China’s competition regulator State Administration for Market Regulation (SAMR) on June 8 published the China Anti-Monopoly Law Enforcement Annual Report 2021 (《中国反垄断执法年度报告（2021）》) and follow it up with the release of a first list of 12 exemplary cases of anti-monopoly practices where some Chinese government agencies were founded to abuse administrative powers to eliminate or restrict competition the next day.

Case 01

Enforcement agency: Shangdong Administration for Market Regulation

Sanctioned agency: Gaomi General Administration and Law Enforcement Bureau

Sanction agency location: Gaomi city, Weifang city, Shandong province

Date of decision: June 6

The Gaomi General Administration and Law Enforcement Bureau (高密市综合行政执法局) in 2019 planned to procure services from a privately owned operator through public tendering for a municipal power-assisted bike (PAB) sharing scheme and entrusted a private company Shangdong Chengdexin Management Co., Ltd. (山东诚德信项目管理有限公司) to perform a bidding procedure at the Gaomi unit of the Weifang Public Resource Trading Center. The Weifang Kuaipao Network Technology Co., Ltd. (潍坊快跑网络科技有限公司) won the bid and signed a five-year concession agreement with the bureau to be granted an exclusive right to operate, maintain, and carry out investment in the scheme as a public utility, with no other private companies allowed into the bike sharing business in Gaomi city.

The Shangdong Administration for Market Regulation investigated the bureau in March and then ordered it to terminate the agreement and open up the bike sharing market to qualified operators to ensure consumers’ freedom of choice. In the case, the administration invoked Article 32 of the Anti-Monopoly Law (AML) of the People’s Republic of China providing that administrative agencies and organizations authorized by laws and regulations to administer

public affairs shall not abuse administrative powers to restrict, or implicitly restrict entities or individuals to goods offered by business operators designated by administrative agencies and organizations to be operated, purchased, or used.

Case 02

Enforcement agency: Zhejiang Administration for Market Regulation

Sanctioned agency: Haining Housing and Urban-Rural Development Bureau

Sanction agency location: Haining city, Jiaxing city, Zhejiang province

Date of decision: June 9

The Haining Housing and Urban-Rural Development Bureau (海宁市住房和城乡建设局) in 2021, in conjunction with the Haining Emergency Management (海宁市应急管理局) and the China Banking and Insurance Regulatory Commission (CBIRC), issued a notice to stipulate that all construction and civil engineering companies that were performing projects in Haining city purchase workplace safety insurance as policyholders. The bureau planned to procure services from three or more Chinese insurers through public tendering to collectively function as one insurance carrier to provide workplace safety insurance plans to all construction and civil engineering companies. The bureau entrusted a private company Jiaxing Jianxin Cost Engineering Consultancy Co., Ltd. (嘉兴市建新工程造价咨询事务所有限公司) in the name of the Haining Construction Safety Commission (海宁市建筑施工安全委员会) to perform a bidding procedure at the Haining unit of the Jiaxing Public Resource Trading Center. Four insurers won the bid and signed a three-year agreement with the bureau to be granted an exclusive right to operate as the collective insurer. 39 construction companies and civil engineering companies purchased workplace safety insurance policies from the collective insurer as of January.

The Zhejiang Administration for Market Regulation investigated the bureau in March and then ordered it to terminate the agreement and open up the market to qualified insurance carriers to ensure construction and civil engineering companies’ freedom of choice. In the case, the administration invoked Articles 32, 37, and 51 of the AML and the State Council’s Opinions on Building a Fair Competition Review System for a Market Economy (《国务院关于在市场体系建设中建立公平竞争审查制度的意见》).

Case 03

Enforcement agency: Ningxia Hui Autonomous Region (NHAR) Administration for Market Regulation

Sanctioned agency: Helan Housing and Urban-Rural Development Bureau

Sanction agency location: Helan county, Yinchuan city, NHAR

Date of decision: February

The Helan Housing and Urban-Rural Development Bureau (贺兰县住房和城乡建设局) in 2017 issued a notice to designate a cable television installation company as an exclusive service provider for all real estate developers in Helan county.

