| China adopts anti-monopoly law |
BEIJING, Aug. 30 (Xinhua) -- Foreign acquisitions of Chinese companies will be subject to stringent new checks intended to protect China's economic security under a new competition law passed on Thursday.
After 13 years on the drawing board, the Anti-Monopoly Law passed by the Standing Committee of the National People's Congress (NPC), China's top legislature, will come into effect on Aug. 1, 2008.
"As well as anti-monopoly checks stipulated by this law, foreign mergers with and acquisitions of domestic companies or foreign capital investing in domestic companies' operations in other forms should go through national security checks according to relevant laws and regulations if the cases are related to the issue," it reads.
Foreign companies have begun to acquire major state-owned enterprises or companies with famous brands, arousing concerns about economic security.
China has already established a basic national security check system for foreign mergers and acquisitions.
Foreign investors should apply for approval from the Ministry of Commerce (MOC) if their purchases of domestic companies affect national economic security, take place in key sectors or cause a transfer of the operating rights of famous domestic brands, according to a regulation issued by the MOC along with five other government organs last year.
Before that, only mergers and acquisitions worth more than 100 million U.S. dollars needed MOC checks and approvals.
The government will strengthen examination and supervision of foreign merger operations affecting major enterprises in sensitive sectors and issue policies to improve the system for admitting foreign-invested industries by the end of 2010, according to the National Development and Reform Commission (NDRC).
In December last year, the State Council, China's cabinet, released a list of strategic sectors in which the state would retain control.
The list included military-related manufacturing, power production and grids, petroleum, gas and petrochemicals, telecom manufacturing, coal, civil aviation and shipping.
The law, with eight chapters and 57 provisions, also bans monopolistic arrangements, such as cartels and other forms of collusion, and provides for the investigation and prosecution of monopolistic practices, while protecting monopolistic arrangements that promote innovation and technological advancement.
It prohibits monopolies from using their dominant status in the market to curb competition, fix prices, enforce package sales, and refuse or enforce trade.
All companies seeking mergers or acquisitions would have to notify the anti-monopoly law enforcement departments if the actions meet the standard set by the State Council.
The law states that "an anti-monopoly commission will be set up under the State Council to deal with anti-monopoly issues." The commission will appoint departments to undertake enforcement.
The law also stipulates "officials of the law enforcement departments will be prosecuted if they leak confidential trade information acquired during investigation", to protect the interest of companies.
The law stipulates that "government departments should not take advantage of their power to curb competition", and prohibits governments from appointing producers or suppliers for unit or individual procurement. It also bans impediments to free commodity distribution, and prohibits government tender requirements that discriminate against firms from other areas.
China joins more than 80 countries in adopting an anti-monopoly law. Drafting of the law began in 1994.
Experts said China's socialist market economy had matured in the last decade, and the current market circumstances made the introduction of an anti-monopoly law imperative.
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