StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

What are the main constraints for the effective enforcement of the antimonopoly law in china - Essay Example

Cite this document
Summary
Some think it applies to all businesses or organizations in dealings of providing goods and services, while others think the complexity of the law has something to enhance leniency in state owned enterprises. …
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER94.6% of users find it useful
What are the main constraints for the effective enforcement of the antimonopoly law in china
Read Text Preview

Extract of sample "What are the main constraints for the effective enforcement of the antimonopoly law in china"

? WHAT ARE THE MAIN CONSTRAINTS FOR THE EFFECTIVE ENFORCEMENT OF THE ANTIMONOPOLY LAW IN CHINA? by of the of the Professor Name of the School City, State January 18, 2013 Introduction Antimonopoly law in China was introduced following the restriction of competition mostly in sales and commercial activities, affecting the fair distribution of resources among the people of China, and its territories. Some businesses, whether private or state owned could monopolize the market activities, from which most small organizations and individual businesses felt strained, and could eventually close the businesses. Having the price of products and services dictated by a specific organization made them monopolize the markets and their shares, such that small and medium enterprises felt inferior, most of them operating under influence of bigger companies and with little as benefits. The Antimonopoly law began operating in early August 2008, making China a vital competition law jurisdiction, for international and domestic businesses, or companies with running activities in China’s territory. Its three broad rules are based on prohibiting abuse of dominant market positions and restrictive agreements, mergers rules preventing mergers or joint ventures that restrict competition as well as control M&A activities, and rules forbidding abuse of administrative powers that end up in competition restriction (Rose, 2012). The application of the law is viewed differently among the people of China. Some think it applies to all businesses or organizations in dealings of providing goods and services, while others think the complexity of the law has something to enhance leniency in state owned enterprises. However, even after its initiation, several factors have dominated to restrict full enforcement of the law. They include limited transparency, concentration, influence from government involvement, outdated economic planning, unreliable market infrastructure, unnecessary enforcement of law, insider control, and general resistance. So far, the Anti Monopoly Law (AML) is being enforced by three bodies; MOFCOM, NDRC and SAIC, to ensure fair competition, safeguard social public and consumer interest, boost economic efficiency, and restrain monopolistic behavior. The enforcement agencies continue to experience challenges and problems in the law enforcement practice, limiting effective application and acceptance of the AML by the people. 1. Limited Transparency Over the years, the enforcement agencies have been handling many cases to do with monopolistic agreements, merger control, and price and non price related cases for the companies and businesses operating and showing interest to practice within China. The NDRC and SAIC have faced accusations of hiding investigation results, but MOFCOM has so far been transparent. NDRC and SAIC, which are regulators of anti monopoly law of China have limited transparency to a certain level, raising the need for confidentiality of certain information, with respect to the companies after investigation. For example, the TravelSky, which is a state owned company, was alleged to change its discount policies back in 2009, influencing other airlines in its network to raise airfares that resulted in country wide complaints The NDRC was the enforcement agency responsible for conducting investigations in the case, but the consumers of the airline service and the public never got to hear the results of the investigation (Wang, 2011). The controversial issue remains as to why some investigation results of certain companies are disclosed, while those of others never get to be released to the public. Again, most of the cases brought forward are convictions of private enterprises, in areas of cartels and abuse of dominance. Does it mean that the law breakers are private organizations and businesses? Surely, the state owned enterprises (SOE) are no exception, but too many issues to do with them are being ignored, or leniency is being applied to them as a favor. The structure of ownership (in this case the SOEs) has been used to influence law enforcement negatively, such that the public is slowly loosing trust in the AML and the enforcement agencies. As much as the enforcement agencies have to be recommended for their great effort in securing domestic positions in the competitive market, the nature of applying effort in investigation, but reducing it in publishing the information, as well as limited or lack of detailed provisions on the procedure taken in various issues, generally make their enforcement actions to be surrounded with mysteries. This is because the society and the affected parties lack transparency in their handling of cases, which means they end up never contended with what was made available. Another related case involved MOFCOM in the acquisition of China Netcom by China Unicom, where the transaction went approved, even if MOFCOM agency was never notified of the 2 SOE companies merge in accordance to AML merge control (Wang, 2011). What the China society needs is a more open system to put clarity on fines, mysteries, procedures followed and legal proceedings in AML application, and the case dealings. 2. Influence from Government Involvement Enforcement effort has been associated with heavy handed government influence, which has been accused to limit the fairness in application of the law. The government agencies such as the municipal councils and most of SOEs could have established informal relations, that may be used to bend the law, for them to achieve what they intend. With the government being involved both in the rule making and as a market player, certain activities in law making or amendment could be as a result of vested interest of the administration, than public general benefit from competition law. It then would be difficult for the organizations and society to apply the law effectively, while still having the government arms top in violation. According to Chang et al, back in 2012, administrative monopoly was experienced through the Heyuan municipal government in the East Guangdong province, after the municipal government violated the AML by its action of preventing sales and promotion of GPS vehicle tracking systems within the region; a complaint was filed through the Guangdong AIC by the GPS operators, against the Heyuan municipal that led to the rectification of Heyuan government abuse of conduct (2013). No doubt that the government agencies, SOEs and high ranking government officials influence each other with regard to law formulation, application, and its enforcement. 