The anti-monopoly legal framework of China consists of the Anti-Monopoly Law and over 20 regulations.
The hierarchy of these norms represented in the form of a five-level pyramid. Such law and regulations are all applicable for China's anti-monopoly law enforcement agencies when enforcing the norms.
I. One Law
The Law refers to the Anti-Monopoly Law (2007).
The Anti-Monopoly Law, formulated by the Standing Committee of the National People’s Congress in 2007, is at the top of China’s anti-monopoly legal framework.
The key points are as follows:
1. There are three types of monopoly:
(a) monopoly agreements reached by business operators;
(b) abuse of market dominance by business operators; and
(c) the concentration of business operators (CBO) which has or may have the effect of excluding or restricting competition.
2. The law enforcement agencies designated by the State Council shall be responsible for anti-monopoly law enforcement, including the review of CBO applications, the investigation into suspected monopolistic activities, and the handling of business operators who have engaged in monopolistic activities.
The anti-monopoly law enforcement agency of China was initially the Ministry of Commerce (MOFCOM), which was later replaced by the State Administration for Market Regulation (SAMR) since the establishment of SAMR in 2018, and the MOFCOM would no longer be responsible for this field.
II. One Administrative Regulation
The administrative regulation refers to the Regulation on the Declaration Threshold for the Concentration of Business Operators (2018).
China’s State Council promulgated the Regulation on the Declaration Threshold for the Concentration of Business Operators (the Regulation, 关于经营者集中申报标准的规定) in 2008 and amended the Regulation in 2018.
The CBO refers to the merger of several business operators or the acquisition of control over other business operators by a business operator.
Under the Regulation, if the CBO satisfies the following conditions, the relevant business operators shall apply to the law enforcement agency for approval:
(1) the total global turnover of all business operators involved in the CBO in the previous accounting year exceeds CNY 10 billion with at least two business operators each having a turnover of more than CNY 400 million within the territory of China in the previous accounting year;
(2) the total turnover of all business operators involved in the CBO within the territory of China in the previous accounting year exceeds CNY 2 billion with at least two business operators each having a turnover of more than CNY 400 million within the territory of China in the previous accounting year.
III. Six Departmental Rules
The six departmental rules are formulated by the law enforcement agencies, including as follows:
1. Measures for the Declaration of Concentration of Business Operators (2009)
The Measures for the Declaration of Concentration of Business Operators (经营者集中申报办法), which was promulgated on 21 Nov. 2009, initially stipulates how the law enforcement agencies examine the applications for the CBO.
2. The Measures for Review of the Concentration of Business Operators (2009)
The Measures for Review of the Concentration of Business Operators was promulgated on 24 Oct. 2009, aiming to specify how the law enforcement agencies review the applications for the CBO.
3. Interim Measures for Investigation and Handling of Failure to Legally Declare the Concentration of Business Operators (2011)
The Interim Measures for Investigation and Handling of Failure to Legally Declare the Concentration of Business Operators (未依法申报经营者集中调查处理暂行办法) was promulgated on 30 Dec. 2011, aiming to specify how the law enforcement agencies should deal with the business operators that should have declared the CBO but fail to do so.
4. The Provisions on Imposing Additional Restrictive Conditions on the Concentration of Business Operators (for Trial Implementation) (2014)
The Provisions on Imposing Additional Restrictive Conditions on the Concentration of Business Operators (for Trial Implementation) (关于经营者集中附加限制性条件的规定(试行)) was promulgated on 4 Dec. 2014, aiming to specify how law enforcement agencies approve the CBO with additional restrictive conditions, and to supervise the satisfaction of the said conditions.
Additional restrictive conditions mean that law enforcement agencies can impose extra restrictive conditions to CBO, so as to reduce the adverse impact of the CBO on the competition.
Such restrictive conditions include: (1) divestment of assets; (2) facilitate the access to platform, technology or market.
5. The Interim Provisions on the Examination of Concentration of Business Operators (2020)
The Interim Provisions on the Examination of Concentration of Business Operators (the Interim Provisions, 经营者集中审查暂行规定) was promulgated on 23 Oct. 2020, and came into force on 1 Dec. 2020.
In fact, the Interim Provisions are improvements to the aforesaid four departmental rules. The relevant matters will be subject to the Interim Provisions as the Interim Provisions comes into force.
6. Measures for the Calculation of Turnover for the Declaration of the Concentration of Business Operators in the Financial Sector (2009)
The Measures for the Calculation of Turnover for the Declaration of the Concentration of Business Operators in the Financial Sector (金融业经营者集中申报营业额计算办法) was promulgated on 15 Jul. 2009, aiming to clarify that if the CBO in the financial sector satisfies specific conditions, the approval of the competent law enforcement agency shall be obtained.
IV. Nine Regulatory Documents
1. Provisions on the Prohibition of the Abuse of Intellectual Property Rights to Exclude or Restrict Competition (2020)
Activities prohibited by the Provisions on the Prohibition of the Abuse of Intellectual Property Rights to Exclude or Restrict Competition (关于禁止滥用知识产权排除、限制竞争行为的规定) refer to the performance of monopoly agreements, abuse of market dominance by business operators and other activities at the time of using their intellectual property rights, which have the effects of excluding or restricting the competition.
2. The Interim Provisions on Prohibition of Monopoly Agreements (2019)
Pursuant to the Interim Provisions on Prohibition of Monopoly Agreements (禁止垄断协议暂行规定), the prohibited monopoly agreements refer to agreements, decisions or other concerted conducts excluding or restricting competition.
