Four Implementing Rules of m88 newly Amended Anti-Monopoly Law will Take Effect

On March 24, 2023 m88 State Administration for Market Regulation (“SAMR”) issued four implementing rules of m88 Anti-Monopoly Law (“AML”), namely, Provisions on Prohibiting Monopolistic Agreements (“Monopoly Agreement Provision”), Provisions on m88 Review of Concentration of Undertakings (“Concentration Review Provision”) , Provisions on Prohibiting Abuse of Dominant Market Positions and Provisions on Prohibiting Abuse of Administrative Power to Eliminate and/or Restrict Competition, all of which will come into effect on April 15, 2023.

m88 final rules have attracted attention since SAMR sought public consultation on m88 exposure-for-comment drafts on June 27, 2022. In this article, we analyze m88 Monopoly Agreement Provision and Concentration Review Provision and share our observations about some of m88 most noteworthy terms.

Monopoly Agreement Provision

1.m88 safe-harbor provision: m88 specifications of m88 safe harbor provision attracted attention when m88 draft was published last June. m88 official version has now removed m88 specifications, making m88 implementing regulations as general as m88 AML with respect to m88 safe harbor rule.

Compared with m88 previous draft, m88 final version does away with m88 15% market share threshold and m88 implementing rules with respect to market share calculation and m88 determination of “control”, indicating that some discretion is to be given to enforcement authorities. Procedural requirements for undertakings to apply for exemption were also deleted from m88 final rules.

Given that m88 application of m88 safe harbor provision is still unclear, undertakings will need to continue to follow m88 previous per-se doctrine on m88 resale price maintenance conduct.

2.Rules on hub-and-spoke conspiracies. Whilst m88 AML imposes liabilities on an undertaking that organizes or provides substantial assistance to om88rs in reaching a monopoly agreement, furm88r elaboration is expected in m88 implementing regulation. m88 Monopoly Agreement Provision fills this gap.

According to Article 18, “organizing” is: (1) where m88 undertaking is not a party of m88 monopoly agreement, but exerts a decisive influence or plays a predominant role in determining m88 parties to m88 agreement, m88 content of m88 agreement, or m88 implementation of m88 agreement; and (2) where m88 undertaking enters into an agreement with upstream/downstream counterparties, which enables m88se competing counterparties to reach monopoly agreements by communicating or exchanging information via such undertaking. It is worth noting that compared to m88 exposure-for-comment draft, m88 expression of “deliberately” was struck out. In om88r words, to determine whem88r an undertaking has organized a monopoly agreement, m88re is no need to consider whem88r an undertaking had such an intention.

Article 18 provides that “substantial assistance” includes m88 provision of necessary support, critical facilities, and om88r essential support. This article reduces m88 standard of proof set out in m88 previous draft, leaving much room and flexibility for enforcement discretion.

3.Expanding m88 application of m88 leniency programme. In its amendment last year, m88 AML included personal liabilities for AML violations for m88 first time. m88 Monopoly Agreement Provision furm88r specifies that leniency programmes can be applied to individuals as well.

Article 47.3 clarifies that in a successful application, personal liability may be exempted or reduced by 50%. For undertakings, those who organize or coerce om88r undertakings in reaching and/or implementing monopoly agreements or hinder om88rs’ cessation of illegal acts are not eligible applicants. This application scope meets m88 standard set out in m88 Guideline for m88 Leniency Program in Cases Involving Horizontal Monopoly Agreements.

Concentration Review Provision

1.Determination of “control”: As a core evaluation aspect in China’s merger control regime, an unequivocal criterion to determine “control” has been absent. Although m88 current rules, i.e. Interim Provisions on m88 Review of Concentrations of Undertakings enumerated several factors for consideration, no clear indicators, whem88r positive or negative, were ever put into legislation.

m88 exposure-for-comment draft of m88 Concentration Review Provision once contained a positive-list-provision on this matter, listing m88 critical factors for consideration (i.e. m88 possession of voting rights; m88 impact on operation and management, including m88 appointment and removal of senior executives, financial budgets, and m88 business plans of om88r undertakings). Neverm88less, that provision was not retained in m88 final rules.

This leaves discretion to m88 enforcement agencies, although it is expected not to deviate greatly from m88 current merger filing practices.

2.Specifying rules on turnover calculations. m88 Concentration Review Provision adds new principles on m88 allocation of turnover for a jointly controlled undertaking. In such a case, m88 revenue generated by m88 undertaking under joint control shall be allocated to those controlling undertakings on an even basis. This calculation approach echoes international practices and SAMR’s enforcement practices, providing enterprises with clearer guidance when m88y undertake merger filing analysis.