China Issued Draft Amendment on Anti-monopoly Law for Public Opinions

On October 23, 2021, China issued “Draft Amendment on Anti-monopoly Law” (“Draft”) for seeking public opinions. The Draft explicits the regulation of hub-and-spoke conspiracy, the system of safe harbor, the concentration declaration system and the punitive measures, etc.

1. Clarifying the regulation of hub-and-spoke conspiracy. The Draft adds "operators shall not organize other operators to reach monopoly agreements or provide substantive assistance to other operators in reaching monopoly agreements", and explicitly incorporate typical "hub-and-spoke conspiracy" behaviors into anti-monopoly regulations scope. In addition, this clause is not limited to the scope of the hub and spoke agreement. If an operator has neither vertical nor horizontal relationship with other operators, but organizes and substantively helps other operators reach an agreement to implement a monopoly, they will also be subject to antitrust laws.

2. Introducing a safe harbor system. The Draft stipulates that “if an operator can prove that its market share in the relevant market is lower than the standards set by the Anti-monopoly Law Enforcement Agency of the State Council, the provisions of Articles 16, 17 and 18 of this law shall not apply, but there are exceptions for evidence that the agreement reached by the business operator excludes or restricts competition". The safe harbor system helps companies predict operational compliance and, to a certain extent, avoid waste of law enforcement resources.

3. Optimizing the operator concentration declaration system. (1) Strengthening the "investigation power" of the concentration of undertakings. The Anti-monopoly Law Enforcement Agency of the State Council shall conduct investigations in accordance with the law for the concentration of business operators that do not meet the reporting standards but have evidence to prove that they have or may have the effect of eliminating or restricting competition. And strengthening the review of the concentration of business operators in the fields of people's livelihood, finance, technology, and media. (2) Introducing the reporting "Stop Clock" system to increase the flexibility of the review period for the concentration of undertakings. The circumstances that are not included in the review time limit are clearly listed, which increases the procedural flexibility in case handling.

4. Strengthening anti-monopoly supervision in the Internet field. The Draft requires that "operators shall not abuse data and algorithms, technology, capital advantages, and platform rules to eliminate or restrict competition." It also clarified that operators with dominant market positions that use data, algorithms, technology, and platform rules to set up obstacles to impose unreasonable restrictions on other operators, will constitute an abuse of dominant market positions.

5. Significantly increasing the cost of anti-monopoly violations. (1) Significantly increasing the upper limit of fines for illegal implementation of operator concentration; (2) Significantly increasing the fines for non-implementation of monopoly agreements. (3) Establishing a double penalty system; (4) Establishing a double attribution system for operators and responsible personnel; (5) Incorporating into credit records; (6) Increased the illegal cost of refusing to cooperate in anti-monopoly investigations; (7) Established the civil public interest litigation system.