This content is from: Local Insights

Anti-Monopoly Law

The Anti-Monopoly Law (AML) of the People's Republic of China was promulgated in August of 2007 and came into effect on August 1 2008. It took the Chinese legislator almost 13 years to draft and pass the AML. It covers all three main categories of activities against competition: entering into monopolistic agreements of an anti-competitive nature, abusing a market dominant position and concentration of business operators which may have the effect of eliminating or restricting competition which meets with the thresholds.

The AML adopts similar principles and contains similar provisions to those of the anti-monopoly and anti-trust legislation in other jurisdictions such as the US and EU.

The AML applies to all business operators in China, as well as those whose economic activities have or would have an effect of excluding or restricting competition within the PRC, although such activities may occur outside of the territory of China. The AML has attracted attention from almost all of the multinational companies in leading positions in various businesses.

It is a common practice for countries with anti-monopoly legislation to issue legal guidelines or judicial interpretations for the public, especially the business world, to better understand and comply with the legislation. China's AML clearly delegates to an anti-monopoly committee to be established and administered by the State Council the duty to issue such guidelines, in order to further enhance the transparency and credibility of the law.

Lacking implementing rules in relation to the AML, it has been reported that the duty to enforce the AML will be shared by the following three lines of government agencies: the Ministry of Commerce, to be responsible for examining and approving merger control filings; the National Development and Reform Commission, to be responsible for price monopoly-related cases; and the State Administration for Industry and Commerce, to be responsible for issues relating to abuses of a market dominant position.

The AML provides two alternative ways of seeking remedies against monopolistic activities: launching a civil action in court or making an administrative claim to the competent government agency.

One of the supporting regulations of AML, the State Council's Regulations on Notification Thresholds of Concentrations of Business Operators, was adopted at the 20th executive meeting of State Council on August 1 2008, promulgated on August 3 2008 and effective from the date of promulgation.

Under the Thresholds Regulations, business operators must make a filing in two situations: (1) if in the last fiscal year, the total global turnover of all business operators participating in the concentration exceeded Rmb10 billion and at least two business operators had a turnover of more than Rmb400 million in China; (2) if in the last fiscal year, the total turnover of all business operators participating in the concentration in China exceeded Rmb 2 billion and at least two participating business operators had a turnover of more than Rmb400 million in China.

Further, even if any of the above thresholds are not met, if evidence gathered from legal procedures indicate that such concentration of business operators will eliminate/restrict or may eliminate/restrict competition, the competent government agency will conduct an investigation according to the legal requirements.

Bai Tao

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