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2008-07-31 | All chapters

EU companies to be ready for competition law compliance
People's Daily Online, 31st July 2008

European investors in China will harbor an advantage of complying more easily with the Anti-Monopoly Law, to become effective August 1; and the opportunity emerging from China's growing preference toward clean, hi-tech investment.

Michael O'Sullivan, secretary-general of the European Union Chamber of Commerce in China, said in a recent interview with People's Daily Online that their members hold a positive attitude toward China's Anti-Monopoly Law and the investment environment; while they also express concern over the pending interpretation and practice of the law.

This law is familiar to European companies. Legislators have adopted some concepts and principles of the EU competition law. China and the EU have been engaged in a dialogue on competition policies since 2003. European companies have had the chance to offer their commentary on drafts of the law directly to legislators or through European officials.

Given this fact, Mr. Sullivan believes that it will be less difficult for their member companies to comply with the law quickly; and get adapted to the changing regulative framework as compared with Chinese companies which lack experience dealing with a competition law.

"Large European companies will do heavy work to comply," he said, hoping that companies --- either Chinese or foreign --- would be given some time to familiarize and do internal checks once the guideline is released.

The chamber views the law as "broadly positive and necessary to achieve a healthy competitive market." And it recognizes that the law "is written to apply the same way to Chinese and foreign companies."

Foreign companies, including European ones, pay special attention to the articles concerning the national security checks in big acquisitions and mergers by foreign investors, and the abuse of intellectual property rights. Those contents "sound fine in principle" and do not "necessarily arouse concerns," Mr. Sullivan said.

What they really concern, according to Mr. Sullivan, is how the law will be explained and practiced. The implementation regulations have yet to be issued. The enforcement authorities have yet to be established.

Specifically, European businesses do not want a definition of "national security" that is too broad. Otherwise, investment opportunities in China, they argue, may be limited and protectionist voices in Europe may gain more ground.

When it comes to IPR protection, foreign companies are wondering how the abuse of IPR will be defined under the competition law as IPR bears exclusive validity.

Mr. Sullivan highlighted that European businesses built their competitiveness on technology-oriented investment which is what China desires now. They have been making long-term investments in the manufacturing and service sector in the Chinese market which enjoys strong economic growth, a rising disposable income and many new markets to tap.

That is why they are "not running for the exit" when there are reports about foreign investment leaving Asia, including China. The Chamber did not see the factors of the new labor law, inflation and high RMB "biting" European companies as they did those "short term, very opportunistic investments" which rely too much on low costs.

"There is a very positive sentiment toward staying in China and developing business for European companies," he said.

Source: http://english.people.com.cn/90001/90776/90884/6464094.html