Li Qing, anti-monopoly | perspective: China's anti-monopoly law enforcement will not be strict for the sake of strictness

In recent years, the anti-monopoly storm has swept the world, especially the anti-monopoly supervision in China and the United States has attracted attention.

In China, anti-monopoly supervision continues to heat up, Ali was fined, and meituan was investigated, "strengthening anti-monopoly and preventing disorderly expansion of capital" was written into the government work report, and China's Anti-Monopoly Law also ushered in revision.

On the other side of the ocean, antitrust investigations and lawsuits against the Big Four in the United States have been launched. In October 2020, the U.S. Department of Justice formally sued Google for maintaining an illegal monopoly in Internet search and search advertising. In December of that year, the FTC and the multi-state jointly filed a lawsuit against Facebook.com. In addition, the EU has also launched long-term antitrust investigations and lawsuits against microsoft, Google and other technology companies.

Where will antitrust regulation in China and the United States go? How to balance antitrust regulation with encouraging innovation? What should be the purpose of antitrust and competition policy? Around these issues, the Beijing News invited Li Qing, vice president of the China Economic System Reform Research Association (former deputy director of the Anti-Monopoly Bureau of the National Development and Reform Commission and deputy director of the Price Supervision and Competition Bureau of the State Administration of Market Regulation), William Kovacic, a professor at George Washington University and former chairman of the Federal Trade Commission (FTC), and Shi Jianzhong, vice president of China University of Political Science and Law, for an in-depth dialogue.

In China, a noteworthy phenomenon is that since the second half of last year, both the enforcement actions against technology companies and the introduction of legal systems have been very fast. In this regard, Li Qing said that Chinese institutions and other institutions have been paying attention to and discussing the competition issue in the digital economy, and law enforcement agencies have also been paying attention to the competition issue of the platform economy. In the case of a lot of efforts already made in the early stage, some problems of restricting and eliminating competition have been exposed more intensively at this stage, and the Anti-Monopoly Law has a place to play. "Law enforcement agencies don't presuppose positions in advance, and they don't enforce the law strictly for the sake of strict law enforcement." Li Qing said that China's anti-monopoly law enforcement has always paid more attention to protecting innovation.

Regarding the differences in regulation between China and the United States, William Kovacek argues that the United States did not exercise strong control over merger controls in the past, and that China has studied merger transactions more carefully than Europe and the United States. "The United States is approaching a view of enforcement that China has accepted and the European Union has accepted to some extent."

"China's anti-monopoly law enforcement will not presuppose a position in advance"

Shi Jianzhong: Since the second half of last year, China's anti-monopoly law enforcement agencies have launched a number of enforcement actions against Chinese technology companies. In addition, China's anti-monopoly law enforcement agencies have also made some explorations in terms of system construction and legal provisions, including the promulgation of the Anti-monopoly Guidelines in the Field of Platform Economy. We can see that enforcement actions and laws are introduced very quickly, what signals are these moves? Does it mean that China's anti-monopoly in the field of digital economy will become more and more stringent in the future?

Li Qing: First of all, I think China's Anti-Monopoly Law came into being, it is the development of the Chinese market economy to a certain stage, there are many competition problems that have emerged, and we must solve these problems. In this case, China has introduced the Anti-Monopoly Law. In the more than 10 years since the promulgation of the Anti-Monopoly Law, it has had many uses, and China's anti-monopoly law enforcement has also made great achievements.

Second, it may be in the public impression that there was no law enforcement action against Internet high-tech enterprises in the past, why there have been sudden law enforcement actions since the end of last year, and the introduction of the Anti-Monopoly Guidelines in the Field of Platform Economy seems to be particularly rapid. I would like to say that in China, scholars, experts, and institutions have been paying attention to and discussing the issue of competition in the digital economy. For example, before the introduction of the "Anti-monopoly Guidelines in the Field of Platform Economy", many experts published articles and put forward their own views on the issue of competition in this field, and many seminars have discussed the competition issue of the platform economy, and many times have been repeatedly discussed, and law enforcement agencies have also been paying attention to this field. These discussions and understandings are not shown to society, which does not mean that the work behind them is not done. In the case of a lot of efforts in the early stage, at a certain period of time, it is the harvest season that has come, law enforcement activities have also been carried out, and the guidelines have also come out. Some problems of restricting and excluding competition have been exposed more intensively at this stage, so that the Anti-Monopoly Law has a place to play, and it is certain to maintain fair competition in the market.

Third, will China's anti-monopoly law enforcement agencies be very strict and active in the next step in enforcing anti-monopoly law enforcement in the Internet field? In my personal observation, law enforcement agencies do not presuppose positions in advance, nor do experts and scholars. If the Internet platform has problems in restricting and eliminating competition, law enforcement agencies will definitely find ways to face and solve them, and experts will also have various views and opinions to express. If you are accurate, you must actively enforce the law, and if you are not accurate, you can maintain attention, continuous research and observation. Some people think that the development of the platform economy to the present, has been in a relatively mature stage, I personally think there may be a lot of development. At present, the phenomenon of new technologies, new models, and the re-integration of online and offline is still emerging, and many regular things may continue to be displayed, and law enforcement agencies naturally need to pay attention to, supervise and enforce the law on the development of the Internet economy.

