NEW YORK TIMES

 

China Approves Draft Anti - Monopoly Law

 

By THE ASSOCIATED PRESS

Published: June 8, 2006

 

Filed at 1:52 a.m. ET

 

SHANGHAI, China (AP) -- A draft anti-monopoly law endorsed by China's Cabinet will not be used to target foreign businesses, a senior official said Thursday.

 

The proposed law bans monopolistic agreements, such as price-fixing and other forms of collusion, and provides for investigation and prosecution of monopolistic practices. Foreign business groups have expressed concern that it might be used to restrict or interfere with their investments.

 

Vice Minister of Commerce Ma Xiuhong sought to reassure foreign investors, saying the proposed legislation would not discriminate between domestic and foreign companies.

 

''The anti-trust law does not place any special requirements on foreign-invested enterprises,'' Ma told reporters in Beijing.

 

She defended the law as necessary to protect fair competition and said that drafters had studied anti-monopoly laws in the U.S. and other mature economies as well as in developing countries.

 

The proposal, approved by the State Council on Wednesday, will be submitted to China's legislature for debate.

 

The aim of the law is ''protecting fair competition, preventing and checking monopolistic behavior and maintaining and orderly marketplace,'' the official Xinhua News Agency reported.

 

China began drafting the law in 1994 and a first draft was completed in 2003. But progress was stymied by controversy over how to carry out enforcement, given the prevalence of state-owned monopolies or semi-monopolies in many industries.

 

The State Council judged that existing laws and regulations were out of date and hindering competitiveness, Xinhua said.

 

The draft law was not immediately available. But according to the official newspaper China Daily, it defines ''monopoly'' as a single operator controlling half or more of an industry's overall market share, or two operators colluding to hold two-thirds of total market share or three holding three-quarters.

 

The law also targets regional trade barriers, set up to protect local industries from outside competition, it said.

 

Foreign business groups have expressed concern that the law might be used to restrict their investments or otherwise control their operations in China.

 

The Xinhua report appeared to reinforce those worries.

 

Although the law may help open some markets wider to outside competition, it also would help prevent foreign companies from acquiring ''more and more Chinese firms'' and help safeguard national economic security, it said.

 

It pointed to high concentrations of foreign investments in several major industries, such as electronics, auto and chemical manufacturing.

 

But the China Daily said the law was not specifically intended to target foreign companies.

 

''Monopoly is not an offence in itself. The trouble arises when monopolies wield their dominant status to curb competition,'' it cited Huang Yong, an anti-monopoly consultant at the Ministry of Commerce, as saying.

 

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Associated Press Writer Charles Hutzler in Beijing contributed to this report.