Industry News

US Concern Regarding China's Anti-Monopoly Law

September 10, 2014


    U.S. businesses are concerned about China’s application of the anti-monopoly law (AML), which they claim is singling out foreign companies.  In 2007, China implemented the AML to “prevent and restrain monopolistic conducts, protect fair competition in the market, enhance economic efficiency, safeguard the interests of consumers and social public interest, [and] promote the healthy development of the socialist market economy.”  However, foreign firms claim that they are being investigated, while Chinese domestic firms do not face the same scrutiny concerning matters such as pricing investigations.  

    AML is regulated by the Anti-Monopoly Law Enforcement Authorities (AMEAs), the National Development and Reform Commission (NDRC), the Ministry of Commerce (MOFCOM), and the State Administration for Industry and Commerce (SAIC) in China.  In a report published by the Chamber of Commerce this September, the Chamber wrote, “China’s enforcement of the AML is not yet living up to this ideal.  AML remedies often appear designed to advance industrial policy and boost national champions, AMEAs rely insufficiently on sound economic analysis, intellectual property rights have been curtailed in the name of competition law, and AML enforcement suffers from procedural and due process shortcomings.”  The Chamber continues to express their concern over the “quality and fairness of enforcement” in China through this report.  The Chamber of Commerce stated that China’s actions might infringe World Trade Organization regulations regarding the importation of products.  In the report, the Chamber states, “NDRC’s use of AML investigations to pressure foreign companies to lower the prices of consumer goods could potentially violate Article XI:1 of the GATT 1994, which generally prohibits restrictions on the importation of goods.”  The Chamber compares China’s situation with Argentina, “A WTO panel recently found that an unwritten measure imposed by Argentina requiring foreign companies to limit the volume and/or price of imports violates Article XI:1, and the same reasoning could apply to China as well.”

    Several other US organization are voicing their concerns over AML implementation.  A study by AmCham China, which represents US companies in China, conducted a survey that revealed that 49% of the members believe that foreign business are unfairly targeted.  The chairman of AmCham China stated, “If the investment environment deteriorates too far, important relationships and linkages between China and the rest of the world will be materially damaged.”  The U.S.-China Business Council (USCBC) has also voiced their concerns.  USCBC President John Frisbie stated that 86% of the companies they represent have concerns regarding “competition enforcement activities in China.”  The US Chamber of Commerce has also stated, “China seeks to strengthen companies through the AML and, in apparent disregard of the AML, encourages them to consolidate market power.”  

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