On 2 January 2020, the State Administration for Market Regulation of China ("SAMR") released a draft of the proposed amendment to the Anti-Monopoly Law of China ("Draft Amendment") to solicit public comments from different sectors of society. It indicates that after twelve years, at the beginning of the 2020s, the Anti-Monopoly Law of China ("AML") is envisioning an overhaul.

Enacted on 30 August 2007 and implemented on 1 August 2008, the enforcement of the AML in its current form has entered the twelfth year. These years have seen a series of changes, for example, in the domestic and foreign economic environment, the policy goals and the governance concepts of the Chinese government, the characteristics of business competition, and the institutional structure of the antitrust authorities. In the course of the AML enforcement, various problems continuously emerge and enforcement experience is thus accumulated, part of which has been reflected in the implementing rules of the AML. In contrast, some provisions in the AML can no longer adapt themselves to the current practices nor provide sufficient certainty for the latest enforcement cases, thus hindering the achievement of the AML's legislative goals to ensure fair market competition and to safeguard consumers' interests.

In countries with long-established market economy, antitrust law (known as "Antitrust Law" in the United States, "Competition Law" in Europe, and translated as "Anti-Monopoly Law" in China) is honored as the "economic constitution", since it is the primary legal basis for governments to intervene in the operation of the economy at the micro-level. China's proposed amendment to the AML this time will be the first major overhaul of this "economic constitution" twelve years since it took effect. The significance of the amendment is self-explanatory against the pressure of the economic downturn, the escalation of international economic and trade frictions, and the most critical challenge of optimizing economic structure. As lawyers who have witnessed the entire evolvement process of China's antitrust enforcement, we will make remarks about the Draft Amendment from a practical standpoint and in combination with real cases, with a view to making some modest contribution to the amendment of this law, which could influence the operation of the economy and millions of enterprises.


There is no single perfect statute in the world. The same goes for competition law. The Sherman Act of the United States has undergone several amendments or supplements in the past 130 years, the last of which was made in the early 2000s. For a late-developing market economy country like China, which enacted antitrust law as late as in 2007 and on the basis of its thirty-years "Reform and Opening-up", it is also indispensable to revise laws in response to the era of development and the needs of practice.

According to the legislative process, as stipulated by the Legislative Law of China, the amendment process of a statute generally includes three stages. First, relevant ministries or commissions propose a draft of amendment. For example, the Draft Amendment here is proposed by SAMR on the basis of its past law enforcement practices. Second, the ministries and commissions will then submit the draft proposal to the State Council's legislative department, currently undertaken by the Ministry of Justice,2 which will form a new draft based on opinions from all sectors of society. Then the State Council's legislative department will submit the new draft proposal to the legislative department of the National People's Congress ("NPC"), for the AML usually the Economic Law Office under the Legislative Affairs Commission of the NPC Standing Committee, which will deliberate and produce a new version submitted to the NPC for discussion. If passed by the NPC or its Standing Committee, it will be signed by the President and announced.

At the level of the highest legislative body – the NPC, the AML at the time of its birth on 30 August 2007 was passed by the NPC Standing Committee, since it was not included in the scope of "basic laws" (such as the Civil Code or Criminal Code) that need to be reviewed and passed by the NPC's plenary. The same applies to the amendment of the AML; it need not be passed at the NPC's plenary session in March every year, but only be considered and approved by the NPC Standing Committee's session, which is held every two months.

When the amendment to the AML was included in the 2015 State Council's Legislative Work Plan, it signaled the official kickoff. In 2018, it was again included in the Legislative Plan of the Thirteenth NPC Standing Committee. Judging from the Draft Amendment, SAMR did not make a substantive change to the existing framework and kept the basic structure of eight chapters and four pillars. The focus was placed on improving and optimizing the existing antitrust legal system, enhancing the efficiency and consistency of law enforcement, and increasing the deterrent effect of the AML.

