Struggling against administrative powers: practical applications of the anti-monopoly law of China 2007 towards privately-owned SMEs

An examination of State intervention with regard to survival situations of privately-owned small and medium-sized enterprises (SMEs) in Chinese traditional State-owned industries reveals that legal restrictions pay “lip-service” to administrative powers. Whereas the Economic Charter, the Chinese Anti-Monopoly Law 2007, has now been in force for over seven years (from 2008 onwards), administrative powers which are granted by the State’s industrial policies to treat State-owned enterprises (SOEs) and privately-owned SMEs unfairly have never been effectively limited. Accordingly, the interests of privately-owned SMEs and consumer welfare have not been realised, despite them being listed among the goals in the Chinese competition law. As a result, a balance of interests in the market, namely the “public interest”, the ultimate objective of the Chinese Anti-Monopoly Law 2007, has failed to be achieved.
In an attempt to reverse this plight of privately-owned SMEs, this paper puts forward two suggestions in order to make the Chinese Anti-Monopoly Law 2007 a top priority in State intervention. The first suggestion regards the internal considerations of the Chinese Anti-Monopoly Law 2007: namely, to curb the administrative powers of some agencies and SOEs on behalf of privately-owned SMEs. This comprises three parts: establishing an independent anti-monopoly regulatory agency in China; the formulation of several State-specific regulations in order to restrict administrative agencies and SOEs, and improving private anti-monopoly litigation in order to protect privately-owned SMEs. The second suggestion relates to the external considerations, highlighting the need for cooperation between certain legal elements in administrative law; as well as company law, and the Chinese Anti-Monopoly Law 2007, in order to curtail the ultra vires exercise of discretionary powers of anti-monopoly agencies in order to achieve a fair playing-field between SOEs and privately-owned SMEs.