3. The Interim Provisions on Curbing the Abuse of Administrative Powers to Exclude or Restrain Competition (2019)
Behaviors, prohibited by the Interim Provisions on Curbing the Abuse of Administrative Powers to Exclude or Restrain Competition (制止滥用行政权力排除、限制竞争行为暂行规定), refer to the activities that administrative authorities and organizations authorized by laws and regulations to manage public affairs abuse their administrative powers to exclude or restrict the competitors from business running in specific industries or regions for the purpose of protecting specific operators.
4. The Notice on the Delegation of Anti-monopoly Law Enforcement (2018)
The Notice on the Delegation of Anti-monopoly Law Enforcement (关于反垄断执法授权的通知) indicates that:
(1) the SAMR is responsible for the anti-monopoly law enforcement nationwide;
(2) the provincial market supervision and administration departments shall be responsible for the anti-monopoly law enforcement, such as dealing with monopoly agreements, abuse of market dominance and abuse of administrative powers to exclude or restrict competition, within their administrative jurisdiction;
(3) the SAMR may also authorize certain provincial market supervision and administration departments to be responsible for specific national or inter-provincial cases.
5. The Guiding Opinions on Declaration of Concentration of Business Operators (2018)
The Guiding Opinions on Declaration of Concentration of Business Operators (关于经营者集中申报的指导意见) clarifies what kind of CBOs should be declared and how to do so.
6. The Guiding Opinions on the Declaration of Concentration of Business Operators in Simplified Cases (2014)
The Guiding Opinions on the Declaration of Concentration of Business Operators in Simplified Cases (关于经营者集中简易案件申报的指导意见) clarifies that if the CBO meets the standard for simplified cases, the applicant may apply subject to the procedures for declaration of simplified cases, and also stipulate the procedures for declaration of simplified cases.
7. The Interim Provisions on the Application Standards for Simplified Cases of Concentration of Business Operators (2014)
The Interim Provisions on the Application Standards for Simplified Cases of Concentration of Business Operators (关于经营者集中简易案件适用标准的暂行规定) clarifies what kind of CBOs satisfy the requirements for simplified cases, i.e., under what circumstances the applicant may declare the CBO as a simplified case.
8. The Provisions on Regulating Competitive Behavior in the Field of Foreign Investment Cooperation (2013)
The Provisions on Regulating Competitive Behavior in the Field of Foreign Investment Cooperation (规范对外投资合作领域竞争行为的规定) stipulates that Chinese companies shall not take unfair competition behavior to damage the legitimate rights and interests of other Chinese companies, but compete fairly and cooperate with each other when investing overseas.
9. The Interim Provisions on Assessing the Impact of Concentration of Business Operators on Competition (2011)
The Interim Provisions on Assessing the Impact of Concentration of Business Operators on Competition (关于评估经营者集中竞争影响的暂行规定) clarifies how the anti-monopoly law enforcement agencies determine whether the CBO constitutes a monopoly during examination and reviews.
V. Seven Guidelines
1. The Anti-monopoly Guideline on Platform Economy (Draft for comments, not yet effective) (2020)
The Antitrust Guideline on Platform Economy (关于平台经济领域的反垄断指南) defines the standards to determine the monopolistic behavior by Internet platform in the economic field, thus unifying the standards of anti-monopoly law enforcement, and providing guidance for the compliance of Internet platform operators.
2. The Anti-monopoly Compliance Guideline for Business Operator (2020)
The Anti-monopoly Compliance Guideline for Business Operator (经营者反垄断合规指南) aims to guide business operators to formulate corresponding compliance management mechanism for the purpose of preventing and reducing the risk of anti-monopoly compliance.
3. The Guideline for Commitments Made by Business Operators in Monopoly Cases (2019)
The commitments made by business operators in monopoly cases mean that in the process of investigation of monopoly cases, if the business operators make a commitment, the law enforcement agencies can suspend the investigation and terminate the investigation procedures. The Guideline for Commitments Made by Business Operators in Monopoly Cases (垄断案件经营者承诺指南) focuses on how the business operator makes a commitment.
4. The Guideline to Application of the Leniency System of Horizontal Monopoly Agreement Cases (2019)
The leniency system of horizontal monopoly agreement cases means that if the business operator voluntarily reports to the law enforcement agency the relevant information about the conclusion of the monopoly agreement and provides important evidence, the law enforcement agency may reduce or exempt the punishment of the business operator as appropriate. The Guideline to Application of the Leniency System of Horizontal Monopoly Agreement Cases (横向垄断协议案件宽大制度适用指南) focuses on how law enforcement agencies may apply the leniency system.
5. The Anti-monopoly Guideline to the Field of Intellectual Property Rights (2019)
Monopoly in the field of intellectual property rights refers to the conclusion or performance of monopoly agreements when the business operators exercise intellectual property rights or engage in related activities, the abuse of market dominance, or implementing the concentration of business operators that have or may have the effect of excluding or restricting competition. The Anti-monopoly Guideline to the Field of Intellectual Property Rights (关于知识产权领域的反垄断指南) focuses on how law enforcement agencies deal with the monopoly in this area.
6. The Anti-monopoly Guideline to the Automotive Industry (2019)
The Anti-monopoly Guideline to the Automotive Industry (关于汽车业的反垄断指南) focuses on how the law enforcement agencies deal with the monopoly in the automobile industry, so as to prevent and curb the monopoly of the automobile industry.
7. The Guideline for Anti-monopoly Review of Concentration of Business Operators (2018)
The Guideline for Anti-monopoly Review of Concentration of Business Operator (经营者集中反垄断审查办事指南) aims to clarify how the applicant submits the declaration materials to the anti-monopoly law enforcement agency.
Contributors: CJO Staff Contributors Team