3. Concentration It has been a rather controversial issue, serving to block certain companies from fully operating in China, in this age of global competition. Based on the procedure being employed to define companies’ concentration in China, MOFCOM has been able to clear several organizations mergers, either conditionally or unconditionally, if not been subject to rejection. China is now the global subject due to its antimonopoly law, which many would argue to be an act of protectionalism against international competition. Some cases dealing with concentration link with limited transparency and influence issues, preventing or restricting their operations in business. At a time that China’s government is encouraging mergers and acquisition, so as to increase investment and enhance economic development, potential companies like coca cola have been blocked from certain activities in fear of high concentration in the beverage industry. Coca cola is not the only company with high concentration in China, other domestic and foreign organizations exhibit this, yet have been cleared, while coca cola proposal to purchase China Huiyuan Juice Group limited as a merger process was rejected by MOFCOM (Healey, 2010). The perception of many is that the foreign participants in business practice could cause unfairness through influence in pricing and transactions, and impossible entry in the industry. Suppose the coca cola proposal was approved, both the two merging parties had bigger influence in consideration to their brand and market share, meaning once the merge was cleared, expected impact would be Coca cola extending its dominance in carbonated soft drink markets, to fruit juice market. Truly, concentration leads to obstruction of survival for small and even medium enterprises, limiting competition and to an extent, innovation and investment in the lesser shareholding companies in such drinks industry. However, more companies have merged and are now holding a large share of the market in their respective industries, compared to coca cola holding 60% concentration in carbonated drinks, Mistubishi Rayon and Lucite merge accounted for 64% concentration in market share, Pfizer and Wyeth merge with a 49.4 % market share double its competitors and Novartis/Alcon merge with 60 % concentration in china respectively in their distinguished industries (Healey, 2010). Although coca cola/ Huiyuan Juice merge was rejected, even after proposing and holding discussions on how they intended to impose conditions to eliminate anti competitiveness, it seems more of a bias since most operating mergers consists of high concentration in the market, even after being determined by MOFCOM and cleared. Their impacts in the long run are no different from the anticipated effect of the coca cola/ Huiyuan merge. It will continue to be one constraint of the effective enforcement of the law, with more controversies to rise in the reasons behind clearance of some mergers and not others. 4. Planning Economy The leadership and most economic activities of China are under transition. Some high ranking officials are still holding on to outdated versions of leadership and power control. The older tycoons tend to be more confident in the administrative ruling, than focusing in the current market competition and its policies (Wang, 2011). From their positions in government and private sectors, they exercise inside control enhancing administrative monopolistic activities that are in line with their industrial policies interest. They contribute to the resistance in effective enforcement of the AML. Together with political and economists’ ideology and limited companies’ law liberation, the attitude of resistance has been passed on to other existing business ownerships, to obstruct the law enforcement. As you would expect, many of these politicians, tycoons, and structural institutions leadership members are key shareholders in most of the affected companies and organizations. Conclusion The law enforcement mechanisms are way ahead in plans of effective implementation of the law. However, all the agencies need proper coordination to eliminate confusion within the society, and enhance transparency in their fair dealings and assessment of companies, to operate in the China market. Proper clarification in merge procedures and notification should be done, with none of the mergers or acquisition by businesses having to skip the evaluation process by the enforcement agencies. Transparency and concentration issues should be addressed, but China’s economic planning should also shift to logical trends, that match up to the current global market structure and standards. Other minor constraints arise from defective market infrastructure and tax enforcement of law. Bibliography Chang, N. H. F., Hai, H., O’Brien, G., and Brown, M., 2013. China Antimonopoly Law. [online] Available at: [Accessed 18 January 2013] Healey, D., 2010. Anti-Monopoly Law and Mergers in China: An Early Report Card on Procedural and Substantive Issues. [online] Available at: http://tsinghuachinalawreview.org/articles/PDF/TCLR_0301_Healey.pdf [Accessed 18 January 2013] Rose, N., 2012. Antimonopoly Law in China. [online] Available at: [Accessed 18 January 2013] Wang, X., 2011. Three Year’s Enforcement of China’s AML and the Rule of Law. [online] Available at: [Accessed 18 January 2013] Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“What are the main constraints for the effective enforcement of the Essay”, n.d.)
What are the main constraints for the effective enforcement of the Essay. Retrieved from https://studentshare.org/law/1466515-what-are-the-main-constraints-for-the-effective
(What Are the Main Constraints for the Effective Enforcement of the Essay)
What Are the Main Constraints for the Effective Enforcement of the Essay. https://studentshare.org/law/1466515-what-are-the-main-constraints-for-the-effective.
“What Are the Main Constraints for the Effective Enforcement of the Essay”, n.d. https://studentshare.org/law/1466515-what-are-the-main-constraints-for-the-effective.
  • Cited: 0 times