At present, the amendment to the AML just reached the first stage of the legislative process mentioned above, that is, the drafting of the proposal by a competent department under the State Council – SAMR. According to the announcement made by SAMR, the solicitation of opinions will be open until 31 January 2020. Surely, the general legislative process mentioned above does not preclude the possibility to simplify or speed up the process in special or emergent situations. Nonetheless, in whatever way, the NPC or its Standing Committee's deliberation and approval is a necessary step.


The Draft Amendment retains the core structure of eight chapters and four pillars of the current law. There are more articles added than removed, the total number increasing from fifty-seven to sixty-four. The contents of some preserved provisions are also modified. In response to this Draft Amendment, there have been comments from antitrust academia and officials all over the media. We would like to examine the Draft Amendment from a lawyer's practical perspective. The changes can be summarized as "six areas with eighteen changes."

A. Strengthening the Position of "Economic Constitution": Legislative Goal, Competition Policy and Fair Competition Review Added

In the chapter "General Provisions", the Draft Amendment strengthened the position of the AML as the "economic constitution" from three aspects: (1) adding "encouraging innovation" as one of the legislative goals; (2) establishing the "fundamental status of competition policy", and (3) enshrining the fair competition review system.

(a) Adding "Encouraging Innovation" as Legislative Goal

Article 1 of the AML establishes a number of legislative goals of this law, including: preventing and restraining monopolistic behaviors; protecting fair market competition; improving the efficiency of economic operation; safeguarding consumer interests and public welfare; and promoting the healthy development of the socialist market economy. The Draft Amendment includes "encouraging innovation" in the legislative purpose, a move that has multiple meanings. For example, it shows that the goal of the AML is compatible with that of the intellectual property laws, and reflects its support for the new economy and new industries. It also means when the different legislative goals conflict with each other, encouraging innovation could be one of the considerations to balance against.

In the past twelve years, in China there have been many antitrust enforcement and litigation cases in the field of intellectual property, particularly those concerning patents. Qualcomm's Abuse of Dominant Market Position (2015) – the highest fine record (CNY 6,088 million) to date – as well as Huawei Technologies Co., Ltd. v. InterDigital Inc. (2013), Xi'an Xidianjietong Radio Network Co. v. Sony Mobile Communications Products (China) Co., Ltd. (2017), all involve the abuse of standard essential patents to eliminate or restrict competition. In 2019, SAMR carried out a raid on Ericsson's China office, also pointing to its alleged abuse of standard essential patents.3 As the economic structure in China is undergoing a remarkable transformation nowadays, it is of huge significance, beyond doubt, to assert that the AML has the same legislative goal to "encourage innovation" as the intellectual property laws.4

(b) Establishing the Fundamental Status of Competition Policy

The Draft Amendment adds that "the State strengthen the fundamental status of competition policy" in Article 4. It, on the one hand, confirms establishing competition policy system based on the AML, and legalizes the fundamental status of competition policy in the overall national economic policies on the other hand. Previously, the fundamental status of competition policy was already introduced in the Notice of the State Council on Issuing the Plan for Market Regulation during the 13th Five-Year Plan Period (State Council, No. 6, 2017) and other documents issued by the Party and the State Council, especially the Decision of the Central Committee of the Communist Party of China on Some Major Issues concerning Comprehensively Deepening the Reform. The credit should be given to the continuous calling and efforts by insightful people of the antitrust academic and practice community. The Draft Amendment would substantially improve the position of the AML in the national governance, promote the balancing and coordination between competition policy and other economic policies such as industry policy, and further demonstrate the State's latest governance concepts such as administration decentralization, state-owned enterprises reform, industrial transformation and upgrading, innovative country build-up and business environment optimization.

(c) Enshrining the Fair Competition Review System

In June 2016, the issuance of the Opinions on Establishing the Fair Competition Review System in the Construction of the Market System (State Council, No. 34, 2016) by the State Council marked the establishment of the fair competition review system. Since then, supplementary systems such as the Letter of the General Office of the State Council on Approval of the Establishment of the Inter-Ministerial Joint Meeting System for Fair Competition Review, the Detailed Rules for the Implementation of the Fair Competition Review System (for Interim Implementation) and the Implementation Guide of Assessment of Fair Competition Review by Third Party, further perfect such system.5 To date, government at all levels have conducted the fair competition review of a large number of regulatory documents, and have revised or withdrawn many documents that violate the AML.

