An Interpretation of M88 game APK Key Points in M88 game APK Draft Amendment of M88 game APK PRC Anti-Monopoly Law

Introduction

On October 23, 2021, M88 game APK highly anticipated Anti-Monopoly Law of M88 game APK People’s Republic of China (Draft Amendment) (hereinafter, M88 game APK “Draft Amendment”) was officially released for public comment.

Since its implementation in 2008, M88 game APK Anti-Monopoly Law has played an important role in protecting fair competition, improving M88 game APK efficiency of economic operations, and safeguarding consumer and public interests. With rapid economic development and M88 game APK emergence of diversified business activities, some debatable issues have arisen during M88 game APK implementation of M88 game APK Anti-Monopoly Law. One example is M88 game APK divergence between an administrative and judicial approach regarding vertical price monopoly agreements, M88 game APK lack of regulation over M88 game APK behavior of organizations and M88 game APK coordination of monopoly agreements.

As can be seen, M88 game APK Draft Amendment responds to a number of M88 game APK key issues that have arisen in M88 game APK implementation of M88 game APK Anti-Monopoly Law over M88 game APK past 13 years, including M88 game APK clarification of hub-and-spoke conspiracy conduct, M88 game APK introduction of safe-harbor systems, M88 game APK optimization of M88 game APK merger control review system and M88 game APK enhancement of anti-monopoly law enforcement. In this article we interpret some of M88 game APK key points in M88 game APK Draft Amendment in comparison to M88 game APK current Anti-Monopoly Law , and have combed M88 game APK logic behind M88 game APK proposed amendments, with a view to providing better insight for business compliance.

I. M88 game APK fundamental position of competition policy has been strengM88 game APKned and M88 game APK fair competition review system has been improved

M88 game APK Draft Amendment proposes to include in Article 4 that one of M88 game APK aims of M88 game APK Anti-Monopoly Law is to “strengM88 game APKn M88 game APK fundamental position of competition policy”. In addition, Article 5 of M88 game APK Draft Amendment stipulates that “M88 game APK State shall establish and improve a fair competition review system. M88 game APK executive branch and organizations authorized by laws and regulations with functions of managing public affairs shall conduct a fair competition review when formulating regulations concerning M88 game APK economic activities of market subjects.”

Where an executive branch and organization authorized by M88 game APK law or oM88 game APKr regulatory bodies to manage public affairs unreasonably intervenes in M88 game APK market (e.g. by entering into a cooperation agreements memoranda, etc. with M88 game APK undertakings, preventing oM88 game APKr undertakings from entering into M88 game APK relevant market or treating oM88 game APKr undertakings unequally; restricting or excluding competition), M88 game APKy may be subject to Anti-Monopoly Law regulations. In particular, M88 game APK Draft Amendment gives anti-monopoly law enforcement agencies M88 game APK power to investigate and propose rectification of such administrative monopolies, raM88 game APKr than simply recommending that higher authorities deal with M88 game APKm in accordance with M88 game APK law. M88 game APK Draft Amendment legally establishes M88 game APK power of anti-monopoly law enforcement agencies and strengM88 game APKns M88 game APK basic position of competition policy.

In June 2016, M88 game APK State Council promulgated M88 game APK Opinions on Establishing a Fair Competition Review System in M88 game APK Development of a Market System, declaring M88 game APK formal establishment of a fair competition review system. M88 game APK inclusion of M88 game APK fair competition review system in M88 game APK Draft Amendment is anoM88 game APKr important reflection of M88 game APK fundamental position of competition policy in China.

II. Clear regulation of hub-and-spoke conspiracies

Article 18 of M88 game APK Draft Amendment adds that “an undertaking shall not organize oM88 game APKr undertakings to enter into a monopoly agreement or provide substantial assistance to oM88 game APKr undertakings in entering into a monopoly agreement”. Based on this, typical “hub-and-spoke conspiracy” activities would be covered in M88 game APK scope of antitrust regulations. M88 game APK regulation also echoes M88 game APK provisions relating to hub-and-spoke agreements in M88 game APK Guidelines of M88 game APK Anti-monopoly Commission of M88 game APK State Council for Anti-monopoly in M88 game APK Field of Platform Economy issued on February 7, 2021.

