In 2022, China’s anti-monopoly legislation has gone through significant progresses and achievements, the antitrust enforcement and judicial litigation activities have been continuously active, and the importance of antitrust compliance for enterprises is increasingly prominent. More specifically:
■ In the legislation area, the Anti-Monopoly Law has been amended for the first time (the “New AML”) amid the fifteenth anniversary of the AML’s promulgation, followed by six drafts of implementing regulations for public consultation, the Anti-Unfair Competition Law (Revised Draft for Public Comments) and the Provisions on Several Issues Concerning the Application of Laws in the Trial of Civil Monopoly Dispute Cases (Draft for Public Comments). The New AML has adjusted the approach for the identification of vertical monopoly agreements (from “illegal per se” to “rule of reason”), strengthened the merger review enforcement (e.g., introduced the “stop-the-clock” mechanism, clarified the power to initiate investigations, and proposed to establish a classified and graded review regime), focused on the antitrust enforcement on online platforms and new types of abusive conducts, and fully upgraded the administrative penalties and fines for monopolistic conducts. The New AML and the above exposure draft regulations and judicial interpretation have provided more guidance and set higher bar on the antitrust compliance of enterprises.
■ In the enforcement area, (1) with respect to merger review, the State Administration for Market Regulation (the “SAMR”) unconditionally cleared 794 cases in 2022, with an increase of approximately 9% as compared to which in 2021, and conditionally cleared 5 cases in the sectors of semiconductor and air transportation. In the meanwhile, the SAMR has delegated the merger review of certain simplified cases to its local bureaus in Beijing, Shanghai, Guangdong, Chongqing and Shaanxi. It is expected that after the official promulgation of the new increased turnover thresholds, the number of cases reviewed by regulatory authority may decrease to certain extend. Meanwhile, the review of merger cases will be more refined, more regulatory resources will be allocated to the review of cases with competition concerns, and more interaction with external commissions in regards of foreign investment market access, national security review, data security and industrial regulatory supervision, etc. will be witnessed in high-profile cases; (2) with respect to cartel agreements and abuse of market dominance, most of the cases published by enforcement authority involved sectors concerning people’s livelihoods, such as public utilities, pharmaceuticals and building materials, which are expected to remain the focus of the regulatory enforcement in 2023.
■ In the judicial area, in 2022, the Chinese courts, including the Supreme People’s Court (the “SPC”), announced a number of noteworthy judicial cases involving monopolistic conducts. In terms of legal interpretation and judicial practice, these cases have provided significant guidance and instructions in jurisdiction, identification and substantive analysis of monopolistic conducts. It is expected that antitrust and competition litigations will continue to heat up and become a powerful tool for companies to assert their rights and interests or pursue their commercial appeals.
Looking ahead to 2023, as stressed in the National Market Supervision System Anti-Monopoly Work Conference and the Anti-Monopoly Law Enforcement Special Action Deployment Meeting in the People’s Livelihood Field held on February 9, 2023, “emphasizing politics, strengthening supervision, promoting development and ensuring security” will be the overall work roadmap. As one of the key aspects of work, in order to build a great country with upgraded service quality and sophisticated intellectual property, enforcement authorities will strengthen the “normalized supervision” of the platform economy, promote antitrust law enforcement in the key areas of people’s livelihood, improve the merger review of key areas, and explore to deepen the antitrust supervision in the field of intellectual property.
Legislation Area
In 2022, the Decision to Amend the Anti-monopoly Law was adopted and came into force on August 1, 2022. The SAMR successively published six drafts implementing regulations for public consultation following the adoption of the New AML, and the Anti-Unfair Competition Law (Revised Draft for Public Comments). The SPC published the Provisions on Several Issues Concerning the Application of Laws in the Trial of Civil Monopoly Dispute Cases (Draft for Public Comments). In addition, several provinces and municipalities issued rules and guidelines on antitrust compliance applicable to the undertakings in their administrative jurisdictions.
Key legislation and its highlights in 2022 are summarized below.
Enforcement Area
■ Merger Control Review
In 2022, the SAMR concluded 794 cases of merger control fillings, including a total of 789 cleared cases without conditions and 5 conditionally cleared cases, and no prohibited case is involved.
