Enforcing China’S Anti-Monopoly Law in Regulated Industries: A Study of the Airline Industry

By Jingmeng Cai (Beijing University of Chemical Technology) & Jae Woon Lee (The Chinese University of Hong Kong)

Since China enacted its Anti-Monopoly Law (AML) in 2007, foreign observers and business operators have constantly raised concerns as to whether the AML can inject a modern competition spirit into the world’s largest transitional economy or whether the AML will be overridden by policy objectives. These concerns become more obvious in industries that have been heavily regulated by the government. In this article, we choose the airline industry as a research target to explore possible ways to restrain industrial regulators from unduly interfering in competition and to reinforce the role of the AML. We focus on three kinds of administrative regulations in China’s domestic aviation market: limiting the threshold of market entry, price regulations, and subsidies. Then we analyse the policy objectives these regulations intend to achieve and their anti-competitive effects. Finally, we conclude with two suggestions from long-term and short-term perspectives: first, the newly established Fair Competition Review System (FCRS) should be effectively used to normalize and limit regulators’ policy-making authority. Moreover, the reviewing criteria should be made clearer and more meticulous to offer both FCRS reviewers and anti-monopoly agencies guidelines for assessing the effects of administrative behaviours on competition. Second, in the long term, industrial regulators are encouraged to set up competition-friendly industrial policies, embrace modern competition concepts in their traditional regulatory paradigm, and foster a competitive culture.

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