CHECK THESE SAMPLES OF What are the main constraints for the effective enforcement of the antimonopoly law in china

Contemporary Chinese Law in Context

Traditional Chinese Laws were practiced in china even during the latter half of twentieth century.... Over time, the legal reforms in china have been results of direct influence of legal systems of developed Western countries.... While some of the existing laws were amended like the Competition law, social law, Property laws, some new laws like Food and Beverages Law, antimonopoly law, etc were introduced.... hellip; All contemporary laws both the existing ones and the newly formed, aims at constructing a ‘capitalist china'....
12 Pages (3000 words) Essay

Law Enforcement U1IP

In relation to the stated principle of “no quality is more indispensable to a policeman than a perfect command of temper; a quiet, determined manner has more effect than violent action”, it can be viewed that the main reason behind implementing the Code of Ethics in the police department is to generate moral awareness within the policemen... law Enforcement U1IP Introduction Sir Robert Peel is often accredited for his nine principles describing the philosophy of developing an efficient, all-equipped and ethically responsible police force....
3 Pages (750 words) Research Paper

Law Enforcement Intelligence

Community Oriented PolicingPolice agencies are responsible for the maintenance of peace and order and the enforcement of laws as well as the prevention of crime and providing other related services.... The author of the following paper under the title 'law Enforcement Intelligence' presents information which plays a central role in modern police organizations ever since the concept of criminal data collection was first introduced sometime in the early 1930s.... Modern police information management was first pioneered through the use and acceptance of the Uniform Crime Report (UCR) by both federal police agencies (such as the Federal Bureau of Investigation) and by local and state police organizations of the United States of America which enabled law enforcement organizations to enhance their crime-fighting strategies based on effective criminal information gathering methods and effective analyst of data....
1 Pages (250 words) Case Study

Law Enforcement and Leadership in Policing Organization

Running Heading: law Enforcement law Enforcement Introduction The organizational management of policing organization is different from the regular management structures we see in multinational companies.... The law Enforcement Formula.... FBI law Enforcement Bulletin, 62(8): 22-26 Gaines, L.... Developing effective leadership in policing: perils, pitfalls, and paths forward....
2 Pages (500 words) Essay

Is One Child Policy in China Effective

An author of this research "Is One Child Policy in china Effective?... investigates the demographic policy implementation in china.... In other words, the essence of the policy is to reduce fertility levels, discourage couples from having many children, and ultimately reduce the general population in china (Wan, 2012).... In this respect, china formulated and subsequently implemented the one-child policy in early 1980s.... A special attention is paid to the family planning practices called one-child policy - the writer examines whether it is effective or not....
4 Pages (1000 words) Essay

Effective Communication as Code Enforcement Officer

the main argument is that effective communication is necessary for all Code Enforcement Officers, as each of the tasks they perform can only be executed effectively when effective communication is involved.... The work of Code enforcement Officers is centred on people, as these officers work with communities to ensure the health, safety and good quality of life of people.... In this paper, each specific role of Code enforcement Officers is tied to effective communication, and it is shown how effective For Code enforcement Officers to learn and practise effective communication in their work, it is recommended that efforts at the personal and organizational level must be shown....
16 Pages (4000 words) Term Paper

The Threats Emerged from the Globalization of Production

Furthermore, the outsourcing can occur among different neighboring countries Mexico and like the United States or china and Hong Kong.... From the paper "The Threats Emerged from the Globalization of Production" it is clear that the integration is not just limited to the exchange of goods and services rather it has extended to interlinked financial markets like the stock market and money market....
25 Pages (6250 words) Research Paper

Law Enforcement

The researcher of this paper highlights that technology has been playing an evidently important role towards the betterment of law enforcement management strategies and information.... The progress of computer technology has resulted in the increase of competition in the different levels of law enforcement agencies.... law enforcement agencies are expected to conduct investigations, utilize the finest technology available in the world.... he law enforcement agencies can acquire information about a crime related issue swiftly if modern technological equipment is used by them....
10 Pages (2500 words) Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us