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Recognising the important role of fair competition in strengthening markets, both China and New Zealand have made great efforts to improve their legislation and enforcement of competition laws and regulations to provide a transparent and fair competition environment. Both countries are endeavouring to strengthening implementation of the APEC Principles to Enhance Competition and Regulatory Reform (e.g. transparency, procedural fairness, and non-discrimination). The enforcement of good market practices works in the interests of socially responsible companies and ultimately promotes consumer confidence and growth in bilateral trade.
China
China's main competition and fair trading law is The Law of the People's Republic of China for Countering Unfair Competition, adopted by the People's Congress of China in 1993. Its objective is to encourage and protect fair competition, defend the lawful rights and interests of operators and consumers, and safeguard the healthy development of the socialist market economy. Key provisions prohibit:
The Ministry of Commerce of China is responsible for research and policy relating to regulating markets. Enforcement is the responsibility of the Administration for Industry and Commerce of China. The State Administration for Industry and Commerce, an independent agency, organises the local administrative authorities for industry and commerce. Its work includes enacting rules, regulations and guidelines, and dealing with cases of monopoly and unfair competition. Sanctions rendered against activities of unfair competition include ordering the cessation of illegal acts, confiscation of illegal proceeds, imposition of fines of up to three times the amount of the illegal proceeds, revoking business licenses, and/or prosecution for criminal liability.
There are other laws and regulations containing provisions concerning the protection of competition, such as the Foreign Trade Law, the Price Law, the Law on Chinese-Foreign Cooperative Joint Ventures, the Law on Wholly Foreign-Owned Enterprises, and the Law on Chinese-Foreign Equity Joint Ventures. China has also promulgated the Temporary Provisions on the Prohibition of Price Monopoly Activities and Regulations on Telecommunication. It is presently in the process of drafting an Anti-Monopoly Law.
All these efforts aim to safeguard competition and defend the lawful rights and interests of both operators and consumers.
New ZealandNew Zealand maintains robust competition policy frameworks that underpin its competition and fair trading laws, and its regulatory approaches. The former proscribe general rules that apply across the economy, with some limited exceptions.
The main legislation governing competition in New Zealand is the Commerce Act 1986. The objective of this Act is to promote competition in markets in New Zealand for the long-term benefit of consumers. Key provisions prohibit arrangements between firms (e.g. price fixing) and mergers and acquisitions that substantially lessen competition. Monopoly is permitted, but abuses of substantial market power by a firm are not. There are also provisions relating to regulatory control where there is an absence of competition. Other sector-specific acts, such as the Telecommunications Act 2001, supplement these generic prohibitions.
New Zealand recognises that comprehensive competition frameworks are central to supporting strong and effective markets and sustained economic growth. The New Zealand competition policy framework reflects the key principles of transparency, non-discrimination, comprehensiveness and protection of the competitive process.
The Commerce Act has a presumption in favour of promoting competition as a means of increasing efficiency and overall consumer welfare. However, practices can be authorised by the Commerce Commission if it is shown that there are public benefits outweighing the anti-competitive detriments. Sanctions for contraventions of the Act include injunctions or cease and desist orders; pecuniary penalties of up to NZ$10 million 14 or three times the illegal gain for bodies corporate, and up to $500,000 15 on an individual; compensatory or exemplary damages; and, in case of anti-competitive mergers and acquisitions, divestment orders.
The main legislation governing fair trading in New Zealand is the Fair Trading Act 1986. Together with the Commerce Act and the Consumer Guarantees Act 1993 (which provides consumers with post-sales protection), it forms the essence of New Zealand's consumer protection regulatory framework. The objective of the Fair Trading Act is to provide consumer protection by prohibiting (i) misleading and deceptive conduct and false representations by sellers in trade, and (ii) certain unfair trade practices, such as pyramid selling schemes. It also provides for the making of Product and Service Safety Standards, as well as for Consumer Information Standards in respect of specified goods and services.
