Administrative Monopoly and the Anti-Monopoly Law: an examination of the debate in China

Abstract

After more than a decade of preparation, China finally passed the Anti-Monopoly Law (AML) on 30 August 2007. This paper examines the debate over whether or not administrative monopoly should be included in the ambit of the AML, which took place throughout the drafting process of this new law. Administrative monopoly refers to the abusive use of administrative power by government agencies to engage in monopolistic activities. Owing to the administrative nature of this type of monopoly, the intent to regulate it by an economic law, such as the AML, has stirred up much controversy. Having analyzed the arguments both in support of and in opposition to the inclusion, this paper suggests the need to adopt a more comprehensive scheme in tackling administrative monopoly. Also, the enforcement mechanism of the AML will have to be strengthened in order to prevent this new law from degenerating into ‘a toothless tiger’. Furthermore, the competition law regime of China will benefit from in-depth research in overseas anti-monopoly practices. In particular, the experiences of the former socialist states in Europe should be taken into account, given that they are similarly undergoing the transition from a planned economy to a market economy.

Notes

^*Gordon Y. M. Chan is currently a PhD candidate at the Faculty of Law, the Chinese University of Hong Kong. He also holds a Ph.D. in History from the School of Oriental and African Studies, University of London. He would like to thank Miss Jiang Jue and Miss Lai Kwok Fan for commenting on an earlier draft of this paper. Needless to say, the author alone is responsible for any omissions or errors.

^1. A note about the drafts of the AML is that since the consultation of the AML is a closed one, it is impossible for the author of this paper to ascertain how many drafts of the new law had actually been produced. Moreover, all the drafts are not publicly circulated, and existing English versions of them are privately produced. Only two English versions of the drafts, namely, the one of 22 June 2006 and the other one of 8 April 2005, are available for use in this paper. Discussions about other drafts thus relied on secondary sources, principally the excellent summaries provided in Mark Williams, Competition Policy and Law in China, Hong Kong and Taiwan (Cambridge, UK and New York: Cambridge University Press, 2005), pp. 177–211.

^2. Mark Williams, Competition Policy and Law in China, Hong Kong and Taiwan (Cambridge, UK and New York: Cambridge University Press, 2005)., p. 138.

^3. Jin Chaowu and Wei Luo, Competition Law in China (Buffalo, New York: William S. Hein & Co., Inc., 2002), p. 93; Xu Shiying, Jingzhengfa Xinlun [A New Study of Competition Law] (Beijing: Beijing Daxue Chubanshe, 2006), p. 197. Cf. Arts 7 and 8 of the AML.

^4. Yang Lanpin, ‘Xingzheng longduan wenti yanjiu shuping’ [‘Comments on the research of administrative monopoly’], Jinji Pinglun [Economic Review] no. 6, (2005), pp. 114–115.

^5. Jin and Luo, Competition Law in China, p. 77.

^6. Jin and Luo, Competition Law in China., pp. 95–96; Hu Angang and Guo Yong, ‘Administrative monopoly, corruption, and China's economic transformation’, in Pamela C. H. Mar and Frank-Jürgen Richtler, eds, China: Enabling a New Era of Changes (Singapore: John Wiley & Sons (Asia) Pte Ltd, 2003), pp. 102–104.

^7. Williams, Competition Policy and Law in China, Hong Kong and Taiwan, pp. 109–110, 141.

^8. Williams, Competition Policy and Law in China, Hong Kong and Taiwan., p. 139.

^9. Lin Ping, ‘People's Republic of China’, in Douglas H. Brooks and Simon J. Evenett, eds, Competition Policy and Development in Asia (Hampshire and New York: Palgrave MacMillan, 2005), p. 87.

^10. Hu and Guo, ‘Administrative monopoly, corruption, and China's economic transformation’, pp. 104–105.

^11. Williams, Competition Policy and Law in China, Hong Kong and Taiwan, p. 140.

^12. Kevin X. Li and Ming Du, ‘Does China need competition law?’, Journal of Business Law, (March 2007), p. 201.

^13. Nevertheless, he acknowledges the need for such legislation because political power in China is not as centralized as it appears to be. Williams, Competition Policy and Law in China, Hong Kong and Taiwan, p. 183.

^14. ‘Fan Longduan Fa mianlin xin bianshu jinzhi xingzheng longduan tiaokuan bu shan chu’ [‘The Anti-Monopoly Law faces new changes—the articles on prohibiting administrative monopoly have been deleted’], (4 April 2006), available at: www.xinhuanet.com.

