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People's Daily Online>>Opinion

Monopoly probe should not be a go-to-jail card

(Global Times)

14:47, November 14, 2011

China's top economic planner is launching a probe against the nation's two telecommunications giants, China Unicom and China Telecom, over their suspected monopoly of broadband access services. The National Development and Reform Commission (NDRC) said the two companies might face penalties reaching into the billions of yuan.

The case can be seen as another landmark investigation since China implemented its Anti-Monopoly Law in 2008. Two years ago, China blocked Coca-Cola's bid to acquire China Huiyuan Juice Group after an anti-monopoly review. An anti-trust investigation against China's own SOEs may mean a lot to the transformation of the economic system.

The NDRC probe, first revealed by CCTV, soon inspired a round of media condemnation against the SOE monopoly. In only a few days, People's Posts and Telecommunications News soon launched a counter-campaign refuting the CCTV report and questioning the justification of the investigation.

It seems that public judgment has disproportionally factored into the governance of the anti-monopoly case. The public holds strong doubts about the two giants' monopolistic practices. But this does not justify the presumption of guilt by the two SOEs. The regulators need to do this by the book and inform people of the results fairly and fully.

The public instinctively assumes a "monopoly" happens when a company has an overwhelming market share, and SOEs fit this stereotype very well. However, the definition according to the Law is much more complicated and includes three kind of behaviors: business operators achieving an agreement to build a monopoly, abusing market dominance, and seeking to expel or limit competition. With certain warrants, some monopolistic practices can be exempt.

Anti-trust organizations and industrial watchdogs should cooperate fully during the probe. At the moment, the Ministry of Industrial Information Technology (MIIT) is excluded from the probe. The Law does not entitle direct industrial supervisors to enforce anti-monopoly regulations in order to avoid the loss of impartiality due to their close ties to suspected violators. But a problem arises here: law enforcement organizations like the NDRC may lack professional knowledge about the complex situations they are investigating. In this case, the MIIT needs to be involved.

Anti-trust Law aims to resume fair competition and overall efficiency, rather than simply striking at a few market giants. In reality many SOEs are monopolistic giants. However, this should not be a self-evident presumption during an anti-trust probe.

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Leave your comment2 comments

  1. Name

wende at 2011-11-1471.251.41.*
monopoly is really a magnet for more competitions. It is the unlawful act of stifling competition that is punishable and of course, the abuse through price gouging by the monopolist. The important thing is the rule of law. Anti-monopoly laws should also be applied to foreign companies in China.
Marina at 2011-11-14123.126.50.*
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