China: Antitrust proposals trigger foreign business fears over IP protection

Foreign companies with dominant market positions could be increasingly forced to license technology to competitors or face sanctions under China’s latest draft antitrust policy guidelines, according to foreign business groups and attorneys.

The proposals include a so-called “essential facilities” doctrine, a legal concept that assumes some core infrastructure and technology is so important, or the barrier to entry so high, that refusal to share constitutes monopolistic behavior.

If interpreted broadly, companies could be forced to license their intellectual property (IP) to Chinese competitors or lower licensing costs to benefit local firms, at a time when China is seeking to promote domestic champions.

Draft guidelines for implementing the country’s 2008 Anti-Monopoly Law put forward by two of the country’s antitrust regulators go beyond global standards, experts and lawyers say. Telecommunications, pharmaceuticals and renewable energy industries, all priority areas for Beijing, are likely to be the most vulnerable.

“China is still fundamentally looking at this as though it is an IP taker rather than an IP creator,” said Lester Ross, a partner at law firm Wilmer Hale’s Beijing office.

China’s antitrust policies are worrying its trading partners, including the United States, which issued a joint statement with China during President Xi Jinping’s state visit to Washington last September that both countries would “avoid the enforcement of competition law to pursue industrial policy goals.”

Full content: Reuters

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