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Load report (MS Word, 95 Kb) - BRIC International Competition

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Load report (MS Word, 95 Kb) - BRIC International Competition ...

     Session 1

    Formation of Effective System of

    Anti-Cartel Activity in the Fast

    Growing Economies: National

    and International Experience

     September 2, 2009

    Ning Wanglu

     Director General of the Antimonopoly and Anti-unfair Competition

    Enforcement Bureau of the State Administration for Industry and

    Commerce (SAIC)

    Regulations Defined in the Anti-monopoly Law of the People's

    Republic of China on Monopolistic Conducts

Ladies and gentlemen,

    Good afternoon!

It is a great pleasure for me to attend the BRIC International Competition

    Conference. Minister Zhou Bohua of the State Administration for Industry and

    Commerce had given an introduction to the establishment and improvement of

    China’s anti-monopoly laws as well as the setup and functions of China’s anti-

    monopoly enforcement agencies. In terms of the overall framework and contents of

    the Anti-monopoly Law of the People's Republic of China, it has defined three systems of prohibiting monopolistic agreements, prohibiting abuse of dominant

    market positions and putting concentration of business operators under control, just

    like the anti-monopoly laws of most other countries. Meanwhile, it has also

    defined regulations on abusing administrative powers to eliminate or restrict

    competition in line with China’s national conditions. Experiences of other

    countries have been used for reference in developing these systems and regulations,

    which suggest distinct Chinese characteristics. Here today, I will give a brief

    introduction to the regulations defined in the Anti-monopoly Law of the People's Republic of China on monopolistic agreements, abusing dominant market positions

    and administrative powers to eliminate or restrict competition as well as the efforts

    we are making now and the schedules for the next stage in combination with the September 1-2, 2009, Kazan, Russian Federation 1

    SAIC’s anti-monopoly responsibilities.

    1. Regulations Defined in the Anti-monopoly Law of the People's Republic

    of China on Monopolistic Agreements

    There is a special chapter in the Anti-monopoly Law of the People's Republic of

    China which defines regulations on monopolistic agreements, including definitions

    of monopolistic agreement, forms of monopolistic agreement, exemption of

    monopolistic agreement, and regulations on monopolistic agreements implemented

    by industrial associations. In addition, leniency policies have been defined in the

    regulations about legal liabilities.

In terms of forms of monopolistic agreements, the Anti-monopoly Law of the

    People's Republic of China has adopted the mode of enumeration plus catch-all

    regulations. Five typical forms have been enumerated for horizontal monopolistic

    agreements. They are fixing or changing prices of commodities, limiting the output

    or sales of commodities, dividing the sales market or the raw material procurement

    market, restricting the purchase of new technology or new facilities or the

    development of new technology or new products, and making boycott transactions.

    Two typical forms have been enumerated for vertical monopolistic agreements,

    fixing the price of commodities for resale to a third party and restricting the

    minimum price of commodities for resale to a third party. The catch-all regulations

    refer to “the other monopolistic agreements determined by the Anti-monopoly

    Authority under the State Council”. The main purpose to define catch-all

    regulations on monopolistic agreements is to make the law better satisfy practical

    needs. Due to the complexity of real economic activities, it is hard to cover all

    forms of monopolistic agreements in the law. With the catch-all regulations,

    authorized anti-monopoly authority is allowed to identify other agreements beyond

    those enumerated in the law.

Proceeding from actual conditions and using internationally common practices for

    reference, the Anti-monopoly Law of the People's Republic of China has defined

    exemption system. Exemption can be adopted in following six circumstances: (1)

    for the purpose of improving technologies, researching and developing new

    products; (2) for the purpose of upgrading product quality, reducing cost,

    improving efficiency, unifying product specifications or standards, or carrying out

    professional labor division; (3) for the purpose of enhancing operational efficiency

    and reinforcing the competitiveness of small and medium-sized business

    operators; (4) for the purpose of achieving public interests such as conserving

    energy, protecting the environment and relieving the victims of a disaster and so

    on; (5) for the purpose of mitigating serious decrease in sales volume or obviously

    excessive production during economic recessions; (6) for the purpose of

    safeguarding the justifiable interests in the foreign trade or foreign economic

    cooperation. Meanwhile, the business operators enjoying exemption must

    additionally prove that the agreement can enable consumers to share the interests September 1-2, 2009, Kazan, Russian Federation 2 derived from the agreement, and will not severely restrict the competition in

    relevant market.

Generally speaking, the Anti-monopoly Law of the People's Republic of China has

    defined harsh terms on exemption of monopolistic agreements. Business operators are undertaking strong responsibility with respect to providing evidence. For example, it is hard for conducts of fixing prices, limiting output and dividing market, which are internationally recognized as core cartel, to meet the terms on exemption.

