Raising Awareness of Anticompetitive Behavior in the Financial Sector of the People's Republic of China

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Hiroko Uchimura-Shiroishi. Raising Awareness of Anticompetitive Behavior in the Financial Sector of the People's Republic of China

Raising Awareness. of Anticompetitive. Behavior in the. Financial Sector of the. People’s Republic of China

Contents

Foreword

Acknowledgments

Abbreviations

Introduction

Review of the Competition Law of the People’s Republic of China. Competition Law Provisions Concerning the Financial Industry

Monopoly Agreements

Abuse of Dominant Market Position

Concentration of Undertakings

Curtailment of Abuse of the Administrative Power to Restrict Competition

Implementation of the Competition Law in the People’s Republic of China. Summary of the Implementation of the Competition Law

Latest Legislation regarding the Competition Law

Antimonopoly Enforcement Authorities

State Administration for Industry and Commerce

National Development and Reform Commission

Ministry of Commerce

Conflict and Coordination between Antimonopoly Enforcement Authorities

Influence of the Competition Law on the Financial Industry

Current Conditions in the Financial Markets of the People’s Republic of China. Banking Industry

Insurance Industry

Securities Industry

Analysis of Monopoly in the Financial Industry of the People’s Republic of China

Manifestations of Monopoly in the Financial Industry. Monopolistic Agreements

Abuse of Market Dominance

Business Concentration

Application of Antimonopoly Regulations

Damage Caused by Monopoly in the Financial Industry

Supervision by the Financial Industry Regulatory Authority

Supervision of Monopoly Behavior in the Banking Industry by the China Banking Regulatory Commission

Supervision of Monopoly Behavior in the Insurance Industry by the China Insurance Regulatory Commission

Supervision of Monopoly Behavior in the Securities Industry by the China Securities Regulatory Commission

Conflict and Coordination between Antitrust Enforcement and Supervision of the Financial Industry

Ambiguity of the Relationship between Antitrust Enforcement and Supervision

Conflict between Antitrust Enforcement and Supervision of the Insurance Industry

Coordination between Antitrust Enforcement and Supervision in the Financial Industry

Case Study: Acquisition of Shenzhen Development Bank by China Ping An Insurance Group. Pre-acquisition Background of China Ping An Insurance Group and Shenzhen Development Bank. Ping An Insurance (Group) Company of China

Shenzhen Development Bank

Analysis of Transaction and Approval Procedures

Step 1: Ping An’s Acquisition of Newbridge’s Shares in Shenzhen Development Bank

Step 2: Shenzhen Development Bank’s Nonpublic Share Offering to Ping An

Step 3: Reorganization of Major Assets between Ping An and Shenzhen Development Bank

Discussion of the Case Study

Conclusions

References

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By Hiroko Uchimura-Shiroishi and Hanhong Wu

Asian Development Bank

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Enforcing the competition law in the PRC’s financial sector is difficult primarily because of a lack of detailed implementation regulations, lack of coordination between the antimonopoly agencies and the financial regulators, and conflict of interest between state ownership of large financial institutions and the need for increased competition in the financial sector. Consequently, the PRC’s antimonopoly enforcement authorities have been asking for the implementing regulations to strengthen the implementation of the law. ADB will continue to support this initiative because it believes that the adoption of a concrete and specific competition policy will ensure the effective implementation of the competition law.

The cooperation between ADB and the PRC on antimonopoly issues has come a long way since 2003. ADB is pleased to have contributed to the PRC’s efforts in adopting the competition law and in developing a comprehensive competition policy. By providing technical assistance to the PRC government, ADB helped revitalize the legislative process for the competition law and supported the development of the legal framework for the law. With the adoption of the competition law, ADB’s assistance then focused on strengthening the capacity of relevant government agencies to implement it effectively. Through this publication, ADB hopes to contribute further to the understanding of antimonopoly practices in the financial sector of the PRC and their implications for the economy.

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