Anti-trust team lacks real muscle for enforcement

Updated: 2014-08-18 04:25

By Zhao Yinan(China Daily)

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Despite sweeping probes into antitrust cases, China's antitrust team - government law enforcement officers and lawyers representing companies - is falling short in dealing with complicated cases.

While legal experts agree that government regulators have made good progress in investigation and law enforcement since China passed its Anti-Monopoly Law in 2008, penalties are sometimes inconsistent and enforcement lacks the capability to challenge the dominant State-owned enterprises.

Fines issued by local bureaus of the State Administration of Industry and Commerce in 2013 vary from place to place, even though they target the same industry with similar monopolistic practices, according to a five-year review by Beijing Lawyers Association.

The fines, usually about 1 percent of the company's revenues in the past year, are much lower than those issued by the National Development and Reform Commission, another government law enforcement agency, whose fines can top 10 percent, the report said.

Wang Xiaoye, an antitrust law professor at the Chinese Academy of Social Sciences' Institute of Law, rebutted speculation that the ongoing probes are targeting foreign companies.

“If we take a review over the past six years, instead of focusing on the recent years, the three government regulators have investigated more domestic companies than foreign companies,” Wang said.

But she said government regulators can feel constrained when dealing with SOEs and administrative monopoly, a monopolistic practice posed by a public power.

The official status of the three government regulators is lower than many heavyweight SOEs, which leaves them vulnerable when probing cases.

The NDRC's probe into China's two largest telecom companies has yet to make a ruling since its start in 2011.

A shortage of manpower also hinders regulators from looking into bigger cases.

Although the three agencies have all expanded over the years, their teams are dwarfed compared with counterparts in the EU and the United States, where thousands of law enforcement officers work to keep market competition fair.

The NDRC's price supervision and anti-monopoly bureau expanded its staff from 20 to 46 in 2011.

Meanwhile, eight provincial areas, including Beijing, are allowed to recruit a total of 150 antitrust officers in local NDRC offices to strengthen law enforcement ability at the grassroots level.

The Ministry of Commerce, one of China's antitrust regulators, also recruited more staff to top up the review of mergers and acquisitions.

Sun Shaosong, a partner in Beijing's Guantao Law Firm, said more domestic lawyers have been working in the field since 2008.

“Chinese lawyers are proficient in fundamental antitrust work such as compliance, M&A and antitrust investigation,” Sun said. “But we are usually less competitive when it involves more speculative thinking and economic calculation.”

Sun said the capability gap is because European and US lawyers, in general, have seen more cases, while China only introduced its Anti-Monopoly Law six years ago.

Ning Xuanfeng, a senior antitrust lawyer and partner of King & Wood Mallesons, suggested more law schools in China should set up anti-monopoly branches to nurture young talent.