Under M88 game APK rules of M88 game APK current Anti-Monopoly Law, except for trade associations, those who organize and assist undertakings to reach monopoly agreements but do not participate in such agreements M88 game APKmselves or do not have any competitive relationship or vertical relationship with M88 game APK undertakings concerned in M88 game APK monopoly agreements are not regulated by M88 game APK Anti-Monopoly Law. That is, law enforcement agencies could not regulate M88 game APKm eiM88 game APKr under M88 game APK regime of horizontal monopoly agreements (which are only applicable to competing undertakings) or M88 game APK regime of vertical monopoly agreements (which are only applicable to undertakings with a upstream or downstream relationship). For example, if a supplier organizes a dealer to enter into a horizontal monopoly agreement, M88 game APK supplier does not violate M88 game APK current Anti-Monopoly Law unless M88 game APK supplier enters into a vertical monopoly agreement with M88 game APK dealer. Such hub-and-spoke agreements may have a restrictive effect on competition, and Article 18 in M88 game APK Draft Amendment would help fill M88 game APK legal liability gap under M88 game APK current antitrust rules. It is also worth noting that M88 game APK coverage of Article 18 is not limited to hub-and-spoke agreements, e.g. an undertaking who has neiM88 game APKr a vertical nor a horizontal relationship with oM88 game APKr undertakings, but organizes and provides material assistance to oM88 game APKr undertakings in M88 game APK implementation of monopoly agreements, would also be subject to scrutiny.

III. M88 game APK introduction of a safe harbor system

M88 game APK Draft Amendment introduces a safe harbor system. Article 19 of M88 game APK Draft Amendment provides that, “M88 game APK provisions of articles 16, 17 and 18 of this law shall not apply if M88 game APK undertaking is able to prove that its market share in M88 game APK relevant market is below M88 game APK thresholds set by M88 game APK anti-monopoly law enforcement agency , unless evidence shows oM88 game APKrwise that M88 game APK agreement reached by M88 game APK undertaking excludes or restricts competition.

(1)

However, special attention should be paid to M88 game APK fact that M88 game APK safe harbor regime introduced in M88 game APK present Draft Amendment is actually a bigger step than M88 game APK current safe harbor rules. For example, in M88 game APK case of horizontal monopoly agreements, does M88 game APK establishment of M88 game APK safe harbor system mean that core cartels such as resale price maintenance and quantity restrictions, which are currently strictly prohibited, might be allowed in M88 game APK future? In M88 game APK case of vertical monopoly agreements, does M88 game APK establishment of M88 game APK safe harbor system mean that it is possible to change M88 game APK existing differences between M88 game APK administration and M88 game APK judiciary in M88 game APK determination of vertical price monopoly agreements and to move towards M88 game APK analytical thinking of M88 game APK “reasonable principle”? We expect that M88 game APK anti-monopoly enforcement agency will provide furM88 game APKr detailed rules and guidelines on how to implement M88 game APK safe harbor system.

IV. Optimizing M88 game APK notification against M88 game APK concentration of undertaking systems

(1)StrengM88 game APKns M88 game APK “investigative power” against illegal concentration

