Annual Review of Public Enforcement of China's Anti-Monopoly Law

Authored by Michael Gu (michaelgu@anjielaw.com) and Sun Sihui (sunsihui@anjielaw.com) at AnJie Law Firm

I. OVERVIEW

2016 marked the eighth anniversary of the implementation of the PRC Anti-monopoly Law. All three Chinese competition authorities were very active in their enforcement practices. As in2015 and 2014, many waves of high-profile antitrust crackdowns have further established China’s standing as one of the most important emerging jurisdictions for antitrust enforcement in the world. Both the State Administration for Industry and Commerce (SAIC) and the National Development and Reform Commission (NDRC) took atough stance against the cartel and abuse of dominance conduct in 2016 with a strong industry focus on healthcare, automotive and public utilities.In particular, after a five-year investigation, the SAIC finally published its findings and punishments on the Tetra Pak case. The Swiss packaging giant was fined approximately US$97 million for abuse of dominance including the conducts of tying practice, exclusive dealing and loyalty discounts. This penalty decision set the record as the highest antitrust penalty ever issued by the SAIC.

In addition, the three competition authorities in China have increasedtheirlegislativeactivities to refine the antitrust regime. NDRC, SAIC and Ministry of Commerce (MOFCOM)completed their draft of the antimonopoly guidelines on abuse of intellectual property for each of their own enforcement areas. In the second half of 2016, the unified set of guidelines on antitrust enforcement in the intellectual property area was finalized and submitted to the Anti-monopoly Commission of the State Council (AMC) by the NDRC on behalf of the three competition authorities, along with the State Intellectual Property Office, which also had certain input into the guidelines, however theguidelines were not passed in2016 as wasexpected. Furthermore, NDRC has submitted its latest drafts of another five antitrust guidelines to the AMC for review and approval. These guidelines cover both sector-specific substantive issues and procedural issues involvingautomotive industry, the process for undertakings’ exemption, leniency programme, undertaking’s commitments, and the calculation on illegal gains and fines. Theseguidelines will lay down more detailed guidance on the practical and procedural issues with respect to the application of the Anti-monopoly Law. Moreover, 2016 saw the establishment of the fair competition review system. This is a major initiative to ensure fair play among participants in the Chinese market. Under the fair competition review system, government authorities must fully consider the impact of their policies and measures on market competition during the formulation stage and review any potential impact in accordance with the requirements of establishing a unified, open, orderly and competitive market system.

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