In respect of conditionally cleared cases, three cases involved the information and communication technology industry, and two cases are relevant to the air transportation and airport operation industry, and the merger case of the Establishment of a Joint Venture between Shanghai Airport (Group) Co., Ltd. and Eastern Air Logistics Co., Ltd. is the first conditionally cleared case to date in China not involving foreign investment.
In addition, the five local AMRs cleared a total of 94 cases without conditions in 2022: 20 cases cleared by the Beijing AMR, 43 cases cleared by the Shanghai AMR, 10 cases cleared by the Guangdong AMR, 19 cases cleared by the Chongqing AMR, and 2 cases cleared by the Shaanxi AMR.
The SAMR imposed administrative penalties on 32 case of gun-jumping.
Statistics on the Merger Control Cases from 2018 to 2022
■ Monopoly Agreements and Abuse of Market Dominance
Judicial Area
On procedural rules, the courts clarified that the arbitration clauses between the parties to the contract shall not be seen as obvious and absolute basis for excluding courts’ jurisdiction over monopoly agreements disputes, in response to the previous hotspot issues in antitrust judicial area, the relation between jurisdiction of court and arbitration clauses. This rule is also reflected in the Provisions on Several Issues Concerning the Application of Laws in the Trial of Civil Monopoly Dispute Cases (Draft for Public Comments) issued by the SPC at the end of 2022.
On substantive rules, the courts made it clear that reverse payment for drug patent might constitute a monopoly agreement, specified the standards for identifying concerted conduct and the necessity of joint market dominance analysis, and clarified the analytical approach on granting exclusive operation right, exclusive dealing, refusal to trade, differential treatment and imposing unreasonable trading conditions. In the meantime, the courts specified that the provisions under the AML on prohibition of monopolistic conducts are mandatory by law, and contractual terms in violation of such provision should be null and void.
The important judicial cases involving monopolistic conducts in 2022 are summarized below.
If you are interested in further information regarding China antitrust, please feel free to contact Qian Xiaoqiang Lvshi (qianxiaoqiang@haiwen-law.com) or Lin Xixiang Lvshi (linxixiang@haiwen-law.com) or other attorneys of Haiwen & Partners.
*寇梅若律師亦參與本文寫作
[1] For specific insights of the New AML, please refer to the Haiwen Alert: Amendment to the Anti-monopoly Law Promulgated, https://mp.weixin.qq.com/s/li6cp8DcgItjxGdQhNYC3Q.
[2] For specific insights regarding the six supporting rules of the New AML, please refer to the Haiwen Alert: Six Supporting Drafts of the New AML, https://mp.weixin.qq.com/s/LGJwxJTcEysOfU2COITk7w.
[3] (1) The Beijing AMR is responsible for following areas: Beijing, Tianjin, Hebei Province, Shanxi Province, Inner Mongolia Autonomous Region, Liaoning Province, Jilin Province, Heilongjiang Province;
The Shanghai AMR is responsible for following areas: Shanghai, Jiangsu Province, Zhejiang Province, Anhui Province, Fujian Province, Jiangxi Province, Shandong Province;
The Guangdong AMR is responsible for following areas: Guangdong Province, Guangxi Autonomous Region, Hainan Province;
The Chongqing AMR is responsible for following areas: Henan Province, Hubei Province, Hunan Province, Sichuan Province, Guizhou Province, Yunnan Province, Xizang Autonomous Region.
The Shanxi AMR is responsible for following areas: Shaanxi, Gansu Province, Qinghai Province, Ningxia Autonomous Region and Xinjiang Autonomous Region.
(2) Delegated review criteria: (i) at least one notifying parties is domiciled in the relevant region where the local AMRs are delegated to review; (ii) the target (over which an undertaking acquires the control through acquisition of equity, assets, contracts, etc.) is domiciled in the relevant region; (iii) in case of the establishment of a joint venture, the joint venture is domiciled in the relevant region; (iv) the relevant geographic market for the concentration of undertakings is a regional market, and falls entirely or primarily within the relevant region; and (v) other cases as determined by the SAMR. The review of simplified cases falling under any of the above criteria can be delegated to the local AMRs.
[4] For more specific comments on the Anti-Unfair Competition Law (Revised Draft for Public Comments), please see the Haiwen Alert: the Anti-Unfair Competition Law (Revised Draft for Public Comments), https://mp.weixin.qq.com/s/TPMliCpb44t-5WETTPgeUg.
Beijing ICP No. 05019364-1 Beijing Public Network Security 110105011258