    2. Regulations Defined in the Anti-monopoly Law of the People's Republic

    of China on Abuse of Dominant Market Position

    The Anti-monopoly Law of the People's Republic of China is consistent with the

    internationally common practices. It is not against that business operators hold dominant market status, but prohibits the abuse of the market dominance to eliminate or restrict competition.

    Proceeding from actual conditions and using internationally common practices for reference, the Anti-monopoly Law of the People's Republic of China has defined

    six kinds of behaviors involving abuse of market dominance. The Anti-monopoly Authority under the State Council is authorized to determine the other behaviors involving abuse of market dominance beyond those defined in the law. The six kinds of typical behaviors include: (1) selling commodities at unfairly high prices or buying commodities at unfairly low prices; (2) selling products at prices below cost without any justifiable cause; (3) refusing to trade with a trading party without any justifiable cause; (4) requiring a trading party to trade exclusively with itself or trade exclusively with a designated business operator(s) without any justifiable cause; (5) tying products or imposing unreasonable trading conditions at the time of trading without any justifiable cause; (6) applying dissimilar prices or other transaction terms to counterparties with equal standing without any justifiable cause.

    Dominant market position is the precondition and basis to determine whether behaviors of a business operator involve abuse of its market dominance or not. Therefore, the Anti-monopoly Law of the People's Republic of China has defined

    the factors as the basis to identify the behaviors involving abuse of market dominance, including (1) the market share of a business operator in relevant market, and the competition situation of the relevant market; (2) the capacity of a business operator to control the sales markets or the raw material procurement market; (3) the financial and technical conditions of the business operator; (4) the degree of dependence of other business operators upon of the business operator in transactions; (5) the degree of difficulty for other business operators to enter the relevant market; and (6) other factors related to determine a dominant market position of the said business operator. Meanwhile, with practices of other countries September 1-2, 2009, Kazan, Russian Federation 3 as reference, where a business operator is under any of the following circumstances,

    it may be assumed to be have a dominant market position: (1) the relevant market

share of a business operator accounts for1/2 or above in the relevant market; (2)

    the joint relevant market share of two business operators accounts for 2/3 or above;

    or (3) the joint relevant market share of three business operators accounts for 3/4 or

    above. Market share is an important factor to determine whether a business

    operator holds dominant market position, but it is not the absolute criterion. De

    minimis principle has been clearly defined in the Anti-monopoly Law of the

    People's Republic of China. A business operator with a market share of less than 1/10 shall not be presumed as having a dominant market position even if they fall

    within the scope of second or third item. In addition, “where a business operator

    who has been presumed to have a dominant market position can otherwise prove

    that they do not have a dominant market, it shall not be determined as having a

    dominant market position”.

     3. Regulations Defined in the Anti-monopoly Law of the People's Republic

    of China on Abusing Administrative Power to Eliminate or Restrict

    Competition

    Abuse of administrative power to eliminate or restrict competition is a special

    problem facing China during the economic transition period. From the perspective

    of theory and international common practices, the problem is not primarily

    addressed by anti-monopoly laws. Experiences of some countries undergoing

    economic transition also show that the problem can not be fundamentally solved

    by anti-monopoly laws. Abuse of administrative power to eliminate or restrict

    competition distorts competition mechanism and impairs legal rights and interests

    of business operators and consumers, generating same harms as economic

    monopoly. Therefore, there is a special chapter in the Anti-monopoly Law of the

    People's Republic of China on abuse of administrative power to eliminate or restrict competition for the purpose of protecting the competition among major

    market players and standardizing economic order in the market. Any

    administrative organ or organization empowered by a law or administrative

    regulation to administer public affairs may not abuse its administrative power,

    restrict or restrict competition.

    4. SAICs Anti-Monopoly efforts and Schedules for the Next Stage

    As the administrative enforcement department of the Anti-monopoly Law of the

    People's Republic of China, the SAIC undertakes the enforcement tasks involving monopolistic agreements, abuse of dominant market position and abuse of

    administrative power to eliminate or restrict competition (except behaviors

    involving price monopoly). In line with its anti-monopoly functions, the SAIC has

    made a series of efforts to define supporting guidelines and regulations for the Law,

    carry out publicity and training programs for the Law, enhance exchange and

    cooperation on international anti-monopoly, and investigate anti-monopoly cases

    since the Anti-monopoly Law of the People's Republic of China went effect last September 1-2, 2009, Kazan, Russian Federation 4 August.

