China is getting serious about its crackdown on monopolies and has elevated the position of its market regulator’s antitrust investigative unit. In this article, we discuss the latest developments and creation of the new Anti-Monopoly Bureau.
On November 18, State Councillor and Director of the Anti-Monopoly Committee of the State Council, Wang Yong, attended the listing ceremony of the State anti-Monopoly Bureau, emphasizing at the event how necessary he believes it is to strengthen fairness of competition. Wang highlighted that the addition of the State Anti-Monopoly Bureau to the State Administration of Market Supervision (SAMR) is intended to reflect the commitment of the government to anti-monopoly crackdowns.
Previously, anti-monopoly regulations in China were managed by the State Council and run by three departments under the Ministry of Commerce, National Development and Reform Commission, and former State Administration for Industry and Commerce. After the 2018 institution reform, this was assigned to the SAMR and its anti-monopoly department.
Now, SAMR’s anti-monopoly department has been elevated to the deputy ministerial-level State Anti-Monopoly Bureau, which shares the same address as the SAMR. The higher ranking authority is intended to assist antitrust investigators to receive resources when investigating mergers and acquisitions.
The State Anti-Monopoly Bureau is reported to have three separate divisions: Competition Policy Coordination Division, Anti-monopoly Enforcement Division I, Anti-Monopoly Enforcement Division II. The new proposed structure should improve the regulator’s ability to conduct research previously outsourced.
The SAMR has also begun a public recruitment drive for the State Anti-Monopoly Bureau, advertising 33 civil service job roles.
The decision to launch the new antitrust bureau comes alongside a string of antitrust crackdowns.
Most recently, in November 2021, SAMR announced 43 antitrust infringements committed by tech giants Alibaba, Baidu, Didi, ByteDance, JD.com, Meituan, and Tencent, all of whom were fined RMB 500,000 (Approx. US$78,242). Since the first round of fines in December 2020, this round has seen the most cases.
For the first time since it came into effect in 2008, China is amending its Anti-Monopoly Law to better control its rapidly expanding digital sector. The final version of the law is expected to be rolled out in 2022. Alongside increased penalties, the maximum fine for a failure to inform authorities of merger transactions is increasing to US$783,000.
Amendments to the new law stipulate competition should not be limited through the abuse of algorithms, data, technology, advantages of capital, or platform rules.
Beijing had launched an antitrust investigation into Alibaba Group Holdings earlier in 2021, which led into a campaign against big tech companies. Alibaba and Meituan were both fined for violating the Anti-Monopoly Law this year.
Crackdowns are expected to continue, with President Xi Jinping seeking to narrow the wealth gap in China.
Encouraged by Xi, the SAMR has made headlines for its push to root out anti-competitive behaviors, in particular, on the “online platform” industry. Xi has called on officials to improve antitrust work to reduce inequalities that have increased in the last decade.
Given the position occupied by top companies like Alibaba and Tencent Holdings Ltd., the government likely considers it to be crucial to reign them in to reduce inequality, to not slow economic growth, and to not stifle competition.
For example, China is looking to tighten control over algorithms that technology companies use to target consumers. In April this year, the SAMR issued a record fine of US$2.75 billion to Alibaba for engaging in “chose one from two” – a practice that stops vendors from selling on rival sites.
In a statement released by the Cyberspace Administration of China (CAC), it was iterated that companies must follow principles of fairness and not set up algorithms that negatively impact competition on the digital market.
The new State Anti-Monopoly Bureau is expected to strengthen law enforcement in the platform economy, data security, technological innovation, and the protection of people’s livelihoods.
The Chinese government believes it necessary to thoroughly implement fair competition policies; continue to strengthen supervision and law enforcement in areas, such as platform economy, technological innovation, information security, and people’s livelihood protection; resolutely oppose various forms of monopoly and unfair competition; prevent the disorderly expansion of capital; and protect the legitimate rights and interests of market players and consumers – in order to promote the healthy development of various market entities to create a good competition and business environment.
State-owned Xinhua News Agency has reported that the new State Anti-Monopoly Bureau will create a more transparent and predictable competitive environment for over 150 million market participants.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at email@example.com.
Dezan Shira & Associates has offices in Vietnam, Indonesia, Singapore, United States, Germany, Italy, India, and Russia, in addition to our trade research facilities along the Belt & Road Initiative. We also have partner firms assisting foreign investors in The Philippines, Malaysia, Thailand, Bangladesh.
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