3 November 2021 Fay Zhou  -  Xi Liao Competition and Antitrust

China Publishes Latest Draft Amendments to Anti-Monopoly Law: Highlights and Implications

On 23 October 2021, the Standing Committee of China’s National People’s Congress (the “Standing Committee”), China’s top legislature, published for public comments the Draft Amendments to the Anti-Monopoly Law (the “AML”) (the “Draft Amendments”). This is the second round of published draft amendments to the AML, which followed the previous set open for public consultation by the State Administration for Market Regulation in January 2020.

The highlights of the Draft Amendments are summarised as follows:

  • New substantive rules: the concept of safe harbour for monopoly agreements are included; a resale price maintenance arrangement would not be an infringement if the undertaking can demonstrate it lacks anti-competitive effects; a new type of abusive conduct have been added, i.e. unreasonable restrictions on other undertakings by digital platforms by setting obstacles through means of data and algorithm, technology and platform rules.
  • Enhanced deterrence: for the first time, personal liability for substantive violations has been introduced under the AML; the level of monetary penalties also increases significantly, in particular for failure to notify / gun-jumping in merger review and non-cooperation; in extreme cases, the enforcement authority may further increase the fine to two to five times of the original amount.
  • New procedures: “stop-the-clock” mechanism in merger review process and public interest civil litigation against monopolistic conduct are both added to the new AML.

In the meantime, certain issues call for further clarifications and guidance, including:

  • whether missed filings in the past are subject to the strengthened penalties under the new law;
  • when individuals would be held liable in a monopoly agreement case; and
  • whether the safe harbour applies to hard-core restrictions.

The public consultation for the Draft Amendments will run until 21 November. In terms of next step, the Standing Committee will take stock of the feedback received from the public consultation, further deliberate on and refine the amendments, and pass the amendments after settling the relevant issues. Although there is currently no official timeline, it is understood that there is a goal to finalise and pass the amendments by the end of 2021.