In terms of developing supporting regulations, the SAIC issued the Regulation on

    the Industry and Commerce Administration Procedures for the Investigation and

    Prosecution of Cases involving Monopoly Agreements and Abuse of Market

    Dominance and the Regulation on the Industry and Commerce Administration

    Procedures for the Prevention of the Abuse of Administrative Power to Eliminate

    or Restrict Competition on May 26, 2009. The Regulation on the Industry and Commerce Administration Procedures for the Investigation and Prosecution of

    Cases involving Monopoly Agreements and Abuse of Market Dominance has

    clearly defined the regulations on anti-monopoly enforcement of authorized

    relevant departments at provincial level. The SAIC takes the charge in the anti-

    monopoly enforcement on monopolistic agreements and abuse of market

    dominance. In line with practical needs, the authority can authorize provincial

    industry and commerce administrations to take charge of anti-monopoly

    enforcement on monopolistic agreements and abuse of market dominance. The

    authorization shall be delegated on a case by case basis. Clear regulations have

    been defined on acceptation, registration and investigation of cases. For example,

    the SAIC may undertake investigation of cases which it earmarks for investigation

    and prosecution under its own auspices, or it may entrust investigation and

    prosecution to relevant provinciallevel industry and commerce administrations, or

    city-level industry and commerce administrations of cities specifically designated

    in the State Plan, or vice-provincial level industry and commerce administrations.

    Provinciallevel industry and commerce administrations shall carry out

    investigations and associated work in accordance with this regulation for the cases

    which it is authorized to undertake investigation and prosecution. More details

    have been provided for the business operator promise system defined in the Anti-

    monopoly Law of the People's Republic of China, further defining implementation procedures for the system. It is also regulated that leniency policies are not

    applicable for organizers of monopolistic agreements. The Regulation on the

    Industry and Commerce Administration Procedures for the Prevention of the Abuse

    of Administrative Power to Eliminate or Restrict Competition has defined clear

    regulations on prohibiting abuse of administrative power to eliminate or restrict

    competition. As for the abuse of administrative power to eliminate or restrict

    competition committed by those administrative organs or instrumentalities

    authorized by laws and regulations to manage public affairs, the SAIC and

    provincial industry and commerce administrations shall suggest appropriate action

    to higher-level organs, ensuring that such suggestions falling within the ambit of

    relevant laws. In relation to business operators engaging in monopolistic activities

    under the pretext that so doing is "enforced", "required" or "authorized" by the

    administrative organs or instrumentalities authorized by laws and regulations to

    manage public affairs, punishment shall be imposed on them in line with the Anti-

    monopoly Law of the People's Republic of China.

     September 1-2, 2009, Kazan, Russian Federation 5 In terms of developing supporting guidelines for the Anti-monopoly Law of the

    People's Republic of China, the SAIC has drafted four guidelines, namely, the

    Regulation on Prohibiting Monopoly Agreements, the Regulation on Prohibiting Abuse of Market Dominance, the Regulation on Prohibiting Abuse of

    Administrative Power to Eliminate or Restrict Competition, and the Guideline on Anti-Monopoly Enforcement in the Field of Intellectual Property Right after thorough investigation and argumentation. More details have been provided for

    regulations on monopolistic agreements, abuse of market dominance, abuse of

    administrative power to eliminate or restrict competition, and abuse of abuse of

    intellectual property rights to eliminate or restrict competition defined in the Anti-monopoly Law of the People's Republic of China. At present, the SAIC is scheduled to revise the four guidelines for further improvements. I am convinced

    that issuance of the four guidelines will be helpful for all walks of life to better

    understand the Anti-monopoly Law of the People's Republic of China. Meanwhile, they will further strengthen the justness and transparency of enforcement.

    In the near future, we will work on following aspects: (1) speeding up

    development of the supporting guidelines for the Anti-monopoly Law of the People's Republic of China to make them enacted as soon as possible; (2)

    enhancing training on anti-monopoly enforcement through inviting related

    personnel from other countries and going globally to make the personnel engaging

    in anti-monopoly enforcement better understand relevant laws and improve their

    qualification and capabilities in enforcement; (3) undertaking administrative anti-

    monopoly enforcement as well as investigating and prosecuting various

    monopolistic behaviors; (4) enhancing the publicity efforts for the Anti-monopoly Law of the People's Republic of China, giving publicity to anti-monopoly

    knowledge via various media, raising the competition awareness of the whole

    society, and creating a sound environment for anti-monopoly enforcement; (5)

    further enhancing exchange and cooperation with competent competition

    authorities of other countries and relevant international organizations, and

    establishing a sound long-term and effective cooperation mechanism.

Thanks a lot!

     September 1-2, 2009, Kazan, Russian Federation 6

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