China: China Publishes Revised Draft Rules Explaining Key Anti-Monopoly Law Provisions

Last Updated: 2 June 2010

Article by Hannah C. L. Ha , John M. Hickin and Gerry P. O'Brien

Originally published 2 June 2010

Keywords: China, revised draft rules, anti-monopoly law, antitrust regulators, AML, SAIC, draft agreement

China's antitrust regulators have published revised drafts of three implementation rules explaining aspects of the enforcement approach that will be applied to key Anti-Monopoly Law ("AML") 'conduct rule' prohibitions.

Public consultation is continuing in relation to these drafts, and while this process continues it is expected that regulatory enforcement of the conduct rules will remain limited. However, the drafts may impact the approach China's courts take to AML private action cases (which are progressing, notwithstanding the lack of regulatory enforcement) and the latest changes to the drafts reveal new insights into the enforcement approach and methodology that may eventually be adopted by China's Anti-Monopoly Enforcement Authorities.

On 25 May 2010, the Anti-Monopoly and Anti-Unfair Competition Bureau of the State Administration for Industry and Commerce ("SAIC"), published on its website several revised draft rules relating to the AML. Specifically, the revised drafts were:

  • Draft Rules of Administrative Authority for Industry and Commerce on Prohibition of Monopoly Agreements ("Draft Monopoly Agreement Rules"); and
  • Draft Rules of Administrative Authority for Industry and Commerce on Prohibition of Abuse of Dominant Market Position ("Draft Dominance Rules"); and
  • Draft Rules of Administration Authority for Industry and Commerce on Prohibition of Abuse of Administrative Powers to Eliminate and Restrict Competition ("Draft Administrative Monopoly Rules")

Each of the revised draft rules expand on general prohibitions in the AML, and provide some detail about the methodology the Chinese authorities will apply when determining if a business operator (or, in the case of the Draft Administrative Monopoly Rules, a governmental authority) is in breach of those prohibitions. Additionally, the revised Draft Monopoly Agreement Rules and Draft Dominance Rules elaborate on the brief non-exhaustive list of examples of relevant unlawful agreements or activities that is contained in each of the AML Articles establishing the prohibitions, and provide further guidance on the circumstances in which business operators may be able to justify or raise defences for agreements or conduct that would otherwise fall foul of the prohibitions.

A number of the latest refinements to the rules bring them more into line with the enforcement approach taken to analogous prohibitions in mature jurisdictions such as the EU and US. However, the rules (like the AML prohibitions they correspond to) remain open-ended and will be capable of wide interpretation by the Chinese regulators, and thus it remains to be seen how closely the actual enforcement approach taken by the Anti-Monopoly Enforcement Authorities will align with international best practice.

In this legal update, we summarise the key changes the Chinese authorities have made in revising the Draft Monopoly Agreement Rules and Draft Dominance Rules, and provide thoughts on what impact these latest developments may have on the application of China's antitrust regime in the months ahead.

Draft Monopoly Agreement Rules

Our legal update summarising the prior version of the Draft Monopoly Agreement Rules can be found here.

Many of the changes in the latest draft are general refinements and do not appear to signal significant modifications to the enforcement methodology that the Chinese authorities will apply regarding the AML's prohibition of horizontal (i.e. between competitors) and vertical (i.e. between trading partners) monopoly agreements.

However, there are several noteworthy developments.

Firstly, the authorities have removed text that appeared in the previous draft of the rules and which indicated that the prohibition of vertical monopoly agreements could render unlawful certain agreements in which one business operator (i.e. a manufacturer) restricted another business operator (i.e. a distributor) from operating outside a designated geographic market, or from trading with certain other businesses. This is significant, as it suggests China's competition authorities may be reluctant to examine such restraints in vertical arrangements (such as distribution and supply contracts) unless the party imposing the restraint holds a dominant market position - in which case the AML prohibition regarding that matter will apply. Indeed, the Draft Dominance Rules now have more to say on this issue, as explained in the next section of this update. Secondly, there are significant changes to the leniency provisions in the draft rules. Specifically, text in the previous draft which applied tiered penalty discounting to business operators that report participation in a cartel (and provide relevant information to the Chinese authorities about it) has been modified. Now, while the draft rules still provide that a successful and 'first in time' leniency applicant will avoid regulatory penalty under the AML, the extent of penalty discount available to successful 'second in time' and 'third in time' leniency applicants will be at the discretion of the regulators rather than automatically set at 50% and 30% respectively.

