AS A RESULT OF thorough research, last August China introduced a new Unfair Competition Act legislation. The new legislation is strongly influenced by the EU court of law and Erik Söderlind trusts it will be applied in accordance with EU legislation.
– More and more companies have international business and it makes it easier if legislations in each country conform to each other.
SWEDISH COMPANIES ACTIVE in China should review their contracts and make sure that their current business conforms to the new legislation.
– Important news is that all planned mergers and acquisitions have to be reported and approved by Chinese authorities before the transaction, says Erik Söderlind.
Another change is that pre-determination of the wholesale price is no longer allowed.
– Wholesale price pre-determination means that manufacturers, not retailers, determine the end customer price. Retailers cannot compete with each other on price and you get a rigid pricing structure. With the new legislation, retailers have the right to determine price and choose smaller margins through a lower price.
If you break the new law, China will issue penalty and fines like authorities do in the EU and the US.
AUTHORITIES ARE EXPECTED to apply the law treating all companies equally, private as well as governmental, domestic as well as foreign.
CONSEQUENCES OF THE NEW law for domestic and foreign companies remain to be seen and depend on how the authorities apply it.
– The authorities will probably need a start-up period before everything runs properly and there will probably be some confusion in the beginning. We will eventually see how it works.
AS A RESULT OF the new Unfair Competition Act legislation in China, Linklaters Law Firm will expand in Asia. As of September, Erik Söderlind will be Head of competition/antitrust at Linklaters’ new Asian Unfair Competition Act, based in Hong Kong.
Emelie Ring