China: A Six-Month Update Of China's Fair Competition Review System

Last Updated: 3 January 2017
Article by Antitrust Watch

In June 2016, China's State Council issued its Opinions of the State Council on Establishing a Fair Competition Review System During the Development of Market-oriented Review System ("Opinions").1 The fair competition review system ("FCRS") that the Opinions contemplate is designed to protect against the potential abuse of administrative power by Chinese government agencies that could result in anti-competitive effects. In other words, the FCRS is supposed to constrain government activities from unduly influencing market competition, consistent with the prohibition that China's Anti-Monopoly Law places on such conduct.2

The Chinese government has been active in its efforts to implement the FCRS. Those efforts can be classified into three categories: (i) public education and awareness campaigns; (ii) development of implementation regulations and mechanisms; and (iii) actual FCRS reviews. Below, we highlight some of the progress in these areas.

Public Education and Awareness Campaigns

The effort that the Chinese government has undertaken to publicize the FCRS suggests the government is committed to the system and intends to make it work. Indeed, the government was ready to implement its communications plan about the Opinions very soon after releasing them. In late June, the government issued official interpretations of the necessity for, and feasibility of, the FCRS.3 This included a prestigious scholar's discussions about the fundamental status of competition policies, including a discussion of the relationship between competition policies and industrial policies, which is still hotly debated.4 Then, in July, the Information Office of the State Council held a press conference to formally introduce the Opinions.5 By early August, lectures on the Opinions were included as part of a nationwide training program on price regulation and anti-monopoly law enforcement.6

These efforts continued into the fall of this year. In October, the Bureau of Price Supervision held FCRS training courses for the major local price supervision and anti-monopoly agencies, pushing the provincial governments to forward the Opinions to lower government agencies or issue implementation opinions as soon as possible. The intent behind these programs, among other things, was to strengthen guidance to city and county level government departments.7 In early November, training courses on "Anti-monopoly law" were held in Guangzhou, which once again introduced the FCRS to the public.8 Most recently, on November 17, Zhang Handong, Director of the Bureau of Price Supervision of NDRC, spoke before 350 bureau-level officials at the National School of Administration regarding the FCRS.9 Local governments are also actively engaged in relevant training and publicizing of the FCRS.10

Development of Implementation Mechanisms and Regulations

To comply with the Opinions, all departments of the State Council, and all provincial governments and the departments thereof, must now conduct a fair competition review when formulating policy measures. The four departments–National Development and Reform Commission ("NDRC"); Legislative Affairs Office of the State Council ("LAO"); Ministry of Commerce ("MOFCOM"); and State Administration for Industry and Commerce ("SAIC")–are responsible for developing implementation mechanisms and regulations.

NDRC took the lead. On July 27, 2016, it issued a high-level notice on internal work procedures, which provides:

  • Whichever of its subordinate bodies formulates a policy shall be responsible for that policy's review, and shall draft written conclusions before submitting the policy to NDRC along with relevant documents;
  • When needed, departments and bureaus may seek opinions from the Bureau of Price Supervision during the review process; and
  • Departments and bureaus shall submit conclusions on their respective fair competition reviews to the Department of Legal Affairs, together with relevant policies and measures, for legal review.11

MOFCOM has developed similar internal procedures.12 The issuance of these procedures is likely to guide other agencies in their formation of internal procedures to implement the FCRS.