Thus, the Fair Trading Act seeks to provide consumers with accurate and meaningful information when making purchasing decisions, so they can transact with confidence. Effectively, the Act protects ethical traders, as they are detrimentally affected when their competitors engage in deceptive or unfair trading practices. Breach of the Fair Trading Act may result in a fine, injunction or award of compensatory damages. The Courts may also order corrective advertising or statements at the expense of the person or company that breached the Act. Other civil orders may be made declaring any contract or part of a contract to be void, varying a contract, or directing a person to refund money or to pay compensation.
The Commerce Commission, an independent statutory body, is responsible for enforcing the Commerce and Fair Trading Acts (although private parties may also take action). The Ministry of Economic Development (including the Ministry of Consumer Affairs) is responsible for advising the Government on policy matters.
7.1.3 Areas of future cooperation
China and New Zealand actively participate in the APEC Competition Policy Expert Group, which is a forum for discussion and information exchange on competition policy in APEC economies. The Group has developed the APEC non-binding principles on competition policy. China and New Zealand can use the information exchanged in the APEC context as a basis for further discussion of opportunities for bilateral cooperation.
Government expenditure is an important component of total economic activity in both China and New Zealand. Effective communication of the processes that govern government procurement contracts enables more efficient use of government funds and informs interested trading entities in both countries.
China
Though China's government procurement system only began in 1995, the government procurement market has grown quickly over the past few years. According to Ministry of Finance statistics, the government procurement value of China exceeded US$12.1 billion in 2002, and increased to a record high of US$20 billion in 2003.
The Government Procurement Law of the People's Republic of China was promulgated on 29 June 2002 and took effect on 1 January 2003. The Law contains 9 chapters, with 88 provisions on main issues such as the basic principles and patterns of government procurement, the format and enforcement of contract, supplier query and complaint, and the responsibilities of administrative supervision.
Administrative institutions for government procurement have been set up at all levels of government. In addition, an effective information publication system has been preliminarily established, three media organisations having been designated by the Ministry of Finance to provide government procurement information publications. These are China Financial and Economic News, China Government Procurement Network, and the Magazine of China's Government Procurement.
Despite the improvements mentioned above, it should be pointed out that China's government procurement system is still in its infancy. Considerable further efforts are needed in order to create a more favourable environment for its development.
New ZealandNew Zealand participates in the WTO Working Group on Transparency in Government Procurement, but is not a member of the multilateral WTO Government Procurement Agreement. New Zealand's government procurement policy is to provide an open and transparent market based on the principles of best value for money; open and effective competition; full and fair opportunity for domestic suppliers and improving business capabilities. The global non-discriminatory approach is undertaken as a matter of national policy but is reinforced by bilateral commitments with New Zealand's CEP partners Australia and Singapore. A full description of New Zealand's government procurement policy regime is provided in the publication Government Procurement in New Zealand: Policy Guide for Purchasers (July 2002).
7.2.3 Areas of future cooperation
Both China and New Zealand are active participants in the APEC Government Procurement Experts' Group (GPEG), which is a forum for discussion and information exchange on government procurement regimes in APEC economies. The GPEG aims to further transparency and liberalisation of government procurement markets in accordance with the Bogor goals and the Osaka Action Agenda. The GPEG is also a forum for ongoing peer review of individual economies' action plans and progress towards the Bogor goals in the area of government procurement. Given the importance of government expenditure as a percentage of GDP, improving the efficiency and effectiveness of government procurement can contribute to economic growth. This can be achieved by pursuing transparency, value for money, more open and effective competition, fair dealing, accountability and due process, and non-discrimination. China and New Zealand can use the information exchanged in the APEC context as a starting point for further discussion of opportunities for bilateral cooperation.
14
Amounts given in legislation are expressed in NZ dollars, but these amounts are
equal to US$6.7 million at a 1 October exchange rate of US$0.67=NZ$1.00. back
to content
15
Equal to US$350,000 at a 1 October exchange rate of
US$0.67=NZ$1.00. back
to content.
