Jenny Zhang, Attorney at Law, Lawyer, Law firm in Dalian, China

By Tim Burroughs April 8th, 2009

What with all the nationalism-infused shenanigans of Coca-Cola’s failed bid for juice maker Huiyuan, it seems somewhat encouraging that China’s Anti-monopoly Law is being used in the interests of grass-roots consumer activism. A Beijing-based lawyer named Zhou Ze is taking the fight to China Mobile, having seen his case against the telecom behemoth – which he claims has abused its dominant market position by charging subscribers different fees for similar services – accepted by Dongcheng District Court last week.

Good for Zhou. After all, isn’t this the kind of social justice that the Anti-monopoly Law was always supposed to deliver? Back in the summer of 2007, there was much talk about the plight of China’s instant-noodle lovers (no small group) who had just been hit by across-the-board price hikes of around 20%. Their budget snack was becoming less budget, and they complained. Fortunately, the National Development and Reform Commission was listening. An investigation found that members of the China chapter of the World Instant Noodle Association were illegally colluding with one another to fix prices. The noodle makers were punished and we were told to expect more victories for consumer activism once the Anti-monopoly Law was in place.

While China Mobile undoubtedly has a dominant market position, it remains to be seen whether the company is abusing it, or whether the judicial authorities would really want to penalize a large state-owned enterprise. Needless to say, there is an escape route: State-owned firms with administrative monopolies in industries that “implicate national economic vitality and security” are not to be touched by investigators. On issues of market domination – in an economy still making the transition from state to private ownership – China will take time to find the right balance.

Another drama waiting to be played out is how foreign firms hold up against accusations of abusing dominant market positions in China. When the Anti-monopoly Law arrived, there was also much talk about the likelihood of firms such as Microsoft coming under investigation. Lawyers said they knew of foreign companies being targeted, although we have yet to see concrete results. It’s not unreasonable to suggest that a consumer lawsuit could be a useful tool in efforts to restrict foreign access to the China market, or even just as a money-spinning venture by plaintiffs who have seen Western firms grow rich in China on the strength of their intellectual property. Perhaps it’s not so easy to escape nationalist leanings after all.

（source: Chinaeconomicreview.com)

China‘s Ministry of Commerce (MOC) Thursday denied its refusal to approve Coca-Cola’s acquisition of Huiyuan Juice Group was protectionist.  

MOC spokesman Yao Jian said the decision would have no effect on China’s policy in accepting foreign investment.

Yao said the ministry made the decision based “on sufficient investigation and research, on the basis of facts, and strictly inline with the country’s anti-monopoly law.”

He said countries worldwide commonly reviewed acquisitions under anti-monopoly laws, and China was no exception. 

 “The purpose of the examination is to maintain market competition, protect consumers and safeguard the public interest,” he said.Foreign Ministry spokesman Qin Gang echoed Yao’s comments, saying the rejection of the bid was in no way protectionism.

 The government would continue to accept foreign investment, enhance opening up and provide foreign investors with a good investment environment.

“Products of the Coca-Cola company are available anywhere in China’s market. The country’s market is fully open to foreign companies,” said Qin.

Mei Xinyu, a trade expert with the MOC, said the rejection didn’t indicate that the country had closed the door to foreign investment, neither did it equal protectionism.

Coca-Cola offered to buy Huiyuan, the nation’s largest juice maker, for 17.92 billion Kong Kong dollars (2.3 billion U.S. dollars) in cash on Sept. 3. The MOC announced on Wednesday that the bid failed to meet requirements set out in the anti-monopoly law.

Hours after the decision was announced, Coca-Cola Company and Huiyuan said that they respected the decision.

Galaxy Securities analyst Zuo Xiaolei said the failed acquisition would not have any “substantial effect” on Huiyuan, because the company’s domestic market had not changed. 

Wang Zhile, a researcher with the MOC, said the failed bid might have a short-term negative effect on Huiyuan but the company would still play an important role in the country’s pure juice market.

“However, the company should reconsider its development in the domestic market, so that it will grow better in the long run,” he said.

Source:Xinhua

China’s first anti-monopoly law finally came into effect yesterday. It takes too long for it to come into birth(15 years) and since China is still in the change into the market economy, this law attracts a lot of attention, espcially from some foreign investors.

The new law includes eight chapters and fifty-eight articles, including General Principles, Monopoly Agreement, Abuse of Dominant Market Position, Concentration of businesses, Eliminating and Restricting Compitition by Abuse of Administritive Power, Investigation of the Suspected Monoploly Conducts, Legal libilities and Supplymentary Articles.

Someone said, “The new anti-monopoly law establishes a basic framework to build a fair, uniform and national competition law system that benefits consumers by recognising and preserving incentives to compete”. Since there exist a lot of state-owned enterprises and state monoply in China, it is high time for it to influence on such industries as petroleum, telecommunication.

For foreign investors, the decision-making process will become more easy because this law would help to reduce risks in investment. As reads in the law that “As well as anti-monopoly checks stipulated by this law, foreign mergers with, or acquisitions of, domestic companies or foreign capital investing in domestic companies’ operations in other forms should go through national security checks according to relevant laws and regulations”, when foreign investors plan to aquire major State-owned enterprises or companies with famous brands, they shall firstly go through the anti-monoply check provided here.

In Chapter Five, the law also stipulates that “government departments should not take advantage of their power to curb competition”, and prohibits governments from appointing producers or suppliers for unit or individual procurement. I like this part very much, because it expressly prohibits the local protection in government procrement. And that also means more opportunities for multinationals.

One big concern for myself is that the law does not stipulate a definite enforcement party. It only mentions an anti-monopoly committee directly under the state council but did not say who would enforce it. According to CCTV, three government bodies–the Ministry of Commerce, the National Development and Reform Commission and the State Administration for Industry and Commerce–will enforce the law. But for any case of monopoly, it must be important and complex. If there is no a professional law enforcement body, I am afraid the period of hearing and judgement would be prolonged and delayed for the reasons of shifting responsibilites or contending powers.