The following is an excerpt from a recent interview on China’s Anti-monopoly law conducted with Dr. Zhan Hao. The interview below briefly analyzes some of his comments and questions concerning China’s stride towards a form of competition law.
1. Dr. Zhan Hao, what is your main concern about the new law?
Presently speaking, there are some uncertain issues related to this new law. First, there are no practical guidelines complimenting this new law. According to arrangement, the regulation of concentration notification will be promulgated on or before 1 August. However, fierce debate surrounding this regulation brought delay. For instance, there is no common opinion regarding the market share standard for notification. Due to above-mentioned reason, the enforcement of the new law will encounter serious problems.
Second is preparation of regulatory departments and courts. Anti-trust law is a complicated subject and enforcement of it requires knowledge of both law and economics. To be frank, such expertise is seldom found in China.
Thirdly, usually, laymen in China have no idea about issues surrounding fair market competition. Thus some obvious monopoly behavior is not condemned and some phenomena without the necessary ingredients are regarded as monopolistic behavior.
2. Are there any challenges you foresee that will affect your firm’s business or clients when the law comes into effect?
Yes, this new law will affect the Chinese market in many aspects, and its effect will be the similar to that of the WTO on the Chinese economy. In China, state-owned companies are an important economic factor and such companies have resources in the fields of oil, telecommunication, gas, railway, airline and electricity networks. Besides some foreign giants, those companies have the most possibility of becoming targets of the new law. Thus state-owned companies will require the necessary legal services when making decision relating to price, M&A and guilds.
Chinese law firms who want to practice anti-monopoly law must recruit experienced lawyers in anti-trust law and regulatory economy. How to define a relevant market, how to apply the reasonable principle, and how to defend a claim for monopoly, such tasks should be completed by experienced lawyers.
The essential characteristic of this law is its effect outside in jurisdictions outside China. When dealing with legal affairs relating to monopolies, law firms and clients must take into consideration the foreign market. Such issue will lead to more cooperation between Chinese firms and firms in USA and EU.
3. Have any of your clients voiced concerns about this law on their business?
Some clients, specifically domestic companies regulated by SASAC and foreign giants in IT have shown deep concern over this new law. They worry about its contents, such as monopoly agreement, concentration regulation and abuse of the dominant position. For some domestic companies, they also worry about the regulation of administrative monopolies.
4. Specifically, do you think this new law will generate more work or business for your firm?
Of course this new law will generate more work for my firm. In fact, we have retained some big clients in the last few months. One is a major airplane company and another is a foreign IT company in the Top 500.