Local provincial governments, as well as some state-run industries, also have responded to the Opinions by proposing self-review requirements that are in accord with the FCRS.13 For instance, the State Tobacco Monopoly Bureau, China Tobacco, issued an opinion on August 17 that calls for the establishment of fair competition reviews for the tobacco industry. It explicitly stated that all levels of the tobacco monopoly bureaus, tobacco companies, and other relevant entities shall conduct a fair competition review and shall formulate regulations and other policy measures related to market access, tendering and bidding, business conduct, and the like.14

Despite all of this progress, the four departments of the State Council recognize that there is still much work to do in order to successfully implement the FCRS. Thus, the departments have launched an assessment of their progress.15 Since mid-August 2016, the NDRC, MOFCOM and SAIC have undertaken a nationwide review of how local governments have implemented the Opinions; exchanged thoughts with local government officials, industry associations, and business representatives on the FCRS; studied competition in certain local markets; and gathered recommendations and opinions on the status of FCRS implementation.16

For instance, on September 29, NDRC Deputy Director Hu Zucai held a symposium on the FCRS, where he heard recommendations and opinions from various industry associations and enterprises on FCRS implementation and how it has helped to promote fair competition. Heads of the National Federation of Industry and Commerce, China General Chamber of Commerce, China Association of Small and Medium Enterprises, US-China Business Council, China European Chamber of Commerce and other associations and Jingdong Group, Dell Group and other enterprises, took part in that symposium.17

In addition, NDRC and other departments are gathering information from counterparts in other countries to help implement the FCRS. For example, in September, the Market and Price Research Institute of the Academy of Macroeconomic Research and the UK Prosperity Fund launched a project, Study on the Path to the Implementation of FCRS.18 On September 7, the NDRC's Bureau of Price Supervision and the German International Cooperation Agency jointly organized an international seminar on FCRS in Beijing, at which experts from China and other countries analyzed the similarities and differences between the OECD competition assessment system and the FCRS.19 In late October, the fifth "China Competition Policy Forum" took place in Beijing. There, Zhang Handong, Director of the Bureau of Price Supervision, introduced China's FCRS and met with Renata Hesse, Acting Assistant Attorney General of the Antitrust Division of the U.S Department of Justice, U.S. FTC Commissioner Maureen Ohlhausen, and Jenny Pratt, Senior Deputy Director of the Canada Competition Bureau.20 Finally, in early November, NDRC welcomed a visit from the Chairman of the Singapore Competition Commission during which the participants discussed the FCRS.21

FCRS Reviews

Departments of the State Council have started to implement the policies they have developed pursuant to the FCRS,22 and at least one has undertaken a fair competition review. The Interim Administrative Measures for the Business of Online Taxi Booking Services (issued on July 20, 2016, effective as of November 1, 2016) ("Measures") is the first such example.

A draft of the Measures was released for public comment on October 10, 2015. In June 2016, a traditional taxi service company, Shanghai Da Zhong Taxi Company, sent letters to the Ministry of Transport and the State Administration of Taxation, urging a fair competition review of the draft Measures. Da Zhong mainly complained that the online taxi booking service players did not follow the same strict regulations applied to traditional taxi service business and thus improperly lowered their service costs and unfairly competed with traditional tax drivers; moreover, online taxi booking service platform companies continued providing high subsidies to customers and drivers so as to increase their market shares, which constituted "selling services at prices lower than costs for the purpose of pushing out their competitors", violating the Anti-Unfair Competition Law. Several other traditional taxi companies joined the request. Compared with the draft Measures, the promulgated Measures incorporated many changes in details about taxi booking service platform providers, vehicles and drivers, and their conduct and supervision of them. Although we are not aware of any official report clarifying what changes in the promulgated version were made as a result of the fair competition review, compared with the draft Measures, the promulgated Measures more explicitly provide that "[A]n Online Taxi Booking Service Platform Company shall not impede fair market competition...and shall not commit price-related illegal activities" (Art. 21 of the Measures), which Da Zhong believed reflected its main concerns.23

Conclusion

It is still early, but the Chinese government and the four departments of the State Council have made significant efforts in the past six months to promote and implement the FCRS. These efforts reflect a business environment in China that continues to increase its focus on protecting fair competition.

Footnotes

1.Click here for our previous blog post providing an overview of the Fair Competition Review System's purposes and goals.

2.See Zhang Qiong, Implementing Fair Competition Review System and Safeguarding Fair Competition in Market, June, 21, 2016, People's Daily, available at http://www.gov.cn/zhengce/2016-06/21/content_5084029.htm.

