CN SAMR announced 4 anti-monopoly related regulations, all on 10 Mar 2023, and will come into force on 15 April 2023, as below:

  1. Regulations on examining concentration of operators - gkml.samr.gov.cn/nsjg/fgs/202303/t20230320_353972.html
  2. Regulations on prohibition of abuse of dominant market position - gkml.samr.gov.cn/nsjg/fgs/202303/t20230320_353971.html
  3. Regulations on prohibition of monopoly agreement - gkml.samr.gov.cn/nsjg/fgs/202303/t20230320_353968.html
  4. Regulations on prohibition of abuse of administrative power to eliminate and restrict competition - gkml.samr.gov.cn/nsjg/fgs/202303/t20230320_353973.html

I have respective machine English translations.

It seems that China is moving all the way ahead to fight monopoly, and setting the precedents for the rest of the world.

As said many time, I am not an expert of this area, and below are my own observations of several thing that catch my eyes:

Regulations on examining concentration of operators

  • Extensive coverage of ways of concentration, including merger, acquisition of control by acquiring shares or assets, and by golden share (very small share with veto power and special voting rights at the shareholders meeting, recently used by the Chinese Communist Party to exert control over many big Chinese enterprises like Alibaba and Tencent), Article 4
  • Prior approval from the SAMR is required prior to the concentration, Article 8, with disclosures of last year income and tax deduction to the SAMR, Article 9, and detailed calculation basis, Article 10.
  • Foreign companies are covered, even with no businesses in China, Article 19.
  • Once SAMR starts investigation on operator concentration, SAMR would issue opinion, and will be considered as consent to facts stated therein if no reply, Article 28.
  • Penalties include divestiture (tangible and/or intangible assets), opening up of platforms (by changing rules and/or algorithms), licensing of key technologies, Article 40.

Regulations on prohibition of abuse of dominant market position

  • The definitions therein appear to be a lot more detailed than the definitions in those published with the draft rules on 27 June 2022, which the IPO provided comments on. For example, now payment terms and methods of payment would also be included for consideration of whether abuse exists, Article 6 and unfair pricing includes "unfairly low price", Article 14.
  • "Cut-throat" pricing is prohibited, Article 15. I wonder how this is going to affected the Chinese patent profession.

Regulations on prohibition of monopoly agreement

  • By contrast, the definition in these regulations have more resemblance with those published with the draft rules on 27 June 2022, including consideration of consistency of the market behaviors of the business operations involved, Article 6, and the easiness of the relevant goods to be replaced, Article 7.
  • The following are prohibited:
  1. Limited editions of goods, Article 9. Say goodby to limited version of games in China?
  2. Market segmentation (raw materials are also covered), Article 10.
  3. Prohibition on buying and developing new technologies and new equipment, Article 11.
  4. Joint refusal to supply or do business with, Article 12.
  5. Using algorithm to consolidate or set price, Article 15.

Regulations on prohibition of abuse of administrative power to eliminate and restrict competition

  • Firstly, I am not sure whether these cover only activities in China, or worldwide. I suspect only in China, but please let me know what you think.
  • Prohibitions on Articles 4 to 6 and 8 are very interesting, as these have been phenomena imposed by the Chinese government since joining WTO (like explicit requirements, hints, rejections, or delays in administrative approval, filing, repeated inspections, and denial of access to platforms or networks from the authority when starting a business in China by a foreign company). If these Articles are going to be actually implemented nationwide, this could be very good news to many foreign enterprises.

China seemingly is trying to set the anti-monopoly play-field, mainly by imposing a lot of prohibitions. Compliance may face much pressure in the area from China. The good news may be the potential improvement of business environment of foreign enterprises doing business (hopefully not my wishful thinking).

With so many new prohibitions, I wonder when there would be regulations prohibiting me to breathe?

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