The Amendment Draft enshrines the fair competition review system in the AML, in order to make the system risen to become law for one purpose and to ensure its position in the antitrust system for another, thereby further implementing the fundamental status of competition policy and establishing an institutionalized and normalized "semi-judicial review" system – i.e., a system which allows review of the compliance of regulatory documents by government at all levels with the "economic constitution", AML.

B. Adjusting the Structure of Regulating Monopoly Agreement

The Draft Amendment clarifies the regulatory principles and system of monopoly agreements, which is mainly reflected in defining monopoly agreements in a separate clause and adding a clause prohibiting the organizers and aiders of monopoly agreements.

(a) Providing Leeway for Harmonizing Rules of Vertical Monopoly Agreements in Future: a Standalone Definition of Monopoly Agreement

The Draft Amendment repositions the current Article 13, Paragraph 2 – the definition of monopoly agreement – as a separate clause and expressly prohibits reaching a monopoly agreement between undertakings. This change helps to solve the divergence between the enforcement authorities and the courts over vertical monopoly agreement, especially where it concerns the principle of the resale price maintenance ("RPM"). For example, in Hainan Yutai Scientific Feed Company v. Hainan Provincial Price Bureau (2018) and Toyota RPM Decision (2019), the enforcement authorities adopted the "strict prohibition + exemption" approach, presuming RPM conduct is illegal. However, the courts hold that rule of reason should be applied in judicial practice – i.e., whether RPM is illegal or not depends on whether it has the effect of eliminating or restricting competition.6 The Draft Amendment has not yet specified whether the rule of reason or the "strict prohibition + exemption" principle applies here. However, the change in structure provides some leeway for unification in the future.

(b) Prohibiting of Organizing and Aiding Other Undertakings in Entering into Monopoly Agreement

The Draft Amendment adds a new provision under Chapter II "Monopoly Agreements", which "prohibit organizing and aiding other undertakings in entering into monopoly agreement", and corresponding penalties are stated under Chapter VII, "Legal Liabilities". Under the current AML, monopoly agreements mainly regulate the three kinds of subjects (excluding administrative agencies and organizations under administrative monopoly): the first is "competing undertakings" in horizontal agreements; the second is "undertakings and their trading parties" in vertical agreements; the third is "trade associations" which organize undertakings in reaching and implementing monopoly agreements. In the past twelve years of enforcement, most horizontal monopoly agreements cases involve the organization, assistance and implementation of monopoly agreements by industry associations. Examples can be found in Chifeng City Bahrain Left Banner Catering Industry Monopoly Agreement (2019), Heze City Automobile Industry Association Organizing Undertakings to Reach Monopoly Agreement (2019), Beijing Driving Training Association and Eleven Driving Training Institutions Reaching Horizontal Monopoly Agreement (2018), Guangdong Zhongshan City Gas Association Organizing Members to Allocate Sales Market (2018), Beijing Real Estate Management Evaluation Industry Price Monopoly Agreement (2017), Hunan Insurance Industry Association Monopoly Agreement (2016), Guangzhou Fanyu Animation Industry Association Monopoly Agreement (2015), Zhejiang Auto Insurance Price Monopoly Agreement (2014), Shanghai Gold Industry Monopoly Agreement (2013), Zhejiang Fuyang Papermaking Industry Price Monopoly Agreement (2011), etc.

