From the beginning of 2009, the year of the ox, the legislative framework of the Chinese Anti-monopoly Law (AML) has been accelerated. The acceleration is necessary to correct some of the major disadvantages of the AML. It is hoped the corrections will prevent the AML from being seen as abstract and hard to enforce.
Until now, we have heard little from regulatory organizations related to the enforcement of Chinese Anti-monopoly law including the; Ministry of Commerce (MOFCOM); State Administration for Industry and Commerce (SAIC) and the National Reform and Development Commission (SDPC). However, there appears to be a consensus amongst the organizations for a need to focus on the legislation progress, and to promulgate Guiding Opinions, Guidelines, Working Guidelines and Regulation and Administrative Procedures in an expedited fashion. Among these three organizations, it seems MOFCOM is moving far quicker than the others.
From January 1st, 2009, MOFCOM has published some draft documents regarding the AML. These documents will prove to be increasingly important and include:
Working Guidelines on Anti-monopoly Reviews for Concentrations of Business Operators (09.01.01);Flowchart for Anti-monopoly Reviews for Concentrations of business operators (09.01.01);Guiding Opinion on Reporting of Concentrations of Business Operators(09.01.05);Guiding Opinion on Documents and Information Required for Reporting of Concentrations of Business Operators (09.01.07);Provisional Reviews Regulation for Concentrations of business Operators (09.02.16);Provisional Reviews regulation for the Notification of Concentrations of business Operators (09.02.16);Provisional Regulation for Evidence Collection of Concentration of Business Operators Not Reaching the Notification Threshold (09.02.16);Provisional Regulation for Investigation and Disposal of Violation of Concentration Notification ( 09.02.16);Provisional Regulation for Investigation and Disposal of Concentration of Business Operators Not Reaching the Notification Threshold (09.03.06).
Besides the documents above, MOFCOM also published a Guideline for Decision of the Relevant Market on January 31, 2009, as a means of economic analysis for the AML.
Compared with MOFCOM, SAIC and SDPC appear quite quiet. However, they are also preoccupied by the legislation progress concerning the AML, especially in the field of abuse of dominance, monopoly agreement (cartel) and administrative monopoly. It has been heard that both regulatory organizations will publish the related regulations soon, including substantial and procedural regulations. Chinese anti-trust lawyers hail such legislation in general, and hope such documents will resolve the difficulties in the enforcement of the Chinese Anti-monopoly Law.First, the regulations provide Chinese lawyers and business operators with documents detailing the requirement for the concentration notification.
Article 23 of AML states:
"When making a concentration declaration to the Anti-monopoly Law Enforcement Agency under the State Council, the business operators shall submit the following documents and materials:1. The Declaration Form;2. Explanations of the concentration effects on the relevant market competition situations;3. Concentration agreements;4. The financial and accounting reports for the previous fiscal year of the business operators involved in the concentration, which should be audited by an accounting firm; and5. Other documents and materials required by the Anti-monopoly Law Enforcement Agency under the State Council. The declaration form shall contain the names of the business operators involved in the concentration, their domiciles, business scopes, the date on which the concentration is to be implemented, and other matters prescribed by the Anti-monopoly Law Enforcement Agency under the State Council."
In practice, such a simple and abstract provision is far from use. For instance, how to make explanations concerning the concentration effects on the relevant market competition situations could be understood differently by different lawyers. When notifying a concentration to MOFCOM, Chinese lawyers predominately complain it is hard to prepare a related explanation efficiently. Secondly, it is easy for officials to refuse to accept the relevant documents. Now, the Guiding Opinion on Reporting of Concentrations of Business operators regulates such explanation in detail, including an overview of the concentration transaction, the definition of the relevant market, the market share of the business operators and their control to such market, the main competitors and their market shares, the degree of market concentration, etc.
Furthermore, the regulations correct the former legal provision in fact. For example, when calculating the notification threshold for concentration, the regulation from the State Council simply states it depends on the output amount of the total parties of the concentration. Such provision ignores the market power of affiliated enterprises to the parties of concentration. The Provisional Review regulation for the Notification of Concentrations of business Operators clearly regulates the calculation of output, stating it will take the output of the affiliated enterprises into account. Lastly, new regulations regulate hearing procedure, evidence collection and procedure and investigation procedure. Such procedures will ensure that the enforcement of AWL be more transparent and fair.
Overall, the advent of the new regulations and procedures should be held in high regard amongst Chinese Anti-monopoly lawyers and is a positive step forward for the AML.