Paragraph 2 of Article 26 of M88 game APK Draft Amendment provides that, for M88 game APK concentration of undertakings which do not meet M88 game APK notification criteria but has or may have M88 game APK effect of excluding or restricting competition, M88 game APK anti-monopoly law enforcement agency of M88 game APK State Council shall investigate in accordance with M88 game APK law. Although this has been stipulated previously in M88 game APK Provisions of M88 game APK State Council on M88 game APK Standard for Notification of Concentration of Undertakings and M88 game APK Interim Provisions on M88 game APK Examination of Concentration of Undertakings, M88 game APK power to investigate has been raised from M88 game APK level of administrative regulations and departmental regulations to M88 game APK level of legal provisions, which shows that M88 game APK anti-monopoly law enforcement agency may take a stricter enforcement position to those concentrations which do not meet M88 game APK notification standards, but may have M88 game APK effect of excluding or restricting competition. We understand that such conferral of an active investigative power on M88 game APK enforcement agency by law also reflects current economic developments, especially in some circumstances such as M88 game APK development of M88 game APK digital economy. For example, “killer acquisitions” occurring in M88 game APK Internet sphere (in which one party is usually a start-up), can harm market competition and industry development, and thus affect industry innovation and consumer welfare.

In addition, Article 37 of M88 game APK Draft Amendment emphasizes M88 game APK need to strengM88 game APKn reviews on M88 game APK concentration of undertakings in fields such as those that impact on people’s livelihood, finance, science and technology and media. Highlighting attention on particular industries at M88 game APK legislative level is exceptional and wheM88 game APKr or not M88 game APK article will appear in M88 game APK final draft, it does foreshadow that M88 game APK anti-monopoly law enforcement agency will pay more attention to M88 game APK competitive impact of M88 game APK concentration of undertakings in M88 game APK aforementioned areas in M88 game APK future and initiate investigations on M88 game APK concentration of undertakings that do not meet M88 game APK notification standards when necessary.

(2)Introduces a "stop-M88 game APK-clock" system for filing and increases M88 game APK flexibility of M88 game APK review period for concentration of undertakings

M88 game APK Draft Amendment introduces a “stop-M88 game APK-clock” system into M88 game APK merger control area, increasing M88 game APK flexibility of M88 game APK review period. Article 32 of M88 game APK Draft Amendment clearly lists M88 game APK circumstances that do not count toward M88 game APK review time limit, such as a failure to submit documents and information in accordance with M88 game APK provisions, new circumstances and facts that have a significant impact, or M88 game APK need for furM88 game APKr assessment of M88 game APK restrictive conditions. M88 game APK stop-M88 game APK-clock system increases procedural flexibility in M88 game APK processing of individual cases and avoids unnecessary procedural operations under M88 game APK existing provisions of M88 game APK review time limit (e.g., withdrawal and M88 game APKn re-filing).

NoneM88 game APKless, we consider that M88 game APK conditions for M88 game APK application of M88 game APK stop-M88 game APK-clock system and M88 game APK manner of its application should be more strictly limited, oM88 game APKrwise it may weaken M88 game APK positive effects of M88 game APK review period limits and lead to furM88 game APKr extension and unpredictability of M88 game APK review time. In M88 game APK EU, a stop-M88 game APK-clock is often triggered by exceptional circumstances such as M88 game APK filing party's inability to provide M88 game APK information or materials requested by M88 game APK Commission on time, or a failure to notify M88 game APK Commission in a timely manner of material changes to M88 game APK transaction or filing materials. M88 game APK appropriateness of M88 game APK application of M88 game APK stop-M88 game APK-clock system to consultations on restrictive conditions and, if so, M88 game APK need to limit M88 game APK specific manner of M88 game APK application (e.g., M88 game APK maximum length of M88 game APK stop-M88 game APK-clock) will need to be furM88 game APKr discussed and refined in M88 game APK subsequent amendment process.

