China’s recent anti-monopoly probes have attracted widespread attention both at homeand abroad. A group of international business lobbies, backed by a number of westerngovernments, have lodged complaints against China.
According to the Wall Street Journal, U.S. Treasury Secretary Jack Lew has sent a letter toChinese Vice Premier Wang Yang stating that China's recent targeting of foreign companiesin its implementation of anti-monopoly law could negatively impact U.S.-China relations.
Should foreign companies in China be given immunity to anti-monopoly investigations?The answer is absolutely no.
More than 100 countries all over the world have anti-monopoly laws – these are regardedas the ‘economic constitution’ in a mature market. China’s anti-monopoly Law deals withthe following issues: monopoly agreements, abuse of market dominance, and abuse ofadministrative power to eliminate or restrict competition.
Companies often try to take advantage of their superiority in production or distribution togain market dominance. A growing number of enterprises are creating and defendingmonopolies to grab excess profits, by way of using flaws in the modern intellectualproperty system. A side effect of the system is that monopoly companies inhibit theircompetitors from innovation. China, the largest manufacturer in the world, is the biggestvictim of the shackles of the system.
Qualcomm owns a series of 3G patents. All companies that are engaged in production andsales related to 3G products have to sign patent licensing agreements with Qualcomm. Thecompany only sells chips for cell phones, but is insisting on charging patent fees based on apercentage of retail prices. Companies who make cell phone screens, batteries, earphonesor decorations for cell phones have to pay these fees. China’s manufacturers of 3G mobilephones have to surrender half of their profits to Qualcomm. The revenues Qualcommearns from China account for 49% of its gross revenues.
Monopolies impose huge costs on consumers and companies. International Cartels grabmore profits from developing countries than from developed ones. Developing countriesrespond by conducting anti-monopoly investigations against international cartels,contributing to a fair international economic environment. Fines from anti-monopolyinvestigations mainly accrue to developed countries. Millions of dollars in fines have flowedinto the national treasuries of European countries and the US, while companies fromdeveloping countries have lost heavily without any compensation. Anti-monopolysupervision has to be updated constantly, supported by human and financial resources.Supervision departments in charge of anti-monopoly probes in developing countries arenot as sophisticated as those in developed ones. As the second largest economy in theworld, China’s supervision department will be updated and become stronger.
This article was edited and translated from《外企不享有反垄断“豁免权”（望海楼）》,source: People's Daily Overseas Edition, Author: Mei Xinyu
