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Specific guidelines set for new Anti-Monopoly Law

By Diao Ying (China Daily)
Updated: 2008-08-06 09:30

The first regulation that sets specific guidelines for the Anti-Monopoly Law was announced by the State Council late on Monday in a move to provide guidelines and direction for the enforcement of the law, which came into effect on August 1.

According to the regulations, all combinations must apply to authorities in charge of anti-monopoly if the joint global revenue of the companies involved exceeds 10 billion yuan or if revenue in China exceeds 2 billion yuan.

In addition, authorities also need to review the deal if two or more of the firms each reported more than 400 million yuan of revenue in China during the previous accounting year.

By definition of the rule, "combination" refers to mergers and acquisitions; share or asset sales that give one company control of another; and deals in which one company can gain the control of or be able to impose decisive influence over another firm through signing contracts or other means.

In an interview published in the People's Daily yesterday, an official from the Legislative Affairs Office of the State Council said that the rule would work for a while, and adjustment would be made "in time" if it was not easy to enforce.

The regulation also says that if facts and evidence show a firm could possibly limit competitors, law enforcement bodies could still carry out investigations even if the firms do not meet either of the two standards listed above.

The unnamed official said that under some circumstances, an enterprise might still limit competition even if it had not reached the standards as required. For instance, although the turnover of firms in some industries is low, the market share could be large enough to restrict competition.

The antitrust law, China's landmark law in encouraging fair competition, was passed last year after 15 years of discussion. However, the long-awaited law is limited and only set up principles on monopoly and fair competition. Therefore, for lawyers and companies, regulations and explanations of articles are important when the law is put into practice to get deals done.

Joerg Wuttke, president of the European Chamber in China said in an announcement earlier that "the impact of the new law can only be fully assessed once the implementing guidelines are issued and will depend largely on how the implementing authorities will perform their roles".