A Professor's Life in the Air

By Wang Biqiang
Published: 2008-07-30

From cover, issue 378, Jul. 28, 2008
Translated by Zuo Maohong
Original article: [Chinese]

Though the Chinese Antitrust Law will come into effect on Aug 1, many legal details remain unanswered, such as the enforcing agency, the definition of monopoly agreements and the scope of "market-dominant status". Law firms and legal experts have been overwhelmed by inquiries from concerned businesses, but even the experts have unable to answer to all questions, as they themselves have waited for further clarification from Chinese authorities. Two days before the Law takes effect, and they are still waiting.

What Professor Huang Yong wanted most now was to have some days off.

On Tuesday July 15, he was at an anti-monopoly seminar held by the European Union and an energy agency. The next day, he appeared in New York where he gave a lecture about China's new Antitrust Law for a group of legal practitioners.

The night of the following Monday, Huang flew back to Beijing, where he delivered a keynote address on antitrust law at a seminar held by a central government institution; and he attended another seminar on the same issue at University of International Business and Economics, where he teaches, on Wednesday noon. That same day, he showed up in south China's Hangzhou for the same reason.

Then the next two days were spent with officials from National People's Congress and the State Council. They together gave training to over 100 chiefs from central and local enforcement authorities for the Antitrust Law, which would come into effect on Aug 1.

"I'm exhausted," Huang said. But as a legal expert who had engaged in drafting China's first-ever Antitrust Law and its supporting policies, he had a tight working schedule since June.

Apart from domestic and international government institutions, there were also calls from companies in different industries and countries. "Now these foreign companies have more concrete questions that are related to their own businesses," said Huang, adding their greatest concern was the impact of the Law and how they should avoid antitrust-related investigations and charges.

Despite taking effect on August 1, this so-called "economic law" may have problems in implementation, according to most legal professionals.

They believed the altogether 57 articles in the Law were too abstract and thus needed clearer explanations and rulings for implementation.

Almost a year had passed since the Antitrust bill was passed by the Standing Committee of the National People's Congress, yet many crucial details were still missing, such as the omission of which agency would be entrusted with the Law's enforcement.

The delay in clearing the air had added a mysterious aura to the Law, with hearsay and rumors popping up about which company would be the first prosecuted under the Law, and these had put big corporations under anxiety. As a result, multinationals became the regulars at various antitrust seminars, forums and training courses.

Huang said that because western countries had well-developed antitrust regulation, which usually had severe punishment for violation, foreign companies were naturally concerned.

As a result, the torrential demand for an expert take on the Antitrust Law had overwhelmed Huang and his peers.  

As high-end services, anti-monopoly enquiries in China had mostly been taken up by foreign law firms, and some big names in the domestic market. Li Da, partner at law firm Jingtian & Gongcheng, anticipated a boom in handling antitrust cases in 2008. By his estimate, there were only 50 firms in China that were capable of such services.

However, even Huang and those experienced lawyers couldn't answer all questions.

For istance, the 13th article of the Law prescribes that "other agreements identified by antitrust authorities" shall be prohibited. What is the definition of  these "other agreements"? How does one calculate a standard turnover volume, the most important factor in a merger assessment? What is the criteria for the right of control? All these remain unanswered.

Huang said that since the law has been passed, companies have been more concerned about concrete issues, like whether they needed to change their way of doing business, alter distribution channels, and modify clauses in sales and other business agreements.

Lawyer Li Da said some domestic private companies had also begun consulting legal experts. These companies were incomparable in scale to state-owned monopolies, but most had an advantageous position in a certain region or industry.

The most frequently asked questions by them included the scope of "market dominance" mentioned in the Law, and whether their daily operation, such as price policies and agreements, would be impacted, said Li.

Consultant Han Liang said prior to the Law being passed, most antitrust cases they had handled concerned merger; but recently, they had more clients consulting the abuse of market dominance and monopoly agreements.

Some companies asked whether there was a problem in signing an exclusive distribution agreement, Han said. But there were many questions he himself couldn't answer, he said. All they could do now was to wait for further explanation from the authorities.

While various parties were waiting anxiously for just such explanations, state-owned enterprises (SOEs), especially those in monopoly trades, remained calm. According to lawyers of several domestic and international legal firms, they had yet to receive any inquiries related to the Law from any SOEs.

Some professionals believed this was most probably the result of the 7th article of the Law, which goes, "for the undertaking in the state-owned economy controlled industries to which are related to national economic lifeline and state security, and in the industries to which the state grants special or exclusive rights, the state protects their lawful operation."