How China's Enforcement of Its Anti-Monopoly Law Poses Risks to Multinational Companies

Abstract

China’s recent enforcement of its Anti-Monopoly Law (AML) has caused alarm and concern among Multinational Companies (MNCs). Many MNCs believe that the primary purpose of China’s AML is not to create open, fair, and market-based competition but is to serve the Industrial Policy goals of China’s ruling Communist Party. These goals result in the enforcement of the AML in favor of Chinese companies, especially China’s massive State-owned Enterprises, at the expense of MNCs doing business in China. In addition, China’s AML enforcement authorities seem to be using the AML to force MNCs to transfer their valuable technologies (intellectual property rights) at below market rates to Chinese firms and to force price reductions of their products sold in China. AML enforcement authorities also appear to be using the AML to protect famous Chinese brands from being acquired by foreign firms. China’s use of the AML appears to be consistent with China’s overall goal of strengthening its position as a global economic power.