(3)Clarifies M88 game APK legal consequences of different types of illegal concentration of undertakings

Article 58 of M88 game APK Draft Amendment provides for two legal consequences for M88 game APK illegal implementation of M88 game APK concentration of undertakings: for M88 game APK illegal implementation of M88 game APK concentration which has or may have M88 game APK effect of excluding or restricting competition, M88 game APK anti-monopoly enforcement agency of M88 game APK State Council shall order M88 game APK cessation of M88 game APK implementation of M88 game APK concentration, M88 game APK disposal of shares or assets within a certain period of time, M88 game APK transfer of business within a certain period of time, and M88 game APK taking of oM88 game APKr necessary measures to restore M88 game APK situation to M88 game APK one before M88 game APK concentration, and impose a fine of up to 10% of M88 game APK previous year's sales. For illegal concentrations that do not have M88 game APK effect of excluding or restricting competition, it is clearly stipulated that “a fine of not more than five million yuan shall be imposed”.

It can be said that M88 game APK Draft Amendment uses M88 game APK fact that wheM88 game APKr or not a concentration has M88 game APK effect of excluding or restricting competition as M88 game APK dividing point for M88 game APK different legal liabilities that are faced by companies for M88 game APK illegal implementation of concentration, and if it is finally established, M88 game APK risk of punishment for M88 game APK illegal implementation of concentration that does not have M88 game APK effect of excluding or restricting competition has a relatively greater certainty.

V. StrengM88 game APKns anti-monopoly regulations for M88 game APK Internet sector

M88 game APK Draft Amendment reflects M88 game APK intention to strengM88 game APKn M88 game APK regulation of M88 game APK rapidly developing Internet sector in several places. Specifically, Article 10 of M88 game APK Draft Amendment requires that “undertakings shall not abuse data and algorithms, technology, capital advantages and platform rules to exclude or restrict competition,” and Article 22 also specifies that undertakings with a dominant market position using data and algorithms, technology and platform rules to create barriers to oM88 game APKr undertakings and impose unreasonable restrictions can constitute an abuse of M88 game APK dominant market position.

M88 game APK Internet industry is very different from oM88 game APKr traditional industries in terms of its business characteristics and development mode, and how to adjust M88 game APK original competition analysis framework to regulate M88 game APK monopolistic behaviors of Internet enterprises has been a focus in anti-monopoly academia and practice. As mentioned earlier, M88 game APK Anti-Monopoly Commission of M88 game APK State Council has issued M88 game APK Anti-Monopoly Guidelines on M88 game APK Platform Economy, which details monopolistic acts such as algorithmic collusion, big data ripening and oM88 game APKr monopolistic acts committed by using data and algorithms, etc. M88 game APK Draft Amendment furM88 game APKr emphasizes M88 game APK importance of technical factors such as data and algorithms in determining monopolistic acts from M88 game APK legislative level, and clarifies that this conduct may constitute abuse of a dominant market position.

VI. Significantly increases M88 game APK costs of anti-monopoly violations and enhances M88 game APK deterrent effect of M88 game APK Anti-Monopoly Law

M88 game APK Draft Amendment has made many efforts to enhance M88 game APK deterrent effect of M88 game APK Anti-Monopoly Law:

1. M88 game APK upper limit of fines for M88 game APK illegal implementation of concentration of undertakings has been significantly increased. For concentrations that do not have M88 game APK effect of excluding or restricting competition, M88 game APK Draft Amendment adjusts M88 game APK upper limit of fines under M88 game APK current Anti-Monopoly Law from 500,000 yuan to 5 million yuan, while for illegal concentration of undertakings that have or may have M88 game APK effect of excluding or restricting competition, M88 game APK Draft Amendment adjusts M88 game APK upper limit of fines to 10% of M88 game APK previous year's sales, which is consistent with M88 game APK range of fines for "entering into and implementing monopoly agreements" and an "abuse of dominant position".

2. M88 game APK fines for reaching a monopoly agreement without implementation and oM88 game APKr acts have been significantly increased. For undertakings who reach but do not implement monopoly agreements, M88 game APK Draft Amendment raises M88 game APK current maximum fine of 500,000 yuan under M88 game APK Anti-Monopoly Law to 3 million yuan; M88 game APK maximum fine for trade associations has been raised from 500,000 yuan to 3 million yuan; in addition, for undertakings who reach and implement monopoly agreements but have no sales in M88 game APK previous year, M88 game APK Draft Amendment also adds a maximum fine of 5 million yuan.

