In order to implement the amended Anti-Monopoly Law of the People's Republic of China (hereinafter referred to as the "Anti-Monopoly Law"), further strengthen and improve anti-monopoly supervision and law enforcement, effectively regulate monopoly agreements, and protect fair competition in the market, in accordance with the legislative plan and work arrangements, the State Administration for Market Regulation has revised the Interim Provisions on Prohibition of Monopoly Agreements (Order No. 10 of the State Administration for Market Regulation, hereinafter referred to as the "Interim Provisions"). In order to better implement the newly revised Provisions on the Prohibition of Monopoly Agreements (Order No. 65 of the State Administration for Market Regulation, hereinafter referred to as the "Provisions"), it is hereby interpreted as follows:
I. Background of the Revision
Since the implementation of the Anti-Monopoly Law, anti-monopoly law enforcement agencies have continued to strengthen and improve the enforcement of monopoly agreements, and by the end of 2022, a total of 227 cases of monopoly agreements had been investigated and prosecuted, with fines and confiscations of 6.808 billion yuan. Among them, since the institutional reform in 2018, 66 cases of monopoly agreements have been investigated and handled, and 2.777 billion yuan of fines and confiscations have been imposed. Since its implementation on September 1, 2019, the Interim Provisions, as a supporting regulation of the Anti-Monopoly Law, have played an important role in clarifying the standards and procedures for the enforcement of monopoly agreements, unifying the rules for regulatory enforcement, protecting fair competition in the market, and safeguarding the interests of consumers and the public interest. It is necessary to revise the Interim Provisions in order to implement the major decisions and arrangements of the CPC Central Committee and the State Council on strengthening anti-monopoly and further promoting the implementation of fair competition policies, implementing the new Anti-Monopoly Law, and better preventing and stopping monopoly agreements.
First, it is an important part of improving the anti-monopoly legal system. Since the 18th National Congress of the Communist Party of China, the mainland has gradually built a scientific, complete, unified and authoritative anti-monopoly legal system, and promoted the full integration of anti-monopoly supervision into the track of the rule of law. Entering a new stage of development, in order to consolidate the foundation of the rule of law for high-quality development, promote development with good laws, and ensure good governance, it is necessary to implement the spirit and institutional requirements of the new Anti-Monopoly Law, further improve the substantive and procedural rules for regulating monopoly agreements, improve the level of rule of law and standardization of anti-monopoly in the mainland, and promote the construction of a high-standard market system.
Second, it is necessary to give full play to the role of anti-monopoly regulatory functions. Monopoly agreements undermine the market competition mechanism and seriously affect the market-oriented allocation of production factors and the virtuous cycle of the national economy. Improving the institutional rules for regulating monopoly agreements and enhancing the accuracy, effectiveness, and authority of anti-monopoly supervision and law enforcement can effectively solve the problem of monopoly agreements that restrict economic development, promote the free flow of goods and services, and better play the important role of anti-monopoly supervision in promoting the construction of a unified national market, building a new development pattern, and promoting high-quality development.
The third is specific measures to improve the efficiency of anti-monopoly supervision. In order to better meet the requirements of the mainland's social and economic development and the needs of actual law enforcement, it is necessary to further standardize the law enforcement procedures of monopoly agreements, improve the law enforcement mechanism, make up for the shortcomings of supervision, enrich regulatory tools, continuously promote the institutionalization, standardization and proceduralization of law enforcement, improve the efficiency of anti-monopoly supervision, and provide a solid institutional guarantee for the strict, standardized, fair and civilized supervision and law enforcement of monopoly agreements.
II. Basic Principles
In the process of revision, the State Administration for Market Regulation adheres to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, thoroughly studies and implements the strategic deployment of the 20th National Congress of the Communist Party of China on strengthening anti-monopoly, pays attention to strengthening the guidance of institutional rules, accurately grasps the requirements of the new Anti-Monopoly Law, and takes into account the promotion of fair competition and innovative development, mainly adhering to the following principles:
The first is to fully implement the spirit and institutional requirements of the new Anti-Monopoly Law. Deeply understand the spirit of the amendments to the Anti-Monopoly Law, accurately grasp and fully embody the basic principles and main contents of the revision of the monopoly agreement system in the new Anti-Monopoly Law, focus on the new and revised system rules, supplement and refine, and ensure the better implementation of the revised provisions of the new law.