The NHAR Administration for Market Regulation investigated the bureau in 2021 and then ordered it to open up the market to qualified installation companies to ensure real estate developers’ freedom of choice. In the case, the administration invoked Article 32 of the AML.

Case 04

Enforcement agency: Shandong Administration for Market Regulation

Sanctioned agency: Binzhou Urban Management Bureau

Sanction agency location: Binzhou city, Shandong province

Date of decision: June 9

The Binzhou Urban Management Bureau (滨州市城市管理局) in 2017 procured services from a privately owned operator for a municipal bike sharing scheme and signed a five-year agreement with it to be granted an exclusive right to operate the scheme as a public utility, with no other private companies allowed into the bike sharing business in Binzhou city.

The Shandong Administration for Market Regulation investigated the bureau in 2021 and then ordered it to terminate the agreement and open up the market to qualified installation companies to ensure consumers’ freedom of choice. In the case, the administration invoked Article 32 of the AML.

Case 05

Enforcement agency: Shandong Administration for Market Regulation

Sanctioned agency: Huimin General Administration and Law Enforcement Bureau

Sanction agency location: Huimin county, Binzhou city, Shandong province

Date of decision: June 9

The Huimin General Administration and Law Enforcement Bureau (惠民县综合行政执法局) in 2019 procured services from a privately owned operator for a municipal bike sharing scheme and signed a one-year agreement with it to be granted an exclusive right to operate the scheme as a public utility, with no other private companies allowed into the bike sharing business in Huimin county. The agreement also entitled the operator to an option to renew.

The Shandong Administration for Market Regulation investigated the bureau in 2021 and then ordered it to terminate the agreement and open up the market to qualified operators to ensure consumers’ freedom of choice. In the case, the administration invoked Article 32 of the AML.

Case 06

Enforcement agency: Hunan Administration for Market Regulation

Sanctioned agency: Shuangfeng Health Bureau

Sanction agency location: Shuangfeng county, Loudi city, Hunan province

Date of decision: November 2021

The Shuangfeng Health Bureau (双峰县卫生健康局) in 2021 designated a privately owned company as a vendor from which all publicly owned hospitals in Shuangfeng county should procure some drugs, supplies, and equipment. The bureau issued a notice ordering hospitals to sign procurement agreements with the designated vendor with concrete quantities of drugs, supplies, and equipment to procure from it listed within.

The Hunan Administration for Market Regulation investigated the bureau in 2021 and then ordered it to terminate the procurement agreements between hospitals and the designated vendor and open up the market to qualified vendors to ensure hospitals’ freedom of choice. In the case, the administration invoked Article 32 of the AML.

Case 07

Enforcement agency: Gansu Administration for Market Regulation

Sanctioned agency: Baiyin Municipal People’s Government

Sanction agency location: Baiyin city, Gansu province

Date of decision: December 2021

The Baiyin Municipal People’s Government (白银市人民政府) in 2012 issued a notice to stipulate that the Baiyin Human Resources and Social Security Bureau served as the collective policyholder to purchase group personal accident insurance for all urban employees in Baiyin city from an insurer designated by the government and the Municipal Social Security Service Center served as the entity to manage the policies and withhold fees from social security accounts maintained by urban employees as insureds in the form of premiums to remit to the insurer.

The Gansu Administration for Market Regulation investigated the government and then ordered it to open up the market to qualified insurance carriers to ensure urban employees’ freedom of choice. In the case, the administration invoked Article 32 of the AML.

Case 08

Enforcement agency: Hunan Administration for Market Regulation

Sanctioned agency: Chenzhou Education Bureau

Sanction agency location: Chenzhou city, Hunan province

Date of decision: September 2021

The Chenzhou Education Bureau (郴州市教育局) in 2021 published a notice on a public tender for primary and secondary school uniforms on Chinabidding.com.cn, a bidding website sponsored by the Beijing Municipal People’s Government, and official websites maintained by the Chenzhou Municipal People’s Government and the bureau respectively. The bureau intended several school uniform manufacturers to win the bid and draw lots to be decided as designated discrete manufacturers of four sections that the bureau had grouped all primary and secondary schools into.