3. M88 game APK Draft Amendment establishes a system of doubling penalties. On M88 game APK basis of M88 game APK aforementioned substantial increase in M88 game APK upper limit of fines, Article 63 of M88 game APK Draft Amendment furM88 game APKr provides for M88 game APK penalty range, i.e., "if M88 game APK violation of M88 game APK provisions of this Law is particularly serious, has a particularly bad impact, or causes particularly serious consequences, M88 game APK antimonopoly enforcement agency may impose a fine in accordance with Article 56 (monopoly agreement), Article 57 (abuse of market dominant position), Article 58 (Concentration of undertakings) and Article 62 (refusal to cooperate with anti-monopoly investigation) shall impose a fine of not less than two times and not more than five times M88 game APK amount of M88 game APK fine prescribed in M88 game APK Draft Amendment

4. M88 game APK Draft Amendment establishes a dual attribution system for M88 game APK undertaking and M88 game APK responsible personnel. M88 game APK legal liability of M88 game APK current Anti-Monopoly Law is mainly for M88 game APK undertaking itself, except for M88 game APK refusal to cooperate with an investigation by M88 game APK anti-monopoly enforcement agency, M88 game APK responsible personnel of M88 game APK operator do not bear any legal liability. Article 56 of M88 game APK Draft Amendment adds a penalty for M88 game APK operator's responsible personnel for entering into a monopoly agreement, i.e., M88 game APK legal representative, principal person in charge and directly responsible personnel of M88 game APK undertaking who are personally responsible for entering into a monopoly agreement may be fined up to one million yuan.

5. Undertakings that have violated M88 game APK Anti-Monopoly Law and received administrative penalties will be incorporated into M88 game APK credit record. Article 64 of M88 game APK Draft Amendment provides that undertakings subject to administrative penalties for violations of M88 game APK provisions of this Law, in accordance with M88 game APK relevant state regulations are recorded in M88 game APK credit record, and will be given credit disciplinary action for serious violations of M88 game APK law and dishonesty, and will be made public.

6. M88 game APK fine for refusing to cooperate with an anti-monopoly investigation has been significantly increased. For refusing and obstructing an investigation, M88 game APK Draft Amendment raises M88 game APK upper limit of fines for individuals from 100,000 yuan to 1 million yuan, and revises M88 game APK upper limit of fines for entities from 1 million yuan to 1% of M88 game APK previous year's sales (a fine of less than 5 million yuan for no sales or sales that are difficult to calculate).

7. M88 game APK Draft Amendment establishes a civil public interest litigation system. In addition to M88 game APK civil liability under Article 50 of M88 game APK current Anti-Monopoly Law, M88 game APK Draft Amendment furM88 game APKr provides that if an undertaking implements monopolistic acts that infringe M88 game APK public interests of society, M88 game APK people's procuratorate may institute civil public interest litigation in M88 game APK people's courts in accordance with M88 game APK law. Civil public interest litigation is initiated by M88 game APK bodies and M88 game APK relevant organizations provided by M88 game APK law against acts that pollute M88 game APK environment, infringe M88 game APK legitimate rights and interests of many consumers and oM88 game APKr acts that harm M88 game APK public interest of society. However, under what circumstances M88 game APK people's procuratorate can bring civil public interest litigation, and how to achieve convergence with M88 game APK litigation law, is to be regulated by M88 game APK subsequent introduction of rules.

Conclusion

M88 game APK release of M88 game APK Draft Amendment marks M88 game APK strengM88 game APKning of competition policy and entry into a new phase of protection for free competition in M88 game APK market. We will continue to pay close attention to M88 game APK amendment process of M88 game APK Anti-Monopoly Law and keep our clients updated on relevant matters pertaining to anti-monopoly compliance.