Anti-Monopoly Law in China
Anti-Monopoly Law in ChinaUpdated on Tuesday 19th April 2016
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The anti-monopoly law in China has a very important role in controlling the fair development of economic activities and in preventing any monopolistic behaviors from those involved in commercial activities in the country. It is formulated in such a way that it protects the best interests of the consumers and it encourages economic efficiency.
The general provisions of the Chinese anti-monopoly law
The Chinese anti-monopoly law concentrates on several important practices: mergers, monopoly agreements and the abuse of a dominant market position. The three most important authorities that deal with anti-monopoly activities in the country are the Ministry of Commerce, the National Development and Reform Commission and the State Administration for Industry and Commerce.
Companies in China are allowed to merge voluntarily, expand their business operations and enhance their competitiveness, provided that when engaging in any alliances and mergers they do not abuse their position to eliminate or restrict competition.
The anti-monopoly law prohibits any agreements between parties that are considered to be “monopoly agreements”. Companies are not allowed to sign agreements with their competitors that can contain provisions for the restriction of competition. These monopoly agreements usually include certain fixed prices, limitations on production and/or sale, restrictions for technology purpose and others.
One of our lawyers in China can help you conclude any business agreements that will be in line with the anti-monopoly laws and will protect the legitimate interests of all parties.
The prohibition of a dominant market position
The main purpose of the anti-monopoly law is to prohibit companies from occupying and abusing a dominant market position. Illegal acts can include the use of unfairly high prices or selling below cost without justification. Refusal to trade with other business partners or imposing drastic conditions for trade are also unlawful practices in China.
The position of dominance can be established according to the owned market share in comparison to other percentages owned by different companies. A company is likely to be considered dominant if it holds 50 percent or more of the market share.
When doing business in China investors should also know the provisions of the Chinese competition law.
You can contact our law firm in China for more information about the rules and regulations for doing business and opening a company in the country