The Hunan Administration for Market Regulation investigated the bureau in 2021 and then ordered it to terminate the tender and open up the market to qualified school uniform vendors to ensure students’ freedom of choice. In the case, the administration invoked Article 32 of the AML.

Case 09

Enforcement agency: Hunan Administration for Market Regulation

Sanctioned agency: Hengyang Health Bureau

Sanctioned agency location: Hengyang county, Hengyang city, Hunan province

Date of decision: June 9

The Hengyang Health Bureau (衡阳县卫生健康教育局) in 2020, in conjunction with other two local government agencies, published a notice stipulating that all incumbent public officers at government agencies and public institutions in Hengyang county conduct health screenings on a regular basis. The notice also said four health screening service providers would be designated as exclusive vendors through its examinations.

The Hunan Administration for Market Regulation investigated the bureau in 2021 and then ordered it to open up the market to qualified health screening service providers to ensure public officers’ freedom of choice. In the case, the administration invoked Article 32 of the AML.

Case 10

Enforcement agency: Hunan Administration for Market Regulation

Sanctioned agency: Hengnan Health Bureau

Sanctioned agency location: Hengnan county, Hengyang city, Hunan province

Date of decision: June 9

The Hengyang Health Bureau (衡南县卫生健康教育局) in 2020, in conjunction with other three local government agencies, published a notice stipulating that all incumbent public officers at government agencies and public institutions in Hengnan county conduct health screenings on a regular basis. The notice also said one health screening service provider would be designated by one agency or institution as an exclusive vendor.

The Hunan Administration for Market Regulation investigated the bureau in 2021 and then ordered it to stop prescribing the use of health screenings as well as open up the market to qualified health screening service providers to ensure public officers’ freedom of choice. In the case, the administration invoked Article 32 of the AML.

Case 11

Enforcement agency: Guangxi Zhuang Autonomous Region (GZAR) Administration for Market Regulation

Sanctioned agency: Du’an Yao Autonomous County Health Bureau

Sanctioned agency location: Du’an Yao Autonomous County, Hechi city, GZAR

Date of decision: January 2021

The Du’an Yao Autonomous County Health Bureau (都安瑶族自治县卫生健康局) in 2019

filed a petition for some preferential policies to be granted to a medical company with the local people’s government. The petition designated the medical company as a prioritized vendor from which all public medical services in Du’an Yao Autonomous County procure drugs, medical devices, dispensable supplies, traditional Chinese medicine (TCM) decoctions, medical purpose reagents when competing with other medical companies on equal terms. Many public medical services in 2020 complied and signed procurement agreements with the designated vendor.

The GZAR Administration for Market Regulation investigated the bureau in 2021 and then ordered it to terminate the procurement agreements between the public medical services and the designated vendor and open up the market to qualified vendors to ensure the medical services’ freedom of choice. In the case, the administration invoked Article 32 of the AML.

Case 12

Enforcement agency: Guangxi Zhuang Autonomous Region (GZAR) Administration for Market Regulation

Sanctioned agency: Bobai Emergency Management Bureau

Sanctioned agency location: Bobai county, Yulin city, GZAR

Date of decision: August 2020

The Bobai Emergency Management Bureau (博白县应急管理局) in 2019 issued a notice on the administration of the distribution of firework and firecracker manufacturers in Bobai county. The notice stipulated that 28 towns administered by Bobai county would be divided into seven sections, which would in turn be designated as distinctively exclusive areas for seven local firework and firecracker manufacturers for distribution and safety management. The bureau summoned the seven manufacturers to the bureau office to officially sign written pledges to ensure safety in operations and distribution, where four of the manufacturers refused to comply to restrict their distribution areas to the locations allocated by the bureau. The bureau threatened illegal distribution if the four non-compliant manufacturers distributed products outside the areas allocated to them.

The GZAR Administration for Market Regulation investigated the bureau in 2020 and then ordered it to stop artificially segmenting the market and open it up sufficiently to qualified vendors to ensure consumers’ freedom of choice. In the case, the administration invoked Articles 33 and 36 of the AML.

The full text of the cases is available here.