Administrative Monopoly and the Anti-Monopoly Law: An Examination Of the Debate in China

Abstract:     
After more than a decade of preparation, China finally passed the Anti-Monopoly Law (AML) on August 30, 2007. This paper examines the debate over whether or not administrative monopoly should be included in the ambit of the AML, which took place throughout the drafting process of this new law. Administrative monopoly refers to the abusive use of administrative power by government agencies to engage in monopolistic activities. Owing to the administrative nature of this type of monopoly, the intent to regulate it by an economic law, such as the AML, has stirred up much controversy. Having analyzed the arguments both in support of and in opposition to the inclusion, this paper suggests the need to adopt a more comprehensive scheme in tackling administrative monopoly. Also, the enforcement mechanism of the AML will have to be strengthened in order to prevent this new law from degenerating into ‘a toothless tiger’. Furthermore, the competition law regime of China will benefit from in-depth research in overseas anti-monopoly practices. In particular, the experiences of the former socialist states in Europe should be taken into account, given that they are similarly undergoing the transition from a planned economy to a market economy.

Keywords: monopolies, public administration, government agencies, transition economies

JEL Classification: K21, K23

Accepted Paper Series