China is drafting an anti-monopoly law that might force companies such as
Microsoft to give up leading market shares in the world's fastest-growing
economy.
Under the law, local or overseas companies with more than 50 percent of
China's market share for any product will be investigated.
Those using dominant market positions to set unfair prices will be fined as
much as 10 percent of annual sales, according to a draft obtained by Bloomberg
News.
The Chinese government is strengthening laws to help local companies compete
as the country prepares to remove the final trade barriers and investment
hurdles after five years in the World Trade Organization.
The government tightened control of foreign takeovers this year amid rising
criticism that overseas companies are dominating some industries.
"Multinationals do have legitimate reason to fear that this proposed law may
affect them" more than domestic companies, said Anping & Partners' Managing
Partner Guan Anping.
Any company with more than 50 percent of China's market may be fined "more
than 1 percent and less than 10 percent of the total turnover of the preceding
year," if it abused its dominant position, according to the draft law, which
doesn't say whether the fine applies to global income or revenue earned in
China.
Microsoft's Windows operating system has more than a 50 percent share of the
desktop-computer market in China, according to Edward Yu, chief executive of
Beijing-based technology market research firm Analysys International.
"The anti-monopoly law still isn't set in stone, so we can't comment," said
Brian Zhou, president of H-Line Ogilvy, Microsoft's public-relations agent in
China. "Microsoft believes in fair competition; that fair competition will
stimulate better products and services for consumers."
Roger Chen, Microsoft's Beijing spokesman, wasn't available to comment.
The draft law defines abuse as when products are sold at "unfairly high"
prices or bought at "unfairly low" prices, without specifying what constitutes
unfair. Abuse is also defined as selling products at below cost.
