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UPDATED: November 7, 2009 NO. 45 NOVEMBER 12, 2009
Busting the Monopolies
China's Anti-Monopoly Law has been in effect for more than one year, but court, legislative and law enforcement efforts are still needed to clear up unfair practices


JIANG WENYAO OIL MAGNATE: Sinopec was sued for abusing its dominant market position 

China's Anti-Monopoly Law has been in effect for more than one year, but court, legislative and law enforcement efforts are still needed to clear up unfair practices

Despite the historic opening of China's first anti-monopoly case, the court proceedings have been mired in delays, having been postponed twice before their commencement in June, with a final court decision still pending.

Court proceedings for the case, Li Fangping vs. Beijing Branch of China Netcom Group Corp., commenced on June 25, 2009, at the Beijing Second Intermediate People's Court. The case was filed on August 1, 2008, the day China's Anti-Monopoly Law took effect. More significantly, it is the only anti-monopoly case the court accepted among all those filed throughout China that same day.

Li Fangping, a lawyer in Beijing, brought legal action against China Netcom Group Corp., which was incorporated into China United Network Communications Group Co. Ltd. on January 31, 2009.

Slim chance for results

After accepting the case in September 2008, the court issued a summons and established a trial date for April 21, 2009, only to postpone the court session on April 20. A trial date was not reestablished until mid-June when the court telephoned the plaintiff's lawyer, Li Xiongbing, saying the court session would be held on June 24. The case would not be heard publicly because it "involves trade secrets."

The court date would again be changed to June 25 when Li Fangping made a last minute phone call to inquire about written materials for the case from the court.

Since then, Li Fangping has awaited a judgement, as the court explains that "the case is of great significance and needs prudent consideration."

The case against China Netcom was not the first Li Fangping filed—the other was not accepted by the court. On January 4, 2008, Li Fangping sued Sinopec Beijing Oil Products Co. at the Haidian District People's Court of Beijing for abuse of a dominant market position. Although it received all proper documentation, the court rejected the case, said Li Fangping. Repeated inquiries resulted in few answers, as the court stated that it was discussing the matter but would not provide clear answers.

Filing a motion of complaint yielded no results, the plaintiff's lawyer said. Appealing to a higher court saw a similar lack of action while Li Fangping awaited a response.

According to a local newspaper report, other anti-monopoly cases, involving companies like China Mobile Communications Corp., baidu.com and Shanda Interactive Entertainment Ltd., have hit similar road blocks, as the courts receiving the motions of complaint have been prudent in accepting and hearing the cases. And like the case of Li Fangping vs. Beijing Branch of China Netcom Group Corp., these cases hang in limbo awaiting a court response.

Major problems

Huang Yong, Dean of the Economic Law Department at the University of International Business and Economics, said that although China's Anti-Monopoly Law has basically systematic rules and the law enforcement mechanism has been operational, more efforts should be made to perfect the law and analyze law enforcement. Six major aspects of the law need to be given priority, Huang added.

Implementation of the Anti-Monopoly Law offers uniform guidance to laws on market order supervision, but the task of coordinating different laws is still complicated. For example, if the Anti-Unfair Competition Law is amended, procedures on limiting competition would be eliminated and punishments would be uniform to the related requirements of the Anti-Monopoly Law.

In China, several different departments enforce the Anti-Monopoly Law. Such a law enforcement mechanism, affected by traditional Chinese methods, also can be deemed innovative. But however original the mechanism may be, the coordinated efforts of the multiple law enforcement authorities will eventually lead to varying inter-departmental costs.

For the Anti-Monopoly Law to be successful, supervision on market competition will need to be established. China's already powerful set of industrial laws and supervisors may tie down the process of unifying supervision in the industrial sector.

But law enforcement and a unified industrial system are not the only factors the Anti-Monopoly Law needs—a self-help remedy and judicial litigation guarantee will be necessary as well. Improvements in identifying substantive rules, formulating relative judicial interpretations, unifying technical standards, as well as procedural issues such as jurisdiction, evidence collection and litigation mechanism, will need to be made to the court system.

In the chapter of general provisions for the Anti-Monopoly Law, special but vague stipulations on macro-control can be found involving the law's application to key industries and state-owned enterprises. Moreover, law enforcement authorities will be faced with the dilemma of choosing between efficiency or stability when facing economic crisis.

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