The Game of Monopoly and Anti-Monopoly

By+Mei+Xinyu

In the past month or two， an array of antitrust investigations against foreign companies by Chinese authorities has attracted extensive attention worldwide. While some international business lobbyists have made complaints and spun these probes as constituting discrimination against foreign-funded enterprises， a few Western governments have also joined the camp.

As the Wall Street Journal reported on September 15， the U.S. Secretary of the Treasury Jacob Lew has written to Chinese vice Premier Wang yang， claiming that antitrust probes targeted at overseas companies would undermine Sino-American relations.

yet， should foreign companies be free of punishment in spite of their monopolistic behavior？ Of course， the answer is No.

Its an objective law of market economy that free competition will lead to concentration of production and further to monopoly. Since the modern capitalist economy came into existence， its free market mechanism has inevitably led to the sprouting up of cartels and monopolistic behavior after experiencing a golden age in the 1860s and 1870s.

As a result， a variety of anti-monopoly rules and regulations have been formulated with the goals of restricting anti-competitive agreements， reducing the abuse of dominant market position， regulating corporate mergers and acquisitions， defending market order， protecting the legitimate interests of producers and sellers and the rights of consumers， and improving economic efficiency.

So far， more than 100 countries and regions around the world have formulated their own individual anti-monopoly legislation， which in developed countries are referred to as “economic constitutions.”

Just like that of other major economies， the Anti-Monopoly Law of the Peoples Republic of China identifies three types of monopolistic behavior： monopolistic agreements between entities， abuse of dominant market position by entities， and concentrations of entities that may eliminate or restrict competition.

A typical case of a price-fixing agreement came to light at the beginning of 2013， which involved six LCD panel makers. From 2001 to 2006， companies including South Korean makers Samsung and LG Display and AU Optronics， Chimei Innolux， Chunghwa Picture Tubes Ltd. and HannStar Display Corp. from Taiwan took turns to host a total of 53 meetings with the explicit purpose of exchanging market information and manipulating prices. Their price manipulation in the Chinese market severely infringed the legitimate interests of their rivals and consumers. The number of LCD panels sold by the six companies on the Chinese mainland amounted to 5.15 million， with an illegal gain of 208 million yuan （$33.87 million）.