China's first anti-monopoly law to be voted 2007-08-24 11:16:49   Print

    BEIJING, Aug. 24 (Xinhua) -- China's first anti-monopoly law, which requires foreign purchases of Chinese companies to go through national security checks, is expected to be put to a vote later this month after being 13 years of deliberation.

    The draft law was "ready for adoption", the Law Committee of the National People's Congress (NPC) told the ongoing session of the NPC Standing Committee on Friday when submitting the bill for consideration.

    The draft states: "As well as anti-monopoly checks stipulated by this law, foreign mergers 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."

    According to official statistics, the number of foreign mergers and acquisitions only accounted for five percent of all forms of foreign direct investment in China annually before 2004. The proportion rapidly increased to 11 percent in 2004 and almost 20 percent in 2005.

    Foreign companies have also begun to acquire major state-owned enterprises or companies with famous brands in recent years, arousing concerns about China's economic security.

    China has already established a basic national security check system for foreign mergers and acquisitions.

    Foreign investors should apply for approvals 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).

    The draft also added a provision, saying, "Companies that can provide evidence to prove they have no dominant status in the market should be cleared of monopolistic charges."

    According to the draft, a special anti-monopoly commission, which consists of officials and experts, will be set up under the State Council to deal with anti-monopoly issues.

    The draft bill, which aims to protect fair competition, prevent and check monopolistic behavior and maintain a regulated market place, was first drafted in 1994 and submitted for the first review in June 2006, for the second review in June 2007.

    More than 80 other countries also have anti-monopoly laws.

    Lawmakers have said China's socialist market economy had matured, and the current market circumstances made the introduction of an anti-monopoly law is imperative.

    Besides the draft anti-monopoly law, the week-long session will also discuss draft laws on emergency response, employment promotion, labor dispute arbitration and the recycling economy, and the draft amendment to the Law on the Administration of the Urban Real Estate, the Law on Science and Technology Progress and the Law on the Prevention and Control of Water Pollution.

Editor: An Lu
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