Governing China's Administrative Monopolies Under the Anti-Monopoly Law: A Ten-Year Review (2008-2018) and Beyond

Abstract

The enforcement of China’s Anti-Monopoly Law (AML) against administrative monopolies has made some achievements in the last decade. However, prominent shortcomings, including the limited concluded cases, the inadequate expertise of competition agencies and some courts, and the ill-designed Chapter 5 of AML, still exist. Three major reasons may explain such shortcomings. First, the legislature adopted a very narrow scope of administrative monopolies. Second, the legislature introduced an improper “standard of legitimacy” into Chapter 5. Third, the legislature overstated the Chinese characteristics of these distortions, and truthfully (but improperly) authorized other administrative bodies, rather than competition agencies, to rectify them. This paper, built on China’s and international experience and the fundamental understanding of competition mechanism, first takes a strictly logical approach to devise a comprehensive solution to enhance the effectiveness of AML enforcement. This feasible solution is consisted of four interconnected pillars. Firstly, it advises the State Council to timely upgrade the Fair Competition Review System to grant larger policy review power to competition agencies. Secondly, it proposes that competition agencies need to adopt new tools to facilitate a more vigorous competition advocacy program. Thirdly, it urges the competition agencies and courts to strengthen enforcement and only accept limited government conduct defenses. It advocates that the legislature has to confirm that AML enjoys supremacy among all laws and regulations, except the Constitution Law, in regard to the regulation of the unreasonable government distortions of competition. Finally, it appeals to the legislature for partially or entirely authorizing competition agencies to litigate such government conducts in China’s intermediate courts.