China is revising its anti-monopoly law, the first such move since the legislation took effect 10 years ago. The draft by NDRC will be submitted for review next month, according to an official from the country’s top economic planner.
The revision is expected to incorporate into law the fair market competition review system outlined by the State Council, the nation’s Cabinet, according to an official from the National Development and Reform Commission with direct knowledge of the matter who declined to be named.
Officials from local governmental regulatory bodies will be held accountable for administrative monopoly abuses such as granting favorable conditions to preferred enterprises at the expense of other market players, the official said.
Once the draft is approved by the National People’s Congress, the country’s top legislative body, it will be illegal for policymakers to create preferential policies to favor certain companies or limit their market access.
Based on its past law enforcement experiences, the NDRC hopes that some unclear areas that may cause confusion can be better addressed in the revision of the legislation, the official said.
The official said the draft version is expected to be submitted to the State Council for review by the end of this month.
Wang Junlin, a Beijing-based lawyer specializing in international commerce and business competition, said the revision, if approved by the top legislature, would mark a huge step forward by China as it improves its anti-monopoly law enforcement.
In 2016, the State Council published guidelines on establishing a fair competition review system, requiring local policymakers and regulators to perform self-reviews before issuing policies related to the economic activities of market players.
Despite the guidelines, some local authorities reportedly have disregarded the self-review process since it was not mandatory.
The NDRC cracked down on 18 cases in 2016 involving local governments found to have aided enterprises’ price-fixing by issuing discriminatory conditions for market entry or requiring businesses to use goods and services provided by designated producers in the utilities, tourism, clothing and building materials industries.
Shi Jianzhong, vice-president of China University of Political Science and Law, said by putting fair market competition into legislation, it is no longer just a reminder for local governments.
“It can be used as a preventive tool for law enforcement agencies. Currently, authorities launch investigations only after dubious activities are found,” he said.
Zhang Qiong, an expert and consultant for the Anti-Monopoly Committee of the State Council, said anti-monopoly law enforcement is expected to expand to new areas, such as artificial intelligence, big data and other new, emerging industries.
Law enforcement agencies will be required to adapt to new market developments, according to Zhang.
Cybereconomy is expected to become a new area that the law enforcement agencies will watch closely, according to Deng Zhisong, a senior partner at the Beijing office of the Denton global law firm.