On June26, 2019, the State Administration for Market Regulation promulgated threeanti-monopoly related laws and regulations: <Interim Provisions onProhibition of Monopoly Agreements>, < Interim Provisions on Prohibiting Abuse of MarketDominance Status>, < Interim Provisions onthe Suppression of Abuse of Administrative Power to Exclude and RestrictCompetition > (hereinafter referred to as "Regulations"), which havebeen officially implemented since September 1, 2019.

Main Content:

The Regulations clarify thelaw enforcement mechanism at central and provincial levels, such as, the StateAdministration for Market Regulation is responsible for investigating andhandling cases involving cross-provincial (autonomous regions and centrallyadministered municipalities), or cases which are more complicated or have significantinfluence throughout the country, as well as cases that need to be directly investigatedand handled by them. The provincial market supervision departments areresponsible for anti-monopoly law enforcement within its own administrativearea.

The Regulations further clarifythe procedural rules including reporting, filing, investigation, handling etc.,and require that the decision shall be publicized by the law. The Regulations emphasizethat law enforcement agencies should treat all operators equally when dealingwith monopolistic activities.

The Regulations also refinethe consideration factors for determining market dominance, especially in theInternet and intellectual property field.

More Highlight:

1 Unify LawEnforcement Standards

The Regulationsmake detailed provisions on the three monopolistic behaviors of "monopolyagreement", "abuse of market dominance", "abuse ofadministrative power to exclusion and restriction of competition". Theproblem of overlapping functions of law enforcement standards, the formerMinistry of Commerce and other anti-monopoly law enforcement agencies will besolved and the central and local two-level law enforcement system are strengthened;and law enforcement procedures and standards are unified. The Regulations also clarifythe procedural requirements such as reporting, filing, investigation, andhandling, etc.

2 Supervision AdheresTo The Principle Of Prudence

The Regulationsclarify that the serious monopolistic acts such as setting fixed prices,limiting the production and sales of goods, and dividing the market are not applicable to thecommitment system. It also stipulates that if the law enforcement agencyconsiders it constitute a monopoly agreement after verification, it will nolonger accept the operator to suspend the investigation application.

3 Refine Exemption AndLeniency Systems

The Regulations amendthe exemption and leniency systems and encourage proactive reporting. It stipulatesthe conditions for exemption application, the consideration factors and thedecision powers of the law enforcement agencies to determine the exemption; andclarifies the meaning of "important evidence".

The Regulations refinethe method for identifying monopoly agreements and the law enforcementprocedures. For the first three operators who actively report and provideimportant evidences, they can reduce the fines of different ranges according tothe application orders, so that the leniency system is more operable.

4 Supervise The Internet And Other New Economic Forms

(1)   The Regulations clarifythe scope of market share recognition indicator: in addition to the salesamount and the sales volume, other indicators have been defined to provide a basisfor more scientifically identifying the market share of operators in theInternet field.

(2)   The Regulations specifythe special considerations for determining market dominance. Article 11 of the “InterimProvisions on Prohibiting of Abuse of Market Dominance” lists thefactors that can be considered when determining the dominant position of neweconomic operators such as the Internet, which is conducive to guide todetermine whether the Internet operators have market dominance in lawenforcement practice.

(3)   The Regulations clarifythe special case of selling goods at a price lower than the cost. Article 15 ofthe “InterimProvisions on Prohibiting of Abuse of Market Dominance” stipulates that whendetermining the operator selling goods at a price lower than the cost, involvingfree mode in new economic formats such as the Internet, consideration should begiven to the situation of the free goods provided by the operator and relatedcharged commodities, which reflects the consideration of the characteristics ofthe new economic business such as the Internet.

5 RecognizeThe Market Dominant Position In Intellectual Property Field

While identifying thebusiness operator’s market dominant position in the intellectual propertyfield, the anti-monopoly law enforcement agencies may consider factors such assubstitution of intellectual property rights, the dependence of the downstreammarket on the goods provided by intellectual property rights, and the abilityof the counterparty to check and balance the operators.

6 Refine TheViolations And Case Procedures

The Regulations refineabusing administrative power and restricting competitive behavior forms, whichis conducive to law enforcement agencies to accurately identify the nature ofbehavior and enhance operability.

The Regulations clarifythat anti-monopoly law enforcement agencies may discover illegal acts by meansof their powers, reports, assignments byhigher authorities, transfer by other organs, and reports of lower-level organs,etc. It is clarified that the municipal supervision departments belowprovincial level can accept the report materials or find clues, as well asinvestigation units and individuals have the power to make statement.