The Anti-monopoly Law Analysis Of Chinese Automobile Industry

Monopoly is an ancient concept. The modern concept of monopoly is classified into economic monopoly and legal monopoly. The economic monopoly means one or several companies exclusively control the production factors and product market in some way, directly or indirectly, or a state of exclusive control of the object market by the special economic bodies through building market barriers. The legal monopoly means an act of obstructing or rejecting market competition by the market players, government organizations or the state by right of their economic advantage or state power, singly or through conspiracy and otherwise. It is the popular idea that monopoly is not only showed as a monopoly state of actual control of the market, but also includes the acts of substantial restrictive competition, such as administrative monopoly. As a matter of fact, the existence of monopoly state has its own rationality, i.e. to some extent, it can help to form the scale economy, to promote efficiency and it meets the needs of large-scale production. The automobile industry is a typical industry of scale economy and scale economy is the inherent requirement of automobile industry. However, Chinese automobile industry is still in the stage of full competition, but far from the requirements of the scale economy. Besides, with the enactment of Chinese Antimonopoly Law, the large-scale production and M&A of Chinese automobile industry will face the challenge of the law. Therefore, the scale economy and the antimonopoly law seem to have conflicts. But in fact, with the transition from structuralism to behaviorism, Chinese Antimonopoly Law will not judge a monopoly state simply based on the market share, but will regulate the act when it restricts the competition through abusing the market predominance and harms the market. So apparently, the antimonopoly law is not against the monopoly, but against the damage did by the monopoly to the order of market economy. Furthermore, the antimonopoly is far from objecting the scale economy or company expansion. On the contrary, the antimonopoly law will protect the full development of the market competition through restricting negative competitive acts in the market such as administrative monopoly, and then to promote the scale economy and optimize the M&A of automobile industry.This paper is divided into three parts. The first one is the analyses of the Chinese automobile industry in terms of scale economy. It comprises the inherent relation between scale economy and the automobile industry, the analyses to the current situation of scale economy of Chinese automobile industry and the development trend of scale economy of Chinese automobile industry. The scale economy is also called scale merit, means the tendency of declining of the unit cost as the production capacity expands. The issue of scale economy was derived from practices of automobile industry, and subsequently the economists improved and developed it into scale economy theory based on these practices. The scale economy is the soul of the automobile industry. However, the Chinese automobile industry is still on the stage of full competition, which is too far away from the ideal state of scale economy. Although there appeared the symptom of merger and reorganization among big companies, the industrial restructuring is still lagged behind. The entry to the WTO promoted perfection of Chinese automobile industry environment, readjustment of industrial structure, financing and participating in the international division of labor. In order to welcome the entry into WTO, the Chinese government enacted and implemented Formal Policy on Development of Automotive Industry in 1994 and standardized the automobile developmental pattern. With comprehensive consider of the entry into WTO, the current situation and developmental tendency of both worldwide and Chinese automobile industry, the Chinese automobile industry will take on the following trends: the industrial scale will jump to the top one in the world; the process of M&A will accelerate; the level of participating in the globalization will keep increasing.The second part is on the developmental tendency of antimonopoly law and the regulation to the administrative monopoly in Chinese automobile industry. It mainly elaborates the transition of the regulation measures which is changing from structuralism to the behaviorism, the regulation objectives and tasks of Chinese Antimonopoly Law, and the administrative monopoly in Chinese automobile industry and the regulation to it. The regulation measure means, according to the provisions of a country's Antimonopoly Law, the measures taken by the antimonopoly authority body to decide whether a special market constitutes monopoly and how to sanction on it, including structuralism and behaviorism. Structuralism takes market share as the basis of deciding whether a special market reaches to the threshold of monopoly. Whereas behaviorism means that a predominant business itself which takes some certain market share does not break the law, it will be regulated by the antimonopoly law only when some acts of it harm the market and damage the order of the market competition. At present, the replacement of the structuralism by the behaviorism turns out to be the popular trend in worldwide legislation and judicial practice. To go with the tide, the newly-implemented Chinese Antimonopoly Law is not simply against the monopoly status, but objects the acts abusing the market predominance and damaging the market competition. Hence, the tasks of Chinese Antimonopoly Law naturally become first, to resolve the contradiction between antimonopoly and scale economy, and second, to eliminate the administrative monopoly.The third part is systematical discussion to the encouragement and regulation to M&A of Chinese automobile industry by Chinese Antimonopoly Law. It elaborates from three perspectives: the relation between antimonopoly law and scale economy; the attitudes of Chinese Antimonopoly Law to M&A of Chinese automobile industry, which is to encourage on one hand and to regulate on the other hand; and the new developmental strategy of Chinese automobile industry under the view of Antimonopoly Law, i.e. the M&A. Monopoly is not only showed as a monopoly state of actual control of the market, but also includes the acts of substantial restrictive competition. Some people regard antimonopoly is just against the big companies, accordingly the enactment of Antimonopoly Law will obstruct the development of Chinese scale economy. This actually is a misunderstanding to the Antimonopoly Law. Consider from legislation and practices of various countries, the antimonopoly law is not against the development of scale economy. This paper discusses that the antimonopoly law is not conflict to the scale economy or even will promote its development in terms of the value goal, legislation pattern, the content, the countermeasure of the operator and the practices of the Antimonopoly Law. And then, the paper expounds the attitudes of encouragement and regulation to Chinese automobile industry by Chinese Antimonopoly Law. As the monopoly has a certain degree of rationality, i.e. to promote the formation of scale economy, resist the interference from unfair competition, enhance economic benefit, push forward technical progress and boost the competitiveness, thus the Antimonopoly Law encourages the rational monopoly which is helpful to the healthy development of market economy. Specifically speaking, in the area of automobile industry, the rational monopoly is to realize the centralization and expansion of capital, to strengthen the efficiency of the big companies and enhance the international competitiveness. Nonetheless, the preference of the behaviorism to the structuralism does not mean the negligence to the monopoly state. Where a concentration reaches the threshold of declaration stipulated by the State Council, a declaration must be lodged in advance with the Anti-monopoly Authority under the State Council, or otherwise the concentration shall not be implemented. At last, the paper discusses that M&A is the inevitable choice of Chinese automobile industry. Under the protection of Chinese Antimonopoly Law, the Chinese automobile industry will carry out the reorganization with brand new modes, and will finally realize the real prosperity.