Competition Law Enforcement in China: Between Technocracy and Industrial Policy

By Svetiev, Yane; Wang, Lei | Law and Contemporary Problems, Fall 2016 | Go to article overview

Competition Law Enforcement in China: Between Technocracy and Industrial Policy


Svetiev, Yane, Wang, Lei, Law and Contemporary Problems


I

INTRODUCTION

China is a relative newcomer to competition law. Though many jurisdictions around the world adopted competition laws beginning in the early 1990s, China's Anti-Monopoly Law (AML) was enacted only in 2007. (1) At least three other features distinguish China's experience with competition policy. First, China enacted its competition law as part of a gradual evolution of domestic economic and regulatory policy, rather than as a result of pressure or conditionality from international development and funding bodies, such as the World Bank or the International Monetary Fund, (2) or from mature competition jurisdictions. (3) Second, unlike the laws of some recent adopters, (4) the AML is not a wholesale transplant of a pre-existing template of the competition law and enforcement apparatus of a mature jurisdiction. Although China sought to learn from the legal texts and enforcement experiences of established competition regimes, the AML reflects a more deliberate process of selecting features from different competition policy models (5) and includes a number of rules specifically tailored to the Chinese setting. (6) Finally, unlike with many other transplanted competition laws, (7) the enactment of the AML was not followed by a long period of dormancy whereby the law went unenforced. Instead, even as the AML came into force and in the period thereafter, the responsible authorities issued a steady stream of decisions and have maintained consistent levels of enforcement activity over time. (8)

The relative global importance of the Chinese economy and the number of competition decisions affecting international firms have generated considerable interest both in understanding the reasons for the quick uptake of competition policy, as well as in characterizing and assessing China's emergent competition practice. A number of scholars have examined the legislative process behind the AML in an effort to explain the peculiar Chinese characteristics of the law. (9) The degree of convergence of the AML with common international antitrust rules and best practices has been of particular interest due to the resulting impact on international business compliance. (10) From the enforcement perspective, commentators have assessed Chinese practice by examining the outcomes and reasoning in antitrust decisions, (11) as well as the evolution of the competition regime over its first decade. (12) Though some contributors suggest that AML enforcement is largely in line with international practice, many have also argued that it exhibits a number of country-specific concerns. (13) These include political concerns, such as consolidating decisionmaking powers by the central government vis-a-vis the regions, (14) as well as economic concerns, such as balancing development needs and economic efficiency. (15) Some have even argued that the AML has been abused as a competition instrument, by turning it into a protectionist tool to favor or shield domestic industry or local economic interests. (16)

Mixed reviews notwithstanding, the adoption of competition law in the Chinese context over its first six years may be regarded as an overall success. (17) Such an assessment may seem surprising given the AML's short tenure, as well as China's history of strong state intervention in the economy, its lack of experience with antitrust enforcement, and its gradualist and cautious adoption of competitive market principles. In seeking to provide an account of the reasons for the quick uptake, effectiveness, and success of Chinese competition enforcement, this article starts from the observation that legal transplants are more easily received in settings where there is demand (or need) for the transplanted rules by local actors. (18) Such local demand allows for the transplant to be adapted to local circumstances, problems, and policy needs in the process of reception. (19) The transplant can be adapted through the legislative process, so that local needs are reflected in an exercise of informed choice in selecting the rules. …

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