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Anti-monopoly law needs time to be effective

By Wang Xing (China Daily)
Updated: 2008-07-31 15:22

Dominating companies in China may face legal disputes after the country releases its anti-monopoly law tomorrow. But the real impact of the law is still limited as the new legal framework lacks regulations and guidelines for enforcement practices.

"The latest anti-trust law only describes the basic principles and it has more symbolic meaning than its real impact," said Yu Guofu, chief lawyer at Sam Partners Law Firm.

"I think the framework still needs six months to two years before it could be put to practice."

Dubbed as the "economic constitution", China's anti-monopoly law has raised great concerns as it regulates companies that often dominate the market.

Since last week, many Chinese news reports have been guessing which company will become the first defendant under the new legislative framework.

Top candidates among the list include Microsoft, Intel and Tetra Pak that own a majority market share in the country.

However, Huang Yong, member of the legislative working group of China's upcoming anti-trust law, said although companies who have a big market share are often more easily get involved in anti-trust disputes, they are not necessarily guilty for their dominant position.

"The anti-trust law does not oppose dominant market positions of any company but to against the abusive use of the dominant position," said Huang, who is also a professor from the law school of the University of International Business and Economics.

"From this perspective, companies will not be accused of anti-trust simply because they take up a major share of the market."

According to a previous survey by China's State Administration for Industry and Commerce, Microsoft takes up 95 percent of China's system software market. Tetra Pak, the Swedish food packaging company also enjoyed a 95 percent share of China's software drink packaging market. French car tire maker Michelin accounts for 70 percent of the market.