Second, it fully embodies the legislative spirit of "blending leniency with severity." Implement the new Anti-Monopoly Law, strengthen the deterrence and punishment of illegal acts of monopoly agreements, increase the relevant legal liabilities of responsible personnel, and enhance the authority of anti-monopoly law enforcement. At the same time, we should insist on attaching equal importance to development and regulation, implement tiered regulatory tools such as interview improvement, further refine the leniency system, improve institutional rules such as non-prohibition of vertical monopoly agreements, protect the legitimate rights and interests of business operators, and promote the standardized and healthy development of business entities.
The third is to effectively enhance the predictability and operability of the system and rules. In view of the fact that the provisions of the new AML are relatively principled and the law enforcement standards need to be clarified, the substantive and procedural rules of the Interim Provisions should be further improved and refined, so as to provide unified standards and basis for the scientific, accurate and standardized law enforcement of the Anti-Monopoly Law Enforcement Agency, and create an open, transparent and predictable institutional environment for fair competition for business operators.
3. Specific content
There are 36 articles in the Interim Provisions, including authorization and jurisdiction, determination of monopoly agreements, investigation procedures, and legal liability. Compared with the Interim Provisions, the Provisions retain 21 articles, add 15 articles and amend 16 articles, for a total of 51 articles after the amendment. The amendments mainly involve the following six aspects:
(1) Further clarify the criteria for determining competitive relationships. The first is to add relevant provisions to define the relevant market. Fully absorb the core content of the Guidelines on the Definition of Relevant Markets issued by the Anti-Monopoly Commission of the State Council, summarize the experience of law enforcement, clarify the considerations for the analysis of demand substitution and supply substitution, and provide clearer provisions and guidelines for law enforcement practice (Article 7). The second is to add provisions on potential competitors. It is clarified that "competitive undertakings" include actual competitors already in the same relevant market, as well as potential competitors who have the feasibility of entering the relevant market within a certain period of time, and further clarifies the relevant enforcement standards by drawing on international prevailing rules (Article 8).
(2) Improve relevant provisions in the field of the digital economy. First, it is expressly agreed that the "algorithm and platform rules" for calculating prices constitute a monopoly agreement for fixing prices (Article 8). Second, the provisions on the division of the sales market and the raw material procurement market apply to "data" and other elements (Article 10). The third is to enumerate the ways in which business operators use data and algorithms, technology, and platform rules to reach horizontal and vertical monopoly agreements, so as to better meet the needs of anti-monopoly supervision in the context of the digital economy (Articles 13 and 15).
(3) Refine the rules for determining vertical monopoly agreements. The first is to add the right to defend vertical price monopoly agreements. A business operator may provide evidence on a case-by-case basis that its conduct does not have the effect of eliminating or restricting competition in the vertical price agreement it has reached, and the anti-monopoly law enforcement agency shall not prohibit the agreement after determining that the agreement (Article 14). The second is the addition of safe harbor provisions. If the undertaking can prove that it meets the market share standards and other conditions stipulated by the State Administration for Market Regulation, the anti-monopoly law enforcement agency shall not prohibit the relevant agreement (Article 17).
(4) Refine the relevant provisions on organizing and assisting in the conclusion of monopoly agreements. The first is to refine the identification criteria. Clarify the illegal circumstances and specific identification criteria for "organization" and "substantive assistance" as used in Article 19 of the Anti-Monopoly Law, so as to strengthen institutional safeguards for law enforcement agencies to accurately enforce the law and for business operators to comply with laws and regulations (Article 18). The second is to provide leniency guidance. While stipulating that the undertakings that organize and assist in the conclusion of monopoly agreements shall bear legal liability, it is clarified that the above-mentioned undertakings may also apply for a reduction of penalties under the leniency system for monopoly agreements, which fully embodies the spirit of the leniency system and provides better compliance guidelines for undertakings (Article 37).
