China's revised Anti-Monopoly Law comes into effect on August 1
On 24 June 2022, the 35th meeting of the 13th National People's Congress (NPC) Standing Committee passed the decision to amend China's Anti-Monopoly Law (AML), which will take effect from 1 August 2022. This is the first major legislative update of China’s anti-monopoly law since it was first in 2008., The newly-revised law strives to uphold fair competition order and provide a fair, transparent and predictable environment for business operators. vows to establish and improve a fair competition review system, formulate and implement competition rules that are compatible with China's socialist market economy.
The new changes and additions to the AML including 25 Articles which give more legal teeth to the law underpinning China’s anti-monopoly legislative framework. Some of the major changes are highlighted as follows:
Changes to the anti-competitive agreements regime
First, an “effect test” is explicitly introduced in relation to the vertical agreements. Article 18.2 provides that a vertical anti-competitive agreement will not be prohibited, if the business operator can prove that such an agreement does not have the effect of eliminating or restricting competition.
Second, a “safe harbor” principle is defined in the newly amended AML. Article 18.3 provides that a vertical anti-competitive agreement is not prohibited, if the operators’ respective market share in the relevant market is lower than such market share percentage and that any other conditions established by the competition enforcement agency are met.
Third, the new Article 19 explicitly prohibits operators from organizing for other operators to reach monopoly agreements or offering substantial help to other operators to reach monopoly agreements.
Changes to business concentrations regime
First, the newly-revised AML optimizes the investigation procedures and sanction applicable to the business concentration does not reach the standards for reporting. Article 26 stipulates if the concentration of business operators does not reach the declaration threshold set by the State Council, but the evidence submitted shows that the concentration has or may have the effect of eliminating or restricting competition, then the authority for enforcement of the AML under the State Council can require a declaration from the operator; If the operator does not make such declaration, the authority for enforcement of the AML under the State Council shall carry out an investigation;
Second, introduction of “stop-clock mechanism” in review procedure. Article 32 stipulates under certain circumstances, the authority for enforcement of the anti-monopoly law under the State Council may decide to suspend the calculation of the review period for the business concentration;
Third, the new Article 37 stipulates that the authority for enforcement of the anti-monopoly law under the State Council shall improve the anti-monopoly reviews of concentration of business operators, strengthening reviews in accordance with law in important areas related to the national economy and people's livelihood, and enhance the quality and efficiency of the review.
Taking problem-oriented and goal-oriented approaches, the amendment draws equal attention on both development and standardization, and clarifies the basic position of competition policy and the legal status of the fair-competition review system. The amendment not only refines the provisions in the AML, but also leaves space for the formulation of anti-monopoly guidelines and other supporting provisions, said Mr. Wang Xiang, Dpt. Director of the Economic Law Division of the Legislative Affair Commission of the NPC Standing Committee.