Published Draft Anti-monopoly Law: what’s new?

With the rapid development of China's economy in recent years, in order to better protect the rights and interests of various entities in the market economy, on January 2, 2020, the State Administration for Market Supervision issued a public notice soliciting opinions on the "Amendment draft of the Anti-monopoly law" (the “Draft"). 

It is the first time that China has proposed changes to the Anti-monopoly Law (“AML”) since it took effect in 2008. The changes include more clear definition of a system of fair competition review, and tougher penalties for violations.

First of all, Fair Competition Review Mechanism. In order to compress the space of administrative monopoly, the fair competition review mechanism is written into the Draft which stipulates that the State establishes and implements a fair competition review system to standardize government administrative actions, and prevents policies and measures to eliminate or restrict competition. Under the current AML, the administrative authorities shall not abuse their administrative power to formulate provisions that exclude or restrict competition. Although this provision is significant, the operability is weak. 

This time, the Draft stipulates that administrative organs and organizations authorized by laws and regulations to manage public affairs should conduct fair competition review in accordance with relevant state regulations when formulating economic activities involving market entities. The "organizations authorized by laws and regulations with the function of managing public affairs" were added on the basis of the original"administrative organs", which has more directional significance.

Secondly, Market Dominance of Internet. Considering the traditional market dominance standards might have been unable to meet the Internet form of financial industry particularity, the Draft adds more factors to consider in determining the dominance of Internet market, in addition to the traditional factors, such as market shares, competition situation, financial and technical conditions, the network effect, scale economy, the locking effect, the ability to control and deal with the related data should also be considered to further confirm the dominance market in the field of the Internet. It is believed that in the near future this will be combined with the "E-commerce Law" for more detailed provisions. 

Thirdly, Stopping the Clock. The Draft remains the current review period for concentration of operators, which is no more than 180 days. Meanwhile the new added "Stopping the Clock" for procedural flexibility in case processing, in which the review process is suspended under the following circumstances: the examination period shall be suspended upon the application or consent of the applicant; the documents and materials submitted by the operator are inaccurate and need to be further verified; the AML enforcement authority (the “Enforcement Authority”) under the state council and the operators need to consult on the proposal of attaching restrictive conditions.

This provision also provides that the period for stopping the calculation and review shall be separately determined by the AML enforcement authority under the state council.

At the same time, it also reflects that the AML enforcement authority of the state council will have the discretion to decide on the suspension system, so it should make clear provisions on the specific application conditions and methods of the suspension system in the future, so as to prevent the unreasonable abuse of such discretion and extend the review period. 

Fourthly, More severe punishment. 

In conclusion, we can see that the contents reflected in the Draft has kept pace with the times, and we will continue to pay close attention to the revision process of the Draft and keep it updated in a timely manner.

Karen Wang

HFG Law&Intellectual Property