Post by Sapphire Capital on Jul 25, 2008 21:47:51 GMT 4
Enforcement fear over China Anti-Monopoly Law
24 July 2008
Candice Mak
Investors and counsel are worried about potentially inefficient enforcement and protectionism, after China announced its new Anti-Monopoly Law commission earlier this week.
As expected, the enforcement agency will be an amalgamation of three government regulators: the Ministry of Commerce (Mofcom), the National Development and Reform Commission (NDRC) and the State Administration for Industry and Commerce (SAIC).
Mofcom will oversee merger control filings, the NDRC will handle price monopoly cases, and the SAIC will deal with issues of dominant position and restrictive agreements. Mofcom and the NDRC have distinct and specific portfolios, but what falls under the SAIC's jurisdiction has some market commentators on edge.
Graeme Johnston, Herbert Smith's managing partner in Shanghai warns that there may be "some real risks of a temptation to enforce harshly against foreign companies and lightly against powerful local companies, particularly the state-owned enterprises."
The SAIC is perceived as relatively conservative and protectionist, a view widely held after the agency famously issued a report in 2004 accusing foreign companies of anti-competitive behaviour.
Johnston however also thinks that the SAIC will have to moderate its traditional standing in its new role and realise that it cannot take action against foreign companies without a solid case.
But the new enforcement commission is already being touted as a three-headed dragon by market observers wary of the fragmentation of authority, and there is a feeling that the law's infancy may be marred by messy procedure and unclear guidelines.
There has been a long-standing turf war among the three powerful regulators and getting things done often takes a back seat to bureaucratic warring.
One example of this is the approximately 20 detailed sets of implementing rules that were supposed to be in place before the law takes effect on August 1. Until now only one has been administered in the merger control area.
"The result is that we have a set of very general and vague statutory provisions which businesses can't safely plan their legal and commercial affairs around," said Johnston.
Despite this uneasy outlook, he remains confident that the new enforcement agency could succeed under strong leadership.
"It may be that the chairman of the supervisory commission will be tough enough to actually bang heads together and tell everyone to stay in well-defined boxes and not to act inconsistently. In that case, it could work," he said.
24 July 2008
Candice Mak
Investors and counsel are worried about potentially inefficient enforcement and protectionism, after China announced its new Anti-Monopoly Law commission earlier this week.
As expected, the enforcement agency will be an amalgamation of three government regulators: the Ministry of Commerce (Mofcom), the National Development and Reform Commission (NDRC) and the State Administration for Industry and Commerce (SAIC).
Mofcom will oversee merger control filings, the NDRC will handle price monopoly cases, and the SAIC will deal with issues of dominant position and restrictive agreements. Mofcom and the NDRC have distinct and specific portfolios, but what falls under the SAIC's jurisdiction has some market commentators on edge.
Graeme Johnston, Herbert Smith's managing partner in Shanghai warns that there may be "some real risks of a temptation to enforce harshly against foreign companies and lightly against powerful local companies, particularly the state-owned enterprises."
The SAIC is perceived as relatively conservative and protectionist, a view widely held after the agency famously issued a report in 2004 accusing foreign companies of anti-competitive behaviour.
Johnston however also thinks that the SAIC will have to moderate its traditional standing in its new role and realise that it cannot take action against foreign companies without a solid case.
But the new enforcement commission is already being touted as a three-headed dragon by market observers wary of the fragmentation of authority, and there is a feeling that the law's infancy may be marred by messy procedure and unclear guidelines.
There has been a long-standing turf war among the three powerful regulators and getting things done often takes a back seat to bureaucratic warring.
One example of this is the approximately 20 detailed sets of implementing rules that were supposed to be in place before the law takes effect on August 1. Until now only one has been administered in the merger control area.
"The result is that we have a set of very general and vague statutory provisions which businesses can't safely plan their legal and commercial affairs around," said Johnston.
Despite this uneasy outlook, he remains confident that the new enforcement agency could succeed under strong leadership.
"It may be that the chairman of the supervisory commission will be tough enough to actually bang heads together and tell everyone to stay in well-defined boxes and not to act inconsistently. In that case, it could work," he said.