China’s Anti-Monopoly Law Enters its Second Decade

Original 刘成金杜研究院

The year 2019 marks the first complete year of enforcement for the Anti-Monopoly Bureau of State Administration for Market Regulation (“SAMR”)’s since its establishment as well as the start of the second decade of the Anti-Monopoly Law (“AML”). In this year, remarkable progress was made in Chinese antitrust law in terms of legislation, investigation and enforcement, merger control and antitrust litigation. In summary:

Through institutional reforms, SAMR unified the interpretation of the AML by issuing the Interim Provisions on the Prohibition of Monopoly Agreements, the Interim Provisions on Prohibition of the Abuse of Market dominance and the Interim Provisions on Prohibition of Abuse of Administrative Power. At the beginning of 2020, SAMR promulgated the Interim Provisions on the Review of Concentrations of Undertakings (Draft for Public Comments) to integrate various provisions of the existing rules for merger control review. Meanwhile, SAMR and some of its local counterparts (“local AMRs”) also published antitrust compliance guidelines to increase compliance awareness of companies and serve as guidance to improve their internal management.
On the antitrust investigation and enforcement front, SAMR continued to concentrate on enforcement in the industries which impact people’s livelihoods, and began to focus on monopoly issues in the e-commerce sector; Traditional anti-competitive conducts (including cartels, resale price maintenance etc.) continue to remain enforcement priorities while SAMR also provided more in depth guidance in complex abuse of market dominance conduct cases, such as minimum purchase quantity and most-favored-nation treatment clauses etc.
With regard to merger control, SAMR continued to review cases under simplified procedure in an efficient manner. In contrast, complex transactions faced closer scrutiny. In comparison to other jurisdictions, there were certain areas of concern which SAMR particularly focused on. For instance, SAMR adopted a more stringent approach to conglomerate mergers. Based on cases since 2019, it seems that the “Hold Separate” remedy could be an effective measure to solve particular concerns in the Chinese market or particular product related concerns. Also noteworthy, is that in 2019, a record high of 17 cases were punished for failures to notify.
Antitrust litigation continues to be very active, in particular, a number of noteworthy litigation matters in the internet industry caught eyes of the public in 2019. In terms of procedure, 2019 is the first year in which the leapfrog appeal system became effective, i.e., the Intellectual Property Tribunal of the Supreme People’s Court (“Supreme Court”) started to hear appeal cases; the Supreme Court and the Beijing High Court also made respective rulings on whether arbitration can be used for monopoly disputes.
After preparation in 2019, SAMR promulgated the Draft Revision to the Anti-Monopoly Law (Draft for Public Comments) (“Draft Revision”) at the beginning of 2020. The Draft Revision clarified many controversial issues in practice, such as adjusting the regulation system of monopoly agreements, leaving room for future interpretation of regulations about “restricting the minimum resale price”; putting forward specific considerations for the determination of market dominance in the internet sector; significantly increasing the penalties for antitrust infringements. It is expected that the revision to the AML will provide some clarity for companies, and the enforcement of the AML will become more stringent in the future.

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——— Authors ———

Cheng Liu

Partner

Corporate & Commercial Group

liucheng@cn.kwm.com

Mr. Liu Cheng is a partner at corporate department of KWM.

His main areas of practice include antitrust and competition law, corporate investment and M&A. Mr. Liu has extensive experience in antitrust and competition law since 2005. He regularly advises clients on Chinese antitrust and competition matters and has represented numerous multinational companies and Chinese companies in their merger filings at Chinese authority, including a number of high profile transactions. He provides advice on antitrust compliance for the clients’ business model, and delivers antitrust trainings. He also advises clients in dealing with antitrust investigations by the authorities. Mr Liu has been recognized by many global media as one of the leading competition lawyers in China.