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China/anti-trust: China’s campaign against market bullies has a long way to go. Some individual customers have taken on dominant companies under a new antitrust regime launched over a year ago. The targets have included big game such as telecoms operators China Mobile and China Netcom, petroleum group Sinopec, and technology giant Baidu. But the results of two early cases show consumer power hasn’t yet reached the Middle Kingdom.
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The two recent cases have hardly been crushing victories for the consumer. China Mobile paid out a mere $146 to settle with an individual who alleged it was penalising contract customers with extra charges – although the case provides grounds for thousands of others to file copycat claims. Legal action against Shanda Interactive Entertainment, alleging that the media group had used its clout to disadvantage a small publishing house, fell at the first hurdle on a lack of evidence.
Such fleeting cases may say more about publicity-hungry lawyers than the willingness of consumers to use new laws take on former state monopolies. Antitrust rules still leave consumers out in the cold. It is for the plaintiff to prove that anticompetitive behaviour took place – and to prove that losses were incurred as a result. Class actions, as seen in the US, are unheard of in China.
Meanwhile, regulatory oversight is shared awkwardly. Only the Ministry of Commerce (Mofcom) – whose job is to supervise mergers and acquisitions – has any real experience. The less mature National Development and Reform Commission and the State Administration of Industry and Commerce tackle other aspects of anticompetitive behaviour, although the division of responsibility is fuzzy.
This probably explains why antitrust measures have largely been confined to slapping shackled on foreign buyers of Chinese assets.
Mofcom used its powers to block the bid by drinks giant Coca-Cola for Huiyuan fruit juice, and to add conditions to Inbev’s brewing tie-up with Anheuser-Busch. General Motors’ bailout of car-parts maker Delphi was allowed, but only if the US auto group was barred from knowing too much about Delphi’s Chinese customers.
A half-cocked antitrust regime risks preserving a stodgy state sector and locking out serious competition from outside – while consumers simply get what they’re given. China’s legal system is developing fast, but the playing field is far from level.