In China We Trust

When I set out to write this blog on the new Chinese Antitrust laws that will become effective on August 1, 2008, I stumbled upon the Chinese Antitrust law from 1911, which made me laugh with delight.

“Those who deal with merchants unfairly are to be beheaded.
Those who interrupt commerce are to be beheaded.
Those who attempt to close the markets are to be beheaded.
Those who maintain the prosperity of commerce are to be rewarded.”

The New York Times published the law on November 14, 1911 with a commendation to the United States government to look into adopting something similar.  Citing its perfections, the article claims, “no lawyer drew it, [and] no legislative body was permitted to mess up and muddle its primal perfections.”

As a third year law student, I can’t help but love the apparent simplicity of beheading or reward. It would certainly have made my job as a law student and future lawyer much easier.  The consequence to bad behavior is obvious, although the bad behavior itself is a bit more difficult to define.  But I guess it would not matter because the infringer would simply be beheaded.  Now all we would have to worry about what the “reward” was and what “maintain the prosperity of commerce” means.

Unfortunately, both China and the United States have changed greatly in the near century since the original Chinese Antitrust Law was proclaimed. Apparently, history did not intend to adopt the anonymous writer of the New York Times’ suggestion.  In fact, it went the opposite way with the Chinese enacting a law that is modeled on the U.S. and European antitrust law, to the great pleasure of the international antitrust community.  (The new law falls more in line with international standards than the current antitrust law.)

With much more complication and ado, the new Antitrust law will make it more difficult for foreign firms to acquire Chinese companies by making the process and review more complicated.  Gone is the simple beheadings for unfairness or interruption of commerce and markets.  Now, there are prohibitions of certain horizontal and vertical monopolies, regulations against market position that allow an entity to control market prices, and the need to notify the Anti-Monopoly Enforcement Agency for approval whenever there is any form of merger or acquisition.  However, in the end, what will really matter is how the Chinese government chooses to enforce the law.  We might not have progressed that far.  Heads still might roll.

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