market position, a precondition of abuse of dominance.
Dominant market position could refer to a market position held by business operators that have the ability to control the price or quantity of commodities or other trading conditions in the relevant market or block or affect the entry of other business operators into the relevant market.
Article 18 of AML states:
"The dominant market position of a business operator shall be determined according to the following factors:
1. The market share of the business operator and its competitive status in the relevant market;
2. The ability of the business operator to control the sales market or the raw material supply market;
3. The financial and technological conditions of the business operator;
4. The extent of reliance on the business operator by other business operators in the transactions;
5. The degree of difficulty for other business operators to enter the relevant market; and
6. Other factors relevant to the determination of the dominant market position of the business operator. "
Afterwards, Article 19 stipulates the presumption of dominant market position, and most standards are related to market share. According to the AML, a complainant should first determine the concerned relevant market and then the market share. However, determining the relevant market is a major problem in China, and legal definition is lacking.
Secondly, provision of the AML regarding the refusal to trade is too general and abstract for enforcement. Though in China, it is difficult to draw a conclusion as no precedents or specific guidelines for the abuse of dominance exist.
Lastly, there will be conflict between law and regulation. In 1999, a government regulation stated wholesale of oil products is monopolized by CNPC and Sinopec, due to national economic security. The regulation has yet to be modified.