China Cracks Down on Anti-Competitive Practices of Major State-Owned Enterprises

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China’s antitrust authorities are investigating—and taking significant action for the first time against—state-owned enterprises, using the powers granted them under the 2008 Anti-Monopoly Law.

A senior official of the National Development and Reform Commission (NDRC), one of China's most powerful antitrust enforcement agencies, has confirmed the commission is investigating China Telecom and China Unicom for abuse of their dominant market position in the broadband internet market. This is a significant development as it shows that, contrary to many foreign commentators views, the NDRC is prepared to take action against powerful state-owned enterprises (SOEs). Until now, it was assumed that because SOEs were so close to the government, no government agency would subject these companies to investigations or public criticism by the antitrust authorities. Clearly however, the NDRC has not taken this approach. The two telecom SOEs are being investigated for discriminatory pricing for access to their broadband network by charging competitors more than what they charge non-competitors. This development also shows that China’s antitrust enforcement agencies are starting to take significant action using powers granted to them in 2008 under China’s Anti-Monopoly Law.

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