On November 29 2010 the National Development and Reform Commission (NDRC) promulgated one substantive regulation and one procedural regulation regarding pricerelated monopolies (for further details please see "NDRC issues new anti-monopoly pricing regulations"). To accompany these regulations, the State Administration for Industry and Commerce (SAIC) issued the Regulation on Prohibiting Monopoly Agreements, the Regulation on Prohibiting Abuse of Market Dominance and the Regulation on Prohibiting Abuse of Executive Authority to Exclude and Limit Competition on December 1 2010.
Although the timing may seem confusing, it makes sense in view of the internal arrangement of the anti-monopoly supervisory bodies. The NDRC is notionally at the same level as the SAIC in the regulatory structure, but in practice the former has precedence by virtue of its essential function in formulating macroeconomic regulations. To avoid conflicts between the contents of regulations, the two regulators exchanged opinions before issuing the regulations; in deference to the NDRC, the SAIC waited two days before publishing its regulations.
Some experts consider the three SAIC regulations to be more significant than the NDRC regulations because they have a significant role in the enforcement of the Antimonopoly Law.
The three SAIC regulations provide detailed definitions of the terms ‘monopoly agreement’, ‘abuse of market dominance’ and ‘administrative monopoly in order to exclude and lessen competition’. Although the definitions are abstract from the perspective of the common law system, they are still relatively helpful in gauging the interpretation and enforcement of the law. In drafting the regulations, the SAIC incorporated suggestions from Chinese and foreign experts from private practice, business and academia, while inviting public opinions online. This approach has enhanced the transparency of the legislative process.
The Regulation on Prohibiting Monopoly Agreements explains how operators should apply the definitions in transactions. It examines the manner in which an industry association requires operators to reach monopoly agreements and sets out guidance on the characteristics of horizontal monopoly agreements and vertical monopoly agreements.
The Regulation on Prohibiting Abuse of Market Dominance mainly considers how to interpret the term ‘market dominance’ and how to rebut a finding of market dominance. It also gives guidance on the exercise of market dominance and the defences against such practices.
The Regulation on Prohibiting Abuse of Executive Authority to Exclude and Limit Competition mainly enumerates the ways in which administrative organisations take advantage of their power to lessen competition.
Although the SAIC had already dealt with a number of cartel and dominance cases before the promulgation of the three regulations, the newly drafted regulations promise an eventful year for anti-monopoly enforcement in China.