However, in practice, there have been some undertakings, who do not belong to the above three categories but have played a major role in reaching and implementing the monopoly agreements: for example, the (unpunished) wholesaler which helped the three active pharmaceutical ingredient (API) manufacturers reaching a monopoly agreement in the Glacial Acetic Acid Monopoly Agreement (2018), and the insurance brokerage company (who was handed over to competent authority) that led eleven property insurance companies to reach a monopoly agreement in the Loudi Insurance Industry Monopoly Agreement (2012). Due to the absence of clear foundation in the AML, it is difficult for the enforcement authorities to punish them accordingly, leaving a loophole in the enforcement of the AML. In other jurisdictions, this type of undertakings may be characterized as "hub-and-spoke agreements" and be severely punished accordingly (for examples, undertakings who assume the hub role in the British Toy Company Case – Hasbro/Argos/Littlewoods (2003) and the United States v. Apple Inc. (2012) were deemed to be engaged in monopolistic conducts), either being fined or being required to pay settlement. The Draft Amendment finally keeps up with other jurisdictions and provides a clear legal basis for China's antitrust authorities to investigate into and deal with conducts of this kind.

C. Systematically Modifying the Merger Control Regime

The Draft Amendment has made significant changes to the merger control regime. It not only incorporates the provisions previously scattered in other regulations and policy documents into the AML, but also adjusts a large number of provisions based on existing issues in practice.

(a) Introducing the Definition of Control

The definition of "control" under the AML differs from that in the Company Law of China or the Securities Law of China, and such difference often leads to confusion in the filing and review of the concentration of undertakings.7 Common misjudgment situations include the acquisitions by minority shareholders and the establishment of joint ventures. When faced with such situations, companies often come to incorrect conclusions regarding whether the transaction constitutes a concentration because they cannot accurately assess the change of control in the transaction.

Control is a core concept in the concentration of undertakings, and of the utmost importance when determining whether a transaction needs to be filed. Previously, antitrust authorities have included some factors for determining control in departmental regulations and guidance. The Draft Amendment now adds the definition of control in Article 23, Paragraph 2, as "an undertaking's direct or indirect, separate or collective right or actual status which have or may have the decisive influence on the production and operation activities or other major decisions of other undertakings".8 This will provide as an enabling statute the legal foundation for relevant regulations issued before and also the start point for further improvement.

(b) Clarifying that the Triggering Thresholds for the Concentration of Undertakings Can Be Adjusted Timely

Article 24, Paragraph 2 of the Draft Amendment adds that, "the antitrust authority under the State Council can formulate and modify merger notification thresholds in accordance with the level of economic development and industry scale, and make them publicly available in a timely manner."

According to the current rule, if the nationwide turnover within China of an undertaking participating in the concentration exceeds CNY 400 million, such concentration may need to file a notification. This rule was made in accordance with the social and economic development at the time of formulation, but it probably can no longer properly define the notification thresholds since China has experienced more than ten years' rapid economic development. If a large number of small and medium-sized enterprises (SMEs) that are too small to influence market competition are included in the scope of merger review, it may unnecessarily burden the companies with notification filings and also the law enforcement agencies with too much review work. On the other hand, the current notification standard only adopts turnover as the indicator, and cannot cover other scenarios under the AML in which the undertakings' turnover does not meet notification threshold but the transaction may impact market competition. As to these issues, the Draft Amendment may bring three changes in the future: (1) raising the turnover thresholds to adapt to the current economic development; (2) introducing multi-factor standards, for example, considering platform companies' gross merchandise volume (GMV), (3) regularly assessing and modifying the merger notification thresholds by the antitrust authority under the State Council (namely, SAMR).

These changes are drawn from international practices. For instance, the US's notification thresholds will be revised annually, based on the GDP and inflation levels of the previous year, and will be published by Federal Trade Commission (FTC) according to Hart-Scott-Rodino Antitrust Improvements Act.9

(c) Introducing "Stop-the-clock" System for Merger Review

The Draft Amendment adds Article 30, which lists multiple reasons for which the clock shall be stopped for merger review. This helps enforcement agencies to avoid the inefficient way that they would in practice require the notifying parties to withdraw the notification and to refile a new notification. The "stop-the-clock" system will be supplemented by other specific rules. "Stop-the-clock" is a common practice in EU's merger control procedure. If the notifying parties do not provide an important piece of information which the Commission has requested from them, the clock can be stopped until such missing information is supplied.10