(5) Further standardize investigation procedures. The first is to further standardize the law enforcement procedures for monopoly cases such as case filing, administrative penalty notifications, and administrative penalty decisions, so as to fully reflect the protection of the parties' rights to make statements, make defenses, or request hearings (Articles 24, 27, 28, and 29). Second, a special provision has been added to reply to whistleblowers, clarifying that anti-monopoly law enforcement agencies may, upon written application by a written real-name whistleblower, give feedback to them on the results of the handling of the report in accordance with the law, so as to better protect the whistleblower's right to know (Article 23). Third, it further refines the procedures for applying for leniency and designation, clarifying the time for business operators to apply for leniency, the specific requirements for submitting materials, the standards of important evidence, etc., and stipulating the procedures for organizing helpers and personally responsible personnel to apply for leniency, so as to provide clearer and clearer guidance for law enforcement agencies and business operators (Articles 37, 38 and 47). Fourth, it further standardizes the procedures for suspending investigations and exempting determinations, and adds a new interview system and makes detailed provisions in accordance with the amended Anti-Monopoly Law, so as to make the enforcement procedures for monopoly agreements more complete (Articles 19, 20, 32 and 36).
(6) Improve legal responsibility. First, according to the new Anti-Monopoly Law, the relevant provisions on legal liability (Articles 42 to 46) will be adjusted accordingly. The second is to stipulate the range of applications for mitigation or exemption of punishment for the legal representative, principal responsible person and directly responsible personnel of the business operator who bears personal liability (Article 47). The third is to clarify the handling of violations by staff members of anti-monopoly law enforcement agencies (Article 48). Fourth, the new provisions on the convergence of conduct and discipline in the course of anti-monopoly law enforcement on the discovery of clues on suspected violations and crimes by public employees (Article 49) are added.
Fourth, the main features
The "Provisions" mainly have the following three characteristics:
The first is to give full play to the role of guidelines and norms, and the regulatory rules for monopoly agreements are more detailed. On the basis of the full implementation of the new Anti-Monopoly Law, the revision work combines theory and law enforcement practice to improve and refine the substance, procedure, jurisdiction, law enforcement supervision and other issues of the monopoly agreement system, especially clarifying the monopoly agreement exemption, leniency, effect defense, safe harbor and other systems, and strive to build a monopoly agreement regulatory system with complete system, strict logic and clear rules, and continuously improve the scientificity, pertinence and effectiveness of the anti-monopoly supporting regulations. Provide open, transparent and predictable behavioral guidelines for law enforcement agencies to accurately enforce the law and operators to operate in accordance with laws and regulations.
The second is to effectively respond to the needs of new economic supervision and make the regulation of new monopolistic behaviors such as the digital economy more precise. In view of practical problems such as the more complex and concealed forms of monopoly agreements reached by business operators, and the trend of digitalization of means, the Provisions fully consider the characteristics of digital technology and business models, make supplementary provisions on the use of algorithms to fix prices, segment the data market, and use platforms to carry out communication of intentions, etc., and specifically refine the circumstances of new types of organizations and assistance in reaching monopoly agreements, and do a good job of coordinating and connecting with existing provisions, so as to provide strong institutional support for prudently and accurately carrying out the enforcement of monopoly agreements in new fields and forms.
The third is to focus on improving procedural provisions and promoting the standardization of law enforcement. The "Provisions" better reflect the "soft" law enforcement, add an interview system and clarify the relevant procedural and substantive requirements, give the parties the opportunity to correct illegal acts and eliminate the consequences of damage, which will help maintain the vitality of business entities and achieve a better combination and benign interaction between an effective market and a promising government. At the same time, fully embody fairness and justice and law enforcement for the people, further clearly stipulate the relevant administrative law enforcement procedures and systems, such as prior notice, hearings, report responses, discipline inspection and supervision systems, in the source, process and results of law enforcement and other key links fully reflect the strengthening of supervision and restraint of administrative power, and promote strict, standardized, fair and civilized law enforcement.