3.e, e.g., id.

4.See WU Jinglian, A Key Step in Establishing the Fundamental Status of Competition Policies, June 22, 2016, available at http://www.sdpc.gov.cn/fzgggz/jgjdyfld/jjszhdt/201606/t20160622_808258.html.

5.See NDRC'S Explanation on Fair Competition Review System: Setting 18 "Don'ts" on Administrative Power, July 8, 2016, People's Daily, available at: http://www.gov.cn/zhengce/2016-07/08/content_5089315.htm.

6.See National Academy of Development and Strategy, Renmin University of China, Antitrust Research Team of Renmin University Lectured on Special Topics, August 15, 2016, available at http://www.china.com.cn/opinion/think/2016-08/15/content_39092030.htm.

7.See Bureau of Price Supervision and Inspection and Anti-monopoly, Bureau of Price Supervision Held a Training Course on Fair Competition Review System, October 11, 2016, available at http://www.sdpc.gov.cn/gzdt/201610/t20161011_822205.html.

8.See Anti-Monopoly Bureau of the Ministry of Commerce, 2016 Commerce System "Anti-Monopoly Law" Publicity and Training Courses Held in Guangzhou, November 15, 2016, available at http://fldj.mofcom.gov.cn/article/tpxw/201611/20161101760088.shtml.

9.See Bureau of Price Supervision and Inspection and Anti-monopoly, Director Zhang Handong of Bureau of Price Supervision Was Invited to Give a Report on Fair Competition Review System at the National School of Administration, November, 18, 2016, available at http://www.sdpc.gov.cn/gzdt/201611/t20161118_827053.html.

10. See, e.g., Zhejiang Law Society, Seminar Summary on "Comprehensively Deepening Reform, and Building and Implementing Fair Competition Review System" by Zhejiang Province, October 10, 2016, available at https://www.chinalaw.org.cn/Column/Column_View.aspx?ColumnID=737&InfoID=21366; Market and Quality Supervision Committee of ShenZhen Municipality, Market and Quality Supervision Committee of ShenZhen Municipality Organized a Special Seminar on Fair Competition Review System, November 21, 2016, available at http://www.szscjg.gov.cn/xxgk/xwzx/tpxw/201611/t20161121_5379901.htm.

11.See Bureau of Price Supervision and Inspection and Anti-monopoly, General Office of NDRC Issues a Notice on Internal Work Procedures in Implementing the Opinions, August, 2, 2016, available at: http://www.sdpc.gov.cn/gzdt/201608/t20160802_813946.html.

12.See Han Chunlin's Analysis: How the Fair Competition Review System Is Advanced, November 10, 2016, Sina Finance, available at: http://finance.sina.com.cn/meeting/2016-11-10/doc-ifxxsmic5918563.shtml.

13.See, e.g., Jiangsu Province issued Opinions on Implementation of Fair Competition Review System, Xinhuanet.com, August 26, 2016, available at http://www.js.xinhuanet.com/2016-08/26/c_1119460391.htm; Policies that Have Not Gone Through Fair Competition Review Cannot Be Promulgated, Liaoning Daily, October 21, 2016, available at http://liaoning.nen.com.cn/system/2016/10/21/019411305.shtml; People's Government of Heibei Province's Implementation Opinions on Establishing a Fair Competition Review System During the Development of Market-oriented System, September 30, 2016, available at http://www.hebei.gov.cn/hebei/13172779/13172783/13587712/index.html; Ningxia Establishes Fair Competition Review System, October 17, 2016, available at http://www.yinchuan.gov.cn/xwzx/zwyw/201610/t20161017_188404.html.

14.Lu Yanjin, State Tobacco monopoly Administration and China National Tobacco Corporation Issued Opinions on Establishing Fair Competition Review System to Promote the Sustainable and Healthy Development of the Industry, East Tobacco Newspaper, available at: http://www.tobacco.gov.cn/html/30/3004/4934961_n.html.