Various other substantive changes have been made to the Draft Monthly Agreement Rule, including the removal of provisions expressly prohibiting various acts of bid rigging or tender manipulation (although such conduct may still be covered by more general prohibitions in the AML and the associated draft rules). Additionally, a number of provisions appear to have been removed in order to avoid unnecessary overlap and duplication with other AML-related implementation rules that have been published in draft or final form.

Draft Dominance Rules

Our legal update summarising the prior version of the Draft Dominance Rules can be found here.

The changes made to the latest draft of these rules include expansion of a non-exhaustive list of factors that the AMEAs will consider when assessing whether a business operator enjoys a dominant market position, and inclusion of several new examples of the types of behaviour that may qualify as unlawful 'abuse' conduct by a dominant market player.

For example, Article 17 of the AML prohibits a dominant business operator from imposing unreasonable trading conditions, and previous drafts of the rules contained no indication of the kinds of trading conditions that may be considered "unreasonable" beyond imposition of certain 'product tying' terms.

The revised draft addresses this issue, noting that unreasonable trading conditions may include the imposition of unreasonable restrictions on payment terms, delivery terms, or the manner of service provision, as well as the imposition of terms that are "irrelevant" to the subject of the transaction (which language perhaps raises more questions than it answers). Additionally, the revised draft states that unreasonable trading conditions will include the imposition of unreasonable restrictions on trading partners (presumably, in this context, distributors or retailers) regarding their sales territory, sales targets, and after-sales service in relation to products.

Further, the draft provides new examples of the kinds of evidence that a business operator should submit to overturn the presumption of dominance that will be raised against them if they meet relevant market share thresholds referenced in the AML (such as where the business operator holds a market share exceeding 50%).

Perhaps the most significant improvement to the draft is the inclusion of more detailed guidance on the possible 'defences' to abuse of dominance allegations. Specifically, Article 8 of the Draft Dominance Rules makes references to the various provisions in the AML which specify examples of conduct which will constitute unlawful abuse behaviour if undertaken by dominant firms "without valid justification", and states that the AIC Authority shall consider the following factors when determining if valid justifications do exist:

  • whether relevant activities are engaged in by business operators based on their usual business practice;
  • whether relevant conduct has the consequence of eliminating or restricting competition or impairing the interest of consumers; and
  • the effect of relevant conduct on economic operation efficiency, public interests and economic development.

This is the first useful guidance that has been provided on the issue of valid justifications for relevant behaviour by dominant business operators, and the use of language referring to efficiencies and effect on consumers is encouraging in terms of alignment with the key aims of competition laws in most mature antitrust jurisdictions.


Businesses operating in or selling into China will be grateful for the fact that greater guidance in relation to the AML conduct rules is slowly surfacing, permitting more developed compliance initiatives and staff training. Additionally, it is heartening to see clear improvements to the AML-related implementation rules through ongoing public consultation.

The latest public consultation period in relation to the revised draft rules ends on 7 June 2010.

It is hoped that the rules may then be swiftly finalised and adopted to allow for more certainty regarding the manner and methodology of AML enforcement - although to date rapid progress in finalising guidance documents has not been a notable feature of the AML conduct rule regime.

It is expected that regulatory enforcement of the AML conduct rules will remain limited until the rules are finalised, although sporadic enforcement of the various China laws containing competition-related provisions may be expected to continue in this period (as occurred when the several rice noodle manufacturers in Guangxi province where punished for price-fixing activities in March, primarily under the Price Law and Rules of Administrative Sanctions on Illegal Activities Relating to Price).

Additionally, AML-related private action hearings which have proceeded over the past 18 months notwithstanding the lack of regulatory enforcement may continue, and the revised drafts may be taken into account by China's Intermediate Courts when they are applying the law in such cases.

Learn more about our PRC offices and Antitrust & Competition practice.

Visit us at

Copyright 2010. JSM, Mayer Brown International LLP and/or Mayer Brown LLP. All rights reserved. Mayer Brown is a global legal services organization comprising legal practices that are separate entities ("Mayer Brown Practices"). The Mayer Brown Practices are: JSM, a Hong Kong partnership, and its associated entities in Asia; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; and Mayer Brown LLP, a limited liability partnership established in the United States. The Mayer Brown Practices are known as Mayer Brown JSM in Asia.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.