By Yuan-Xi Chen
On June 8, 2022, the National Anti-Monopoly Bureau released the Annual Report on China's Antitrust Enforcement (2021) ("Annual Report"), which is the first annual report since November 18, 2021 when the State Administration for Market Regulation (SAMR) put up the "National Anti-Monopoly Bureau". Since 2019, SAMR has released the Annual Report on China's Antitrust Enforcement (2019) and the Annual Report on China's Antitrust Enforcement (2020), forming an institutional summary of China's antitrust enforcement. The two reports mentioned above were released in December and October of that year, respectively. Compared with the two, the 2021 Annual Report was released at the earliest time and has a reduced length of 170 pages.
In terms of released data, the National Anti-Monopoly Bureau investigated and handled 175 monopoly cases of various types throughout 2021, an increase of 61.5% year-on-year, and the amount of fines was 23.592 billion yuan. Among them, 11 cases of monopoly agreement, with a fine of 1.673 billion yuan; 11 cases of abuse of dominant market position, with a fine of 21.847 billion yuan; 107 cases of illegal implementation of concentrations with a fine of 72.35 million yuan; and 46 cases of abuse of administrative power to exclude and restrict competition. 727 cases of concentration of operators were concluded, an increase of 53% year-on-year, including 1 case of prohibition and 4 cases of approval with restrictive conditions. The following features exist in the reported enforcement data.
1. Total number of penalty cases and forfeiture amount: compared with 2020, the total number of monopoly penalty cases increased slightly, while the total forfeiture amount produced a large increase from RMB 450 million in 2020 to RMB 23.592 billion. The amount of monopoly agreement forfeiture is only 104 million yuan in 2020, the amount of abuse of dominant market position forfeiture is only 341 million yuan in 2020, and the illegal implementation of concentration-related is only 5.8 million yuan in 2020.
2. The amount of penalty for individual cases is record high: monopoly agreement and abuse of dominant market position cases have all seen a record high amount of penalty, and the two cases with the highest amount of penalty are: Alibaba's "Pick one from two" monopoly case announced on April 10, 2021, and Meituan's "Pick one from two" monopoly case announced on October 8, 2021. The two highest cases are: Alibaba's "pick one from two" monopoly case announced on April 10, 2021 and Meituan's "pick one from two" monopoly case announced on October 8, 2021. Both cases are part of the anti-monopoly enforcement in the platform economy area, and both investigated corporations were punished with 4% and 3% of the previous year's sales respectively. The Alibaba case sets a record for the highest penalty amount in history with over 18 billion yuan.
3. Rapid growth in the number of declarations and adjudication of concentration of undertakings cases: from 2019 onwards, the number of concentration of undertakings reviewed by the national antitrust enforcement agencies has been on the rise. In 2019, the enforcement agencies received 503 declarations of concentration of undertakings, filed 462 cases and adjudicated 465 cases; in 2020, 520 declarations of concentration of undertakings were received, 485 cases were filed and adjudicated 473 cases; in 2021, 824 declarations of concentration of undertakings were received, and 727 cases were adjudicated. In 2021, 824 declarations of concentration of undertakings were received, and 727 cases were concluded.
In the second half of 2022 and 2023, we believe that the National Anti-Monopoly Bureau will maintain or even accelerate the current pace of regulation, and the China Central Economic Work Conference in December 2021 emphasized the need to further promote the implementation of fair competition policy, strengthen anti-monopoly, and ensure fair competition through regulation. The General Administration of Market Supervision also mentioned in the announcement of its 2021 annual report that it would "adhere to the general keynote of seeking progress in a stable manner". It is believed that the National Antimonopoly Bureau will soon coordinate the newly established agencies and arrange for additional staff to strengthen antimonopoly supervision.
For the Internet, finance, medicine and other livelihood areas that the industry focuses on, we believe that they will continue to be the focus of enforcement by the Antimonopoly Bureau. In terms of enforcement in the Internet industry, although the penalty amounts of Alibaba and Meituan abuse of dominant market position cases have reached a record high, and it is less likely that the absolute penalty amounts will exceed those of Alibaba in the future, the penalty ratios of the above two cases are only 4% and 3% of the undertakings’ gross sales in the previous year, which are still lower than the upper limit of 10% stipulated by the law; meanwhile, there are still a large number of Internet sub-sectors There are still a large number of monopoly agreements and other acts. However, due to the characteristics of the API industry, the supply of APIs is often highly concentrated and the industry barriers are high, which makes administrative investigation difficult and civil remedies for operators difficult to be effective. It is believed that the National Antimonopoly Bureau will continue to investigate illegal monopolistic practices in this field through joint actions with pharmaceutical industry regulators and professional cooperation with industry associations.
The above is only a brief commentary on the annual report, in addition to which many progresses have been made in legislation and enforcement related to competition law this year. According to the arrangement of the Standing Committee of the National People's Congress, the Anti-Monopoly Law (Draft Amendment) will also be reviewed for the second time at the end of this month. The draft amendment has made many amendments to the existing law, such as increasing the penalty for monopoly violations, clarifying the regulation of "spoke and hubs agreement" and establishing a "stop clock" system. We suggest that it is necessary for the concerning enterprises to sort out their business structure in China mainland, standardize their sales agency model, and investigate the potential monopoly and unfair competition problems. It is also necessary for cross-border private equity funds and other investment institutions and proposed listed companies to focus on anti-monopoly due diligence in equity investment and listing, to exclude the risk of unreported or monopoly agreements in the declaration of concentration of undertakings, and to issue corresponding declaration documents, due diligence reports or legal opinions as required by the regulator.
We will launch a series of topics on understanding and responding to the amendments of the Antimonopoly Law.
Data source: China Antitrust Enforcement Annual Report (2021)
Click the link for the original report: https://www.samr.gov.cn/xw/zj/202206/t20220608_347582.html
Author: Yuan-Xi Chen
Shanghai
+886-2-2707-9976
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