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Thursday, August 24, 2006 - Page updated at 12:00 AM


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Anti-monopoly push by China may hit Microsoft

Bloomberg News

China is drafting an anti-monopoly law that might force companies such as Microsoft to give up leading market shares in the world's fastest-growing economy.

Under the law, local or overseas companies with more than 50 percent of China's market share for any product will be investigated.

Those using dominant market positions to set unfair prices will be fined as much as 10 percent of annual sales, according to a draft obtained by Bloomberg News.

The Chinese government is strengthening laws to help local companies compete as the country prepares to remove the final trade barriers and investment hurdles after five years in the World Trade Organization.

The government tightened control of foreign takeovers this year amid rising criticism that overseas companies are dominating some industries.

"Multinationals do have legitimate reason to fear that this proposed law may affect them" more than domestic companies, said Anping & Partners' Managing Partner Guan Anping.

Any company with more than 50 percent of China's market may be fined "more than 1 percent and less than 10 percent of the total turnover of the preceding year," if it abused its dominant position, according to the draft law, which doesn't say whether the fine applies to global income or revenue earned in China.

Microsoft's Windows operating system has more than a 50 percent share of the desktop-computer market in China, according to Edward Yu, chief executive of Beijing-based technology market research firm Analysys International.

"The anti-monopoly law still isn't set in stone, so we can't comment," said Brian Zhou, president of H-Line Ogilvy, Microsoft's public-relations agent in China. "Microsoft believes in fair competition; that fair competition will stimulate better products and services for consumers."

Roger Chen, Microsoft's Beijing spokesman, wasn't available to comment.

The draft law defines abuse as when products are sold at "unfairly high" prices or bought at "unfairly low" prices, without specifying what constitutes unfair. Abuse is also defined as selling products at below cost.

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