The Slow Boat to Antitrust Law in China: An Examination of New Regulations on Monopoly Pricing

By Peter Neumann and Jackson Guo, Faegre & Benson, Shanghai

On June 18 2003, the newly established PRC State Development and Reform Commission (the SDRC) issued the Suppression of Acts of Price Monopoly Tentative Provisions (the Tentative Provisions), which take effect November 1 2003. According to a press release dated June 30 and posted on the SDRC's website, the Tentative Provisions are declared to be both a "preliminary exploration of antitrust legislation" and a "legal safeguard to promote market price competition". The former is probably a fair statement. But as discussed below, the Tentative Provisions are unlikely to significantly improve the competitive landscape in China.

The Tentative Provisions break little new ground in terms of rule making, leave interpretive and enforcement powers with pricing regulators, fail to create private causes of action and grounds for civil compensation, and generally leave the courts on the sidelines while waiting for an occasional challenge to an administrative decision. What they do accomplish, however, is establishment of a clear tie between dominant market position and abusive and predatory pricing practices; they tacitly acknowledge the potential of industry associations in China to become de facto cartels. Although issuance of the Tentative Provisions is largely a symbolic statement, the Tentative Provisions reinforce the principle that the government and its agencies should not interfere with market pricing (Article 15).