China’s Standing Committee of the National People's Congress (NPCSC) reviewed on October 19 the Draft Amendment to the Anti-Monopoly Law for the first time. The Draft Amendment was drafted by the State Administration for Market Supervision (SAMR).
This will be the first update since the law was promulgated in 2007. The Anti-monopoly Committee of the State Council listed the amending of the law in its work plan in 2018. Since then, the SAMR has already released 6 guidelines including Guidelines of the Antitrust Committee of the State Council on the Field of Intellectual Property (国务院反垄断委员会关于知识产权领域的反垄断指南) and the Regulations on prohibiting abuse of intellectual property rights to exclude and restrict competition (关于禁止滥用知识产权排除、限制竞争行为的规定) in 2020.
1. The draft amendment clarifies the basic status of competition policy and the legal status of the fair competition review system.
2. The draft amendment summarizes China’s anti-monopoly law enforcement practices and clarifies law enforcement rules.
According to the amendment, business operators on the market must not abuse data and algorithms, technology, capital advantages, and platform rules to exclude or restrict competition.
Major business operators shall not form monopoly or provide substantive assistance between each other.
Operators with dominant market positions shall not use data, algorithms, technology, and platform rules to set up obstacles to impose unreasonable restrictions on other operators.
The enforcement agency of Anti-monopoly Law the State Council shall strengthen the census of operators in the fields related to living conditions, finance, technology, and media.
3. Learn from international experience and improve relevant anti-monopoly regulations.
The amendment proposes the establishment of a "safe harbor" system, where operators will not be punished if they prove that their market share in the relevant market is lower than the standards set by the enforcement agency of the Anti-Monopoly Law of the State Council when reaching monopoly.
The amendment proposes the establishment of a “stop clock” system for the review period for the concentration of undertakings, which stipulates that the review work cannot be carried out due to the failure to submit documents or materials in accordance with the regulations, and new situations and new facts that have a significant impact on the review of concentration of undertakings need to be verified. Under such circumstances, the Anti-monopoly Law Enforcement Agency of the State Council may decide to suspend the calculation of the review period for the concentration of undertakings.
4. The amendment further strengthens the protection of anti-monopoly law enforcement.
The amendment stipulates the cooperation obligations of relevant entities or individuals when the enforcement agency of the Anti-Monopoly Law investigates the abuse of administrative power to exclude or restrict competition in accordance with the law. For organizations with business functions, the enforcement agency of the Anti-Monopoly Law may conduct interviews with their legal representatives or persons in charge and request them to take measures for rectification.
5. The amendment clarifies legal responsibilities and increases penalties.
The amendment increases monetary penalties on the practices of most occurrence. The amendment substantially increases the penalties for monopolistic businesses’ legal representatives, top management, and personnel of direct interest. Credit downgrade is among the punitive measures.
