Disclaimer: Reproduced with permission from the Legal Industry Review. The article was first published in The Legal Industry Review – China & Hong Kong chapter May 2023. Click here for the full article.
In August 2022, the Antimonopoly Law was revised for the first time since the law was enacted in 2007. The revisions are light-touch, leaving the key features of the Antimonopoly Law intact, with only a limited expansion in the scope of the law.
The amendments do not change the main substantive rules under the Antimonopoly Law. The amended law still relies on the pre-existing four pillars, i.e. (i) conduct rules prohibiting restrictive agreements; (ii) conduct rules prohibiting the abuse of a dominant market position; (iii) merger rules controlling merger and acquisition activity; and (iv) rules prohibiting the abuse of administrative power that leads to restrictions of competition.
The enforcement model also remains unchanged. The law continues to be enforced both by an administrative antimonopoly enforcement authority (public enforcement) and by the general courts (private enforcement), with an Antimonopoly Commission tasked with coordinating and guiding enforcement.
Most of the revisions are of limited scope, seeking to clarify matters of procedure or of substance, or to slightly expand the law’s ambit. More significant amendments are however made in relation to liability. Fines for noncompliance with the Antimonopoly Law are significantly increased, and new penalties are introduced:
- Parties that facilitate or induce third parties to conclude anticompetitive agreements can now expressly be found liable and subject to a fine up to RBM1 million.
- The maximum penalties that can be imposed for the provision of false or inaccurate information or for obstructing investigations are increased to one per cent of the revenue during the preceding year for companies and a RMB500,000 for individuals.
- As regards merger control, a failure to notify a reportable concentration that has or may have the effect of eliminating or restricting competition may now lead to the imposition of a fine between one and 10 per cent of the undertaking’s turnover in the preceding year. A failure to notify a reportable concentration that does not have effect of eliminating or restricting competition may lead to the imposition of fines of up to RMB5 million.
- For particularly egregious violations of the law, the maximum fine applicable can be increased by up to five times.
The legislator also introduced specific provisions meant to better address competition issues in the digital economy, with an express prohibition on abuses of a dominant position through the use of data, algorithms, technology or “platform rules”; and an expansion of the merger control regime allowing the antimonopoly enforcement authority (the State Administration of Market Regulation, the “SAMR”) to review transactions involving small parties but with a possible significant impact on competition.
The 2022 reform is not yet fully implemented, with the SAMR expected to introduce safe harbour market share thresholds under which “vertical” monopoly agreements shall not be prohibited, as well as new merger control thresholds, which may lead to a reduction in the number of M&A transactions subject to review.
In parallel to the legislative reform, the SAMR has increased the decentralised enforcement of the Antimonopoly Law, delegating for the first time in 2022 merger review powers to local authorities. Provincial authorities in Beijing, Shanghai, Chongqing, Shaanxi and Guangdong are now tasked with the review of simple transactions involving parties or geographic markets in corresponding geographic regions.