^15. ‘Fang Longduan Fa cao'an jian fu Fan Xingzheng Longduan bi zhengti shanchu’ [‘Lighten the load of the Anti-Monopoly Law—the whole section on “anti-administrative monopoly” has been deleted’], (11 January 2006), available at: www.people.com.cn.

^16. Beijing, 17 October 1980. See Jin and Luo, Competition Law in China, p. 65.

^17. English translations of these laws can be found in Beijing., pp. 211–220, 271–302.

^18. Wang Xiaoye, ‘Highlights of Chinese anti-monopoly draft—from a critical perspective’, pp. 13–14, paper presented at the Second Asian Competition Law & Policy Conference held at the Hong Kong Polytechnic University, 11–12 December 2006; Williams, Competition Policy and Law in China, Hong Kong and Taiwan, pp. 169–170.

^19. ‘Fan Longduan Fa mianlin xin bianshu’; Liu Yan, ‘Lun xingzheng longduan you Fan Longduan Fa tianzheng de jichu’ [‘The bases of which administrative monopoly should be regulated by the Anti-Monopoly Law’], Wuhan Jiaotong Zhiye Xueyuan Xuebao [Journal of Wuhan Jiaotong Polytechnic] 6(1), (March 2004), p. 1; Qi Duojun, ‘Fan longduan lifazhong de xingzheng longduan wenti’ [‘The problem of administrative monopoly in the legislation of the Anti-Monopoly Law’], Shidai Faxue [Present-day Law Science] 4(2), (April 2006), p. 6.

^20. Wang, ‘Highlights of Chinese anti-monopoly draft’, p. 12.

^21. Huang Xin and Zhou Yun, ‘Xingzheng longduan yu Fan Longduan Fa yanjiu’ [‘Administrative monopoly and research on the Anti-Monopoly Law’], Zhongguo Faxue [Legal Studies of China] no. 3, (2001), p. 100; Miao Qing, ‘Xingzheng longduan ying you Fan Longduan Fa tiaozheng de lihun fenxi’ [‘An analysis of the theory that administrative monopoly should be regulated by the Anti-Monopoly Law’], Zhengzhou Hangkong Gongye Guanli Xueyuan Xuebao—Shehui Kexue ban [Journal of Zhengzhou Institute of Aeronautical Industry Management—Social Sciences Edition] 25(1), (February 2006), p. 178.

^22. Williams, Competition Policy and Law in China, Hong Kong and Taiwan, p. 160.

^23. Dong Xinkai, ‘Fan Longduan Fa yingdang guizhi xingzheng longduan xingwei’ [‘The Anti-Monopoly Law should regulate acts of administrative monopoly’], Xingzheng Fa Yanjiu [Studies on Administrative Law] no. 2, (February), p. 72; Miao, ‘Xingzheng longduan ying you Fan Longduan Fa tiaozheng de lihun fenxi’, p. 178; Xu, Jingzhengfa Xinlun, p. 202.

^24. Gao Yi and Yang Yonglei, ‘Fan Longduan Fa guizhi xingzheng longduan de jidian sikao’ [‘Reflections upon the regulation of administrative monopoly by the Anti-Monopoly Law’], Sheke Zongheng [Social Sciences Review] 21(4), (April 2006), p. 93; Huang and Zhou, ‘Xingzheng longduan yu Fan Longduan Fa yanjiu’, p. 105; Liu, ‘Lun xingzheng longduan you Fan Longduan Fa tianzheng de jichu’, p. 20.

^25. Dong, ‘Fan Longduan Fa yingdang guizhi xingzheng longduan xingwei’, pp. 72–73; Huang and Zhou, ‘Xingzheng longduan yu Fan Longduan Fa yanjiu’, p. 104; Wang, ‘Highlights of Chinese anti-monopoly draft’, p. 6.

^26. See Williams, Competition Policy and Law in China, Hong Kong and Taiwan, p. 210; Arts 49 and 50 of the AML draft dated 8 April 2005.

^27. Huang and Zhou, ‘Xingzheng longduan yu Fan Longduan Fa yanjiu’, pp. 100–101; Liu, ‘Lun xingzheng longduan you Fan Longduan Fa tianzheng de jichu’, p. 20.

^28. Xu, Jingzhengfa Xinlun, p. 202.

