OECD kpcdb

1. Anti-monopoly Law (AML)

The Anti-monopoly Law of the People’s Republic of China (“AML”), which entered into force on 1 August 2008, is the main legislation that governs competition policy in China. 

 

According to Article 1 the purpose of the AML is to prevent and restrain monopolistic conducts, protect fair competition in the market, enhance economic efficiency, safeguard the interests of consumers and social public interest, and to promote the healthy development of the socialist market economy.

 

The AML regulates monopolistic conducts, which include monopoly agreements (Chapter II), abuse of dominant market position (Chapter III), and concentration of undertakings (Chapter IV). It also covers abuse of administrative powers to eliminate or restrict competition by administrative agencies and other “organisations empowered by laws or regulations with responsibilities for public affairs administration (administrative monopoly)”. 

 

There are also other laws that include anti-monopoly rules: Price Law of 1998, the Bidding Law of 2000, and the Anti-Unfair Competition Law of 1993. However, this guidebook will only cover and review the AML.

 

General exclusions: According to Article 56, the AML is not applicable to the association or concerted actions of agricultural producers or rural economic organisations in their business activities of production, processing, sales, transportation and storage of agricultural products.

 

The AML applies to State-owned enterprises (SOEs).

 

Extra-territorial application: Article 2 sets out that the AML is applied to monopolistic conducts outside the territory of China which serve to eliminate or restrict competition in domestic markets.

 

2. Anti-monopoly Commission and Enforcement Authorities 

 

Anti-monopoly Commission: According to Article 9, the Anti-monopoly Commission (AMC) is in charge of organising, co ordinating, and guiding anti-monopoly work. It is also responsible for developing competition policies and anti-monopoly guidelines, conducting market studies, and co ordinating administrative enforcement of the AML.

 

The Anti-monopoly Commission enforces the AML through 3 authorities: the National Development and Reform Commission (NDRC), the State Administration for Industry and Commerce (SAIC) and the Ministry of Commerce (MOFCOM).

 

National Development and Reform Commission (NDRC): NDRC is a ministry-level macro-economic regulatory body. The Bureau of Price Supervision and Anti-Monopoly of NDRC is responsible for the enforcement of AML with respect to price-related anti-competitive agreements, such as horizontal price-fixing and resale price maintenance. The NDRC is also responsible for price-related abuses of dominance and administrative monopoly.

State Administration for Industry & Commerce (SAIC): SAIC is a ministry level agency responsible for administration of industry and commerce. The Antimonopoly and Anti-unfair Competition Enforcement Bureau of SAIC, established in 2008, is responsible for the enforcement of AML with respect to non-price-related anti-competitive agreements, such as output restrictions and market allocation. SAIC is also responsible for non-price-related abuses of dominance.

 

SAIC also enforces regulations related to consumer protection and unfair trade practices. 

 

SAIC is established at the ministerial level directly under the State Council, the chief administrative authority in China. SAIC has about 300 staff members as at September 2015.

 

Ministry of Commerce, People’s Republic of China (MOFCOM): The Anti-Monopoly Bureau of MOFCOM, established in 2008, is responsible for the enforcement of AML with respect to merger control. 

 

Competition advocacy: The Anti-monopoly Commission under the State Council performs market/sector studies in China. 

From July 2016, departments of the State Council and provincial governments are required to carry out a fair competition review when drafting new regulations and policies. The implementation of the Fair Competition Review Mechanism has been attributed to NDRC. 

 

International co operation: SAIC concluded Memorandums of Understanding (MoUs) with Australia, Brazil, Canada, France, Thailand, Kazakhstan, Korea, Mongolia, Portugal, Romania, Russia, United Kingdom, United States, Vietnam and the European Union.

 

3. Investigation

 

Initiation of investigation: 

 

SAIC or NDRC may conduct investigations on their own initiative or upon receiving a report on an infringement of the AML. If the a complaint is made with the relevant facts and evidence, under Article 38 the NDRC and SAIC are obliged to open an investigation.

 

Powers of investigation: The AML empowers the enforcement authorities to investigate suspected infringements to the AML. According to Article 39 such powers include (i) the power to conduct an inspection of the business places or relevant premises of the undertakings under investigation, (ii) interviews, (iii) inspecting and copying relevant documents and materials, (iv) seizing and retaining relevant evidence, (v) enquiring into bank accounts of undertakings under investigation. 

 

Failure to comply with investigation: According to Article 52, where a business operator refuses to provide relevant materials or information, provides false materials or information, conceals or destroys evidence, or obstructs an investigation in any other manner, the enforcement authorities may instruct the unit or individual to rectify, and a fine of no more than CNY20,000 shall be imposed on the individual and no more than CNY200,000 on the undertaking.

 

Where the circumstances are serious, a fine of no less than CNY20,000 but no more than CNY100,000 shall be imposed on the individual, and no less than CNY200,000 but no more than CNY1 million on the unit; and if a crime is constituted, criminal liability shall be investigated for in accordance with law.

 

Procedural fairness: According to Article 43, undertakings under investigation and interested parties have the right to make statements. The enforcement authorities verify the facts, justifications and evidence presented by the undertakings or interested parties.

There are procedural guidelines explaining the investigation procedure: 

 

SAIC Measures on the Procedures for Investigating and Handling Cases Concerning Monopoly Agreements and Abuse of Dominant Market Positions 

 

NDRC has issued the Measures on the Administrative Enforcement Procedures of the Prohibition of Price Monopoly. 

 

Confidentiality: According to Article 41, the anti-monopoly authority must keep confidential any trade secrets to which it may have access during the investigation.

 

4. Remedies and sanctions

China follows an administrative system, with the enforcement agencies investigating and adjudicating on anti-competitive matters. The agencies also have the powers to accept commitments.

 

The enforcement authorities may instruct the undertakings to discontinue the violation and impose a fine. Please see relevant parts below, under Chapters II, III and IV.

 

5. Appeal

According to Article 53, where an undertaking is dissatisfied with the decision made by the enforcement authorities the undertaking may apply for administrative reconsideration according to the Administrative Reconsideration Law 1999. Alternatively it may bring an action before a people’s court. 

 

In the case of merger control, the parties must first bring the appeal to MOFCOM for administrative reconsideration and only then bring a challenge in a people’s court. 

 

6. Private Enforcement

Pursuant to Article 50, where the monopolistic conduct of a business operator has caused losses to other entities or individuals, the business operator shall bear civil liabilities. Thus stand-alone actions are possible in China under the AML.

 

 

* This information is based on Competition Law in Asia-Pacific: A Guide to Selected Jurisdictions (2018).