15.See Han Chunlin's Analysis: How the Fair Competition Review System Is Advanced, November 10, 2016, Sina Finance, available at: http://finance.sina.com.cn/meeting/2016-11-10/doc-ifxxsmic5918563.shtml.

16.See, e.g., Sichuan Development and Reform Commission, NDRC Fair Competition Review System Investigation Symposium Was Held in Our Province (Sichuan), August 24, 2016, available at http://www.scdrc.gov.cn/dir1118/180695.htm; Shanxi Price Bureau, NDRC Conducts Investigation on Fair Competition Review System in Shanxi Province, August 29, 2016, available at: http://www.shaanxi.gov.cn/0/1/9/41/217734.htm; Shanghai Government, NDRC Conducts Investigation on Fair Competition Review System in Shanghai, August 26, 2016, available at http://www.shanghai.gov.cn/nw2/nw2314/nw2315/nw4411/u21aw1157149.html.

17.See Bureau of Price Supervision and Inspection and Anti-monopoly, Deputy Director Hu Zucai Held a Symposium on Fair Competition Review System and Listened to the Recommendations from Some Industry Associations and Enterprise, September 30, 2016, available at http://www.sdpc.gov.cn/gzdt/201609/t20160930_821811.html.

18.See Bureau of Price Supervision and Inspection and Anti-monopoly, Mr. Zhang Handong, Director of the Bureau of Price Supervision Attended the Launching Ceremony of the Project- "Study on the Path to the Implementation of FCRS" of the National Academy of Macroeconomic Research and Gave a Speech, September 9, 2016, available at: http://www.sdpc.gov.cn/gzdt/201609/t20160909_818118.html.

19.See Bureau of Price Supervision and Inspection and Anti-monopoly, Bureau of Price Supervision under NDRC and the German International Cooperation Agency Jointly Organized an International Seminar on FCRS, September 9, 2016, available at http://www.sdpc.gov.cn/gzdt/201609/t20160909_818121.html.

20.See 2016 China Competition Policy Forum Held, Established the Fundamental Status of Competition Policies, October 28, 2016, available at http://wap.eastmoney.com/(S(vizage45k4udrmjmhk4skl55))/ScrollNewsCont.aspx?cd=20161028678166685.

21.See Bureau of Price Supervision and Inspection and Anti-monopoly, Bureau of Price Supervision Met with Mr. Du HanLi, Chairman of Singapore Competition Commission, November 11, 2016, available at: http://www.sdpc.gov.cn/gzdt/201611/t20161101_825369.html.

22.See Han Chunlin's Analysis: How the Fair Competition Review System Is Advanced, November 10, 2016, Sina Finance, available at: http://finance.sina.com.cn/meeting/2016-11-10/doc-ifxxsmic5918563.shtml.

23.See Bao Zhimin, Taxi Companies Responded to the New Policy on Online Taxi Booking Services: Limited Impact, Look Forward to Implementation Rules, July 29, 2016, Caixin.com, available at: http://www.weidu8.net/wx/134815.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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

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

Authors
Events from this Firm
21 Sep 2018, Conference, Florida, United States

Employment partner, Michael Weil will be participating in The Intellectual Property Law Institute’s 2018 Conference.

26 Sep 2018, Conference, New York, United States

Employment Partner, Mandy Perry and Chair of Orrick's Global Employment Law Practice, Mike Delikat will be participating in the Global Business Protections 2018: International Restrictive Covenants and Confidential Information Conference.

26 Sep 2018, Seminar, Tokyo, Japan

Orrick’s Global Japan Practice is hosting a series of “Orrick Library” seminars to explore legal issues in various fields in Japan as well as the United States, Asia and Europe

Similar Articles
Relevancy Powered by MondaqAI
Orrick, Herrington & Sutcliffe LLP
 
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”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Orrick, Herrington & Sutcliffe LLP
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions