Monday, August 4, 2008

China’s Anti-Monopoly Law

China’s new Anti-Monopoly Law took effect on August 1, 2008.

Financial Times, in a news report published last week (July 28, 2008), has a brief comparison between the Indian and Chinese positions on antitrust. The report observes:

“Tough antitrust laws that take effect in China this week and India later this year could delay or thwart high-profile cross-border mergers and acquisitions, lawyers and business executives have warned.

From [August 1, 2008], companies will have to notify Chinese enforcement agencies about any planned M&A that meets designated thresholds for filings – then await clearance before completing the deal.

China and India are implementing regimes based on the European Union model, covering anti-competitive agreements, abuses of dominance and merger control – with the potential effect on M&A causing concern among multinational companies.

Lawyers and business executives believe China and India’s thresholds for merger filings are too low, and likely to ensnare global deals that will have little effect on competition locally. They also fear enforcement agencies in each country will lack the resources and expertise to deal quickly with complex merger cases.”
Commentators on Chinese law are lamenting about the lack of adequate guidance and resources in implementing the new complex law. See China Law Blog and Chinese Law Prof Blog.

However, an interesting comment has been made on China Hearsay blog as follows:

“Yes, I’m aware of all the breathless press reports on the looming Anti-monopoly Law. I’ve read several articles, including this one from the FT.

Why no blogging? Essentially, there is nothing to blog about here. The law was passed some time ago, we have no implementing regulations (i.e. no regulatory guidance), and obviously we have no cases yet to ponder over and try to determine what position the government will take.”
There appears to be a great deal of similarity (at least at a general level) in the development of competition laws in India and China – the agonizingly slow pace of reforms. In both cases, new laws on competition (or anti-monopoly) have been passed a while ago, but took time to be given effect to, and would perhaps take a lot more time in future to be meaningfully implemented.