In general, anti-monopoly law enforcement is to better promote competition, law enforcement agencies will not strictly enforce the law for the sake of strict law enforcement, and law enforcement agencies will enforce the law according to the needs of statutory procedures and competition issues themselves.

Shi Jianzhong: I very much agree with the above point of view. Since the second half of last year, China's relevant departments have increased their law enforcement actions in the Internet field, and the establishment of rules and regulations has been accelerating, which is related to the rapid development of the digital economy. Different from the traditional industrial economy, technological development may accelerate the speeding up of the digital economy, amplify its achievements, and make great contributions to society, while generating many problems. In the context of the rapid development of the digital economy, starting last year or earlier, the three jurisdictions of the United States, the European Union and China have begun to strengthen law enforcement in the field of digital economy, and there is no doubt that the strengthening of law enforcement in the three jurisdictions almost at the same time is not collusion, not a "monopoly agreement", but related to the development of the digital economy in various countries.

The purpose of China's anti-monopoly law enforcement is to promote industrial development, pursue and protect innovation, and protect the rights and interests of consumers, not to strictly enforce the law for the sake of strict law enforcement, do not think that our anti-monopoly in the digital field has entered an era of strong supervision. I myself have always disagreed with the "strong supervision, weak supervision" statement, the subjectivity of strong and weak is too strong, and China's anti-monopoly law enforcement is not for the sake of strong and strong, not for the sake of weak and weak. If this is the case, the purpose of anti-monopoly law enforcement cannot be better achieved.

"China's anti-monopoly law enforcement has always paid more attention to protecting innovation"

Shi Jianzhong: How do you view the relationship between antitrust supervision and innovation in China in recent years?

Li Qing: Since the promulgation and implementation of the Anti-Monopoly Law in 2008, China's anti-monopoly has also faced the problem of regulating large innovative technology companies. Based on the law enforcement practices I have experienced in the past and my current observations and thinking, I believe that China's anti-monopoly law enforcement agencies have always paid more attention to protecting innovation, and have always maintained a more sensitive attitude towards improving efficiency and encouraging innovation in anti-monopoly law enforcement. In the Draft Amendment (Draft for Public Comment) released in January 2020, a new item "encouraging innovation" was added to the legislative purpose of Article 1. Item 4 of Article 15 of the Draft for Comments replaces "restricting the purchase of new technologies..." with "restricting access to new technologies...". It can be said that whether it is anti-monopoly law enforcement or legislation, China regards encouraging innovation as a very important consideration.

"U.S. merger control is too weak, China's law enforcement view is being accepted"

Shi Jianzhong: In Mr. Kovacic's view, what are the differences between antitrust supervision in the United States, the European Union and China?

WILLIAM KOVACEK: An important theory is that merger control in the United States is too weak, and in the last 20 years, competition authorities have been too cautious in applying merger laws. A prime example is Facebook's acquisition of Instagram and WhatsApp about 10 years ago. At that time, Instagram had fewer than 20 employees. For the $1 billion acquisition of this inexperienced small company, Facebook CEO Mark Zuckerberg said the acquisitions were because they had the potential to become strong competitors to Facebook, they had promising ideas, and now they may not understand how good the idea is, but will come up with a way. The way to stop this from happening is to buy them and the threat will disappear. The FTC did not intervene in the merger.

Google has a similar story. A major focus of these U.S. cases is to work to repair the consequences of the so-called fragmented policy of combined control. Weak consolidation controls have led to this happening. There are certainly similar concerns in Europe, where they allow such mergers to take place. So, the view of these jurisdictions is that perhaps not strong enough in terms of merger control. We were too open to the idea that "merging is usually good", so we didn't implement strong controls.

In many cases, China has studied some of the mergers more closely than Europe and the United States. But U.S. officials have said on visits to Beijing for years, "Be cautious, and if you intervene too much, you will reduce the incentive to innovate." That view is changing. I think in the United States, there is a growing acceptance of the idea that the policies of the United States over the last 20, 30, 40 years have been too weak and not strong enough. What we've seen in these cases is that the United States is approaching a view of enforcement that China has embraced and that the European Union has accepted to some extent.

An important difference in the case of U.S. abuse of dominance is that corporate restructuring, spin-offs, and divestitures are all clear solutions. The FTC sued Facebook, specifically requesting the spin-off of Facebook. In the Google case, the prosecution's claim was that the court ordered the company to restructure to weaken its power. European policymakers are very cautious about this. The Vice-President of the European Commission has said that divestitures are a last resort and will only be used in extreme cases. The interesting thing about the U.S. case is that the U.S. government, the Justice Department, and the FTC have now all said they want to break up and implement structural solutions to address the problem. This is a big policy change compared to four or five years ago, and it's a very serious problem.

Li Qing: Mr. Kovacek discussed the issue of the spin-off of large technology companies, especially some structural issues, which I think may not be directly analogous to China's anti-monopoly enforcement. China's anti-monopoly law enforcement has so far focused on the structural considerations of the concentration of undertakings, and the review of the concentration of undertakings may make some structural or behavioral remedies.

Beijing News reporter Hou Runfang Gu Zhijuan Editor Wang Jinyu Proofreader Zhang Yanjun Wei Zhuo