^29. Dong, ‘Fan Longduan Fa yingdang guizhi xingzheng longduan xingwei’, p. 73; Wang, ‘Highlights of Chinese anti-monopoly draft’, p. 14.

^30. Dong, ‘Fan Longduan Fa yingdang guizhi xingzheng longduan xingwei’, p. 73; Miao, ‘Xingzheng longduan ying you Fan Longduan Fa tiaozheng de lihun fenxi’, pp. 178–179; Xu, Jingzhengfa Xinlun, pp. 203–206; cf. Roger Alan Boner, ‘Antitrust and state action in transition economies’, The Antitrust Bulletin 43(1), (Spring 1998), pp. 84–85; OECD, Competition Law and Policy in Russia, (2004), pp. 21, 35–39, available at: http://www.oecd.org/infobycountry/0,3380,en_2649_33759_1_70747_119663_1_37463,00.html.

^31. Williams, Competition Policy and Law in China, Hong Kong and Taiwan, p. 143.

^32. Serious analyses of how foreign cases may actually be applied to China are on the whole lacking in the current literature. See further illustration of this aspect in Part V of this paper.

^33. Li Boqiao and Wu Ye, ‘Xingzheng longduan de Fan Longduan Fa fansi’ [‘Reflections on administrative monopoly and the Anti-Monopoly Law’], Guangxi Shehui Kexue [Guangxi Social Sciences] no. 2, (2006), pp. 73–75; Xue Kepeng, ‘Xingzheng longduan bugaiyou Fan Longguan Fa tiaozheng’ [‘Administrative monopoly should not be regulated by the Anti-Monopoly Law’], Shanxi Shida Xuebao—Shehui Kexue ban [The Journal of Shanxi Teachers University—Social Sciences Edition] 28(2), (April 2001), pp. 28–30.

^34. Williams, Competition Policy and Law in China, Hong Kong and Taiwan, p. 159.

^35. Xu, ‘Xingzheng longduan bugaiyou Fan Longguan Fa tiaozheng’, pp. 28–29.

^36. H. Stephen Harris, Jr, ‘The making of an antitrust law: the pending Anti-Monopoly Law of the People's Republic of China’, Chicago Journal of International Law 7, (Summer 2006), p. 21.

^37. Xu, ‘Xingzheng longduan bugaiyou Fan Longguan Fa tiaozheng’, p. 31; Yang Shibing and Xu Yanyan, ‘Dui Fan Longduan Fa zhong guifan xingzheng longduan de zhiyi’ [‘Queries about regulating administrative monopoly by the Anti-Monopoly Law’], Wanxi Xueyuan Xuebao [Journal of Wanxi University] 18(3), (June 2002), p. 51.

^38. Guo Zongjie, ‘Yiti lifa yu fenbie guizji’ [‘Unified legislation and separate regulation’], Jinan Xuebao—Renwen Kexue yu Shehui Kexue ban [Journal of Jinan University—Humanities and Social Sciences] no. 1, (2005).

^39. Duan Bing and Hua Meng, ‘Xingzheng longduan guiru Fan Longduan Fa zhiyi’ [‘Questioning the inclusion of administrative monopoly in the Anti-Monopoly Law’], Qiye Gaige Yu Guanli [Reforming and Managing Enterprises] 6, (2003), p. 16; Yang and Xu, ‘Dui Fan Longduan Fa zhong guifan xingzheng longduan de zhiyi’, p. 51.

^40. Cf. Xu Wei and Liu Lin, ‘Fan Longduan Fa yuanhe fanbuliao xingzheng longduan’ [‘Why the Anti-Monopoly Law cannot tackle administrative monopoly’], Guangxi Zhengfa Guanli Ganbu Xueyuan Xuebao [Journal of Guangxi Administrative Cadre Institute of Politics and Law] 19(5), (September 2004), pp. 105, 109; Xu, ‘Xingzheng longduan bugaiyou Fan Longguan Fa tiaozheng’, p. 32.

^41. Xu and Liu, ‘Fan Longduan Fa yuanhe fanbuliao xingzheng longduan’, p. 105; Xu, ‘Xingzheng longduan bugaiyou Fan Longguan Fa tiaozheng’, p. 31.

^42. Li and Du, ‘Does China need competition law?’, pp. 205–206.

