Landmark anti-monopoly law passed
Updated: 2007-08-31 09:39
Foreign acquisitions of Chinese companies will be subject to stringent new checks intended to protect national economic security under a new law passed Thursday.
After 13 years on the drawing board, the Anti-Monopoly Law passed by the Standing Committee of the National People's Congress (NPC), China's top legislature, will come into effect on August 1, 2008.
"As well as anti-monopoly checks stipulated by this law, foreign mergers with, or acquisitions of, domestic companies or foreign capital investing in domestic companies' operations in other forms should go through national security checks according to relevant laws and regulations" it reads.
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China already has a basic security check system for foreign mergers and acquisitions.
Foreign investors should apply for approval from the Ministry of Commerce (MOFCOM) if their purchases of domestic companies affect national economic security, take place in key sectors or lead to a transfer of the operating rights of famous domestic brands, according to a regulation issued by the MOFCOM along with five other government organs last year.
In December last year, the State Council, China's cabinet, released a list of strategic sectors in which the State would retain control.
The list included military-related manufacturing, power production and grids, petroleum, gas and petrochemicals, telecom manufacturing, coal, civil aviation and shipping.
The law also bans monopolistic arrangements, such as cartels and other forms of collusion, and provides for the investigation and prosecution of monopolistic practices, while protecting monopolistic arrangements that promote innovation and technological advancement.
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