(d) Clarifying Liabilities for Providing False Information in Notification

Article 51 of the Draft Amendment newly provides that, the enforcement agencies can revoke the merger review decision if the notifying parties provide false or incorrect information. For the notification usually involves a large amount of industry information irrelevant with laws, the officials would have great difficulty in verifying such information. Article 51 helps to prevent the notifying parties from providing false information to "muddle through." In EU, providing incorrect information for merger notification is a serious breach of law, and there have been many decisions with huge fines for failure to provide accurate and truthful information. For instance, in 2017, the Commission fined Facebook EUR 110 million for providing misleading information about WhatsApp takeover (2014).11 In 2019, the Commission fined General Electric EUR 52 million for providing incorrect information in LM Wind takeover (2017) (withdrawn and then re-notified by General Electric).12

(e) Getting Much Tougher on Gun Jumping

In the past twelve years, the antitrust authorities have publicized fifty administrative penalty decisions for gun jumping. Especially in recent two years, more gun jumping cases have been investigated and penalized, including fifteen cases in 2018 and sixteen in 2019. Currently, the fines for gun jumping range from CNY 150,000 to CNY 400,000, which obviously lacks deterrent effect for M&A deals at hundreds of millions, billions or even tens of billions by value. Thus there are a number of gun-jumping cases in reality, such as Alibaba acquiring the Amap (2014), the merger of Ganji.com and  (2014), the merger of Ganji.com and 58.com (2015), the merger of DiDi and Uber (2016), the merger of Ele.com and Baidu Food Delivery (2017).13

Article 55 of the Draft Amendment provides that, the fines for gun-jumping will be increased from "up to CNY 500,000" to "up to 10% of its sales revenue in the previous year", which reaches the same level of fines for monopoly agreement and abuse of dominance. Therefore, the deterrent effect for gun-jumping will be greatly improved and it is expected that increasingly more parties will submit remedial notifications, voluntarily apply for consultation, voluntarily file notifications and even self-report themselves for gun-jumping.

D. Optimizing Antitrust Public Enforcement Procedures with More Efficiency

(a) Authorizing Central Enforcement Agency to Set up Regional Offices

At the beginning of 2019, SAMR released a notice generally authorizing thirty-one provincial administrations for market regulations ("AMR") to investigate monopolistic conducts within their own jurisdictions.14 Due to limited job quota, it is highly unlikely for central enforcement agency to conduct investigation of antitrust cases nationwide, considering China's vast territory and large population. Though this problem can be alleviated by authorizing provincial AMRs to conduct investigations, the manpower and budget of provincial AMRs are subject to local government, thus unable to solve the problem of local protectionism. At the same time, the administrative efficiency of the thirty-one provincial law enforcement agencies are often unsatisfactory. To address this issue, in some jurisdictions, central law enforcement agencies have set up its regional offices, such as Japan and the US. Japan Fair Trade Commission (JFTC) has set up regional offices at Hokkaido, Kyushu, Tohoku, Chubu, etc.15 The Antitrust Division of Department of Justice (DOJ) has set up field offices in eight states.16 Central antitrust agency setting up regional offices is similar to the practice of the Supreme Court setting up circuit courts nationwide, which can solve the problems of inefficiency and protectionism.

(b) Clarifying that Commitment Mechanism Shall Not Apply to Hardcore Cartels

Theoretically, the commitment mechanism can apply to all types of monopoly agreement and abuse of dominance, for the AML does not limit the types of behaviors covered by it. According to public information, until the end of December 2019, about twenty-one cases were suspended by the antitrust authorities based on the commitment mechanism, including fifteen cases of abuse of market dominance, three cases of horizontal monopoly agreement, and three cases of vertical monopoly agreement.

In June 2019, SAMR released the Interim Provisions on Prohibition of Monopoly Agreements, which excluded hardcore cartels (price-fixing, output restriction and market sharing) for the first time from the scope of applying commitment mechanism by undertakings. The Draft Amendment again confirms this provision, and its Article 50 states that, "for monopoly agreements suspected of violating items of (1) (2) (3) of Article 15 of this Law, antitrust authorities may not suspend investigation."