^43. Huang He, Xu Demin and Li Yongning, ‘Lun Shehui Zhuyishi shichang jjinhji tiaojianxia de xingzheng ganyu yu xingzheng longduan’ [‘Discussion on administrative interference and administrative monopoly under the socialist market economy’], Falu Kexue [Legal Sciences] no. 6, (2002), pp. 90–91; Xu and Liu, ‘Fan Longduan Fa yuanhe fanbuliao xingzheng longduan’, pp. 104–105.

^44. Huang and Zhou, ‘Xingzheng longduan yu Fan Longduan Fa yanjiu’, p. 105.

^45. Gao and Yang, ‘Fan Longduan Fa guizhi xingzheng longduan de jidian sikao’, p. 93; Yang, ‘Xingzheng longduan wenti yanjiu shuping’, p. 118.

^46. Lin, ‘People's Republic of China’, p. 89.

^47. This can be inferred from the media's strong criticisms of the removal of the chapter on administrative monopoly from the draft of November 2005. See notes 14 and 15 above.

^48. Mark Furse, ‘Competition law choice in China’, pp. 12–13, paper presented at the Third Asian Law Institute (ASLI) Annual Conference, 26 May 2006; Yang Lanpin, Zhongguo Xingzhenglongduan Wenti Yanjiu [A Study of the Problem of Administrative Monopoly in China] (Beijing: Jingji Kexue Chubanshe, 2006), pp. 165–185.

^49. See Li Guohai, Fan Longduanfa Shishi Jizhi Yanjiu [An Institutional Study of the Anti-Monopoly Law] (Beijing: Zhongguo Fangzheng Chubanshe, 2006), pp. 117–129; Liu Ningyuan, ed., Zhongwai Fan Longduanfa Shishi Tizhi Yanjiu [An Examination of the Systems in Implementing Anti-Monopoly Laws in China and Overseas] (Beijing: Beijing Daxue Chubanshe, 2005), pp. 329–338; Qi, ‘Fan longduan lifazhong de xingzheng longduan wenti’, pp. 7–8; Zhou Xi and Li Zhiwang, ‘Qianyi woguo fanlongduan zhixing jigou de shezhi’ [‘A brief study of the setup of the anti-monopoly enforcement authority in China’], Faxue Luntan [Legal Forum], (June 2006), p. 66.

^50. Cf. Part IV, B (5) of this paper.

^51. The few exceptions include Guo, ‘Yiti lifa yu fenbie guizji’; Guo Zongjie, ‘Guanyu xingzheng longduan de Fan Longduan Fa dingyi yu juti guizhi’ [‘Definition and presentation of administrative monopoly in Anti-Monopoly Law of China’], Wuhan Daxue Xuebao—Zhexue Shehui Kexue ban [Wuhan University Journal—Philosophy and Social Sciences] 58(2), (March 2005); Yang, Zhongguo Xingzhenglongduan Wenti Yanjiu.

^52. Williams, Competition Policy and Law in China, Hong Kong and Taiwan, p. 157.

^53. See, for example, Xu Guangyao and Huang Xiaohua, ‘Lun xingzheng longduan bingfei Fan Longduan Fa shang de teshu wenti’ [‘Discussion on administrative monopoly not being a special issue in the Anti-Monopoly Law’], Hunan Shehui Kexue [Hunan Social Sciences] no. 5, (2003), p. 65.

^54. Youngjin Jung and Qian Hao, ‘The new economic constitution in China: a third way for competition regime?’, Northwestern Journal of International Law and Business 24, (Fall 2003), p. 140.

^55. Boner, ‘Antitrust and state action in transition economies’, pp. 84–100.

^56. William Neilson observes that China's experience of introducing a competition law has been watched attentively by drafters of competition laws in Vietnam, for the latter shares China's gradualism in economic reform and struggle to maintain a balance between market reform and social stability. See William A Neilson, ‘Competition laws for Asian transitional economies—adaptation to local legal cultures in Vietnam and Indonesia’, in Tim Lindsey, ed., Law Reform in Developing and Transitional States (London and New York: Routledge, 2007), pp. 311–313.

Additional information

Notes on contributors

Gordon Y. M. Chan

57 *Gordon Y. M. Chan is currently a PhD candidate at the Faculty of Law, the Chinese University of Hong Kong. He also holds a Ph.D. in History from the School of Oriental and African Studies, University of London. He would like to thank Miss Jiang Jue and Miss Lai Kwok Fan for commenting on an earlier draft of this paper. Needless to say, the author alone is responsible for any omissions or errors.