Fair market is anti-trust goal

The irony is that the same companies that abide by strict laws in developed countries and face heavy penalties for violating them try to ride roughshod over rules in China to grab a larger share of the Chinese market, where commodity pricing, income and economic development and the Anti-Monopoly Law are very different.

After the launching of reform and opening-up more than three decades ago, China offered preferential policies for a long period to attract foreign investment. And the foreign investment that flowed into China helped boost the country's economic growth. But the preferential policies also made foreign companies assume that they could continue enjoying them and increase their stakes in the Chinese market forever. Even though the preferential tax policy for foreign companies was annulled in 2008, many local governments in China continued to offer favorable tax policies to various degrees to attract foreign investment.

Some foreign auto companies have taken advantage of such favorable policies to control supply channels and manipulate the prices of vehicles and auto parts, forming a vertical monopoly and drastically increasing prices, which have hurt the interests of consumers. Such practices have to be eradicated to develop a healthy market atmosphere in China, and the foremost thing to do is to create a level playing field for domestic and foreign enterprises.

The anti-trust probes have yielded remarkable results so far, with the penalized auto companies expressing their willingness to cooperate with regulators and abide by the rules, and the others offering aggressive reduction in the prices of either their vehicles or auto parts.

But since the intensive anti-trust campaign has also given rise to anxiety among many foreign companies operating in China and such a development is not conducive to building an open and fair market economy, regulators have to ensure that the investigations are more transparent and carried out strictly according to established procedures. They also need to give domestic and foreign companies a stable institutional guarantee of fair play.

China's market economy is still rather immature compared with those of developed economies and its anti-trust mechanism and measures need further improvement and standardization. In the long run, relevant departments such as the NDRC, SAIC and the Ministry of Commerce should work together to establish a foolproof supervision mechanism to investigate and evaluate law-enforcement procedures and help strengthen a fair and open market.

In the meantime, both domestic and foreign companies should recognize the long-term power of the anti-trust probes and desist from indulging in monopolistic activities and price fixing.

Zhang Jianping is director of the International Economic Cooperation Institute for International Economic Research, NDRC, and Ma Xinyue is a researcher at Peking University.