(c) Supporting Antitrust Investigation with Police Force

According to Article 44, Paragraph 2 of the Draft Amendment, when antitrust authorities investigate alleged monopolistic behaviors, "public security organs shall assist where necessary pursuant to laws." In reality, when being investigated, some companies would use violence against law enforcement, or obstruct law enforcement process, or even threaten law enforcement officials' safety. In such situations, the assistance of public security organs is particularly necessary. For example, in the antitrust enforcement obstruction case of a Guangzhou Toyota dealer, when the antitrust enforcer carried an antitrust raid on Guangzhou Toyota Car Sales Company, the general manager and the legal representative of the company not only unplugged an official's USB flash drive when they were extracting evidence from the company's computer, but also refused to give it back on the official's demand, and even insulted officials and claimed that they had no power to investigate. In the end, the antitrust enforcer imposed fines on the company's legal representative and general manager, totaling CNY 20,000.

(d) Confirming the Obligations of Administrative Agencies to Cooperate with Administrative Monopoly Investigation

In practice, it is often difficult for law enforcement agencies to conduct and complete administrative monopoly investigations without the cooperation of administrative agencies. Article 52, which is newly added to the Draft Amendment, makes it clear that administrative agencies have the responsibility to cooperate with the investigations conducted by antitrust authorities and provide relevant information, which provides a legal basis for antitrust authorities to conduct investigations and obtain relevant information.

E. Increasing the Severity of Administrative Penalties and Enhancing Deterrence of the AML

(a) Providing Potential Convergence with Future Criminal Code that Hardcore Cartels May Constitute Crimes

Article 57 of the Draft Amendment stipulates that, "if an undertaking implements a monopolistic conduct and causes losses to others, it shall bear civil liability in accordance with the law. If it constitutes a crime, criminal liability shall be pursued in accordance with the law." This means that a regime of antitrust criminal liability may be established in the future in China.

Currently, the AML only provides two provisions concerning criminal liability, but they do not aim at monopolistic behaviors. Article 52 of the AML stipulates that "if a person refuses to provide relevant materials and information to the antitrust authorities for examination and investigation pursuant to the law, or provide false materials and information, or conceal, destroy, or remove evidence, or commit any other act to refuse or obstruct investigation, and it constitutes a criminal offence, criminal liability shall be pursued in accordance with the law." The provision, in fact, stipulates the crime of interference with public duties. Article 54 of the AML stipulates that "for a person of antitrust authorities who is found guilty of abusing their official powers, dereliction of duties, corruption or divulging commercial secrets which have come to their knowledge during the enforcement process, criminal liability shall be pursued in accordance with the law if the case constitutes a criminal offence." The above provision stipulates the crime of dereliction of duty and the crime of infringing trade secrets, which do not involve the monopolistic behavior itself.

The criminal liability provisions in the current AML are mainly to protect the implementation of the AML. Monopolistic behaviors including monopoly agreements, abuse of market dominance, and concentration of undertakings are only subject to civil liability and administrative liability, without criminal liability. Since China strictly adopts statutory law crimes, only the criminal code can provide criminal charges. That means no new crimes can be added simply by amending the AML, and the antitrust criminal liability can only be added through the NPC's amendment of the criminal code. Therefore, Article 57 of the Draft Amendment in the Chapter "Legal Liability" leaves the possibility of applying in concert with the Criminal Law of China in the future. Seeing from the trend of international antitrust legislation,17 it is probable that the three hardcore cartels of price fixing, output restriction, and market division may constitute crimes in the days to come.

(b) Substantially Increasing Penalties for Certain Offenses

Chapter VII of the Draft Amendment has substantially increased the amount of penalties for some illegal behaviors: (1) the penalty for a monopoly agreement that has not been implemented increases hundredfold (from CNY 500,000 to CNY 50 million); (2) the upper limit of penalties of obstructing investigation and inspection increases tenfold for individuals (from CNY 100,000 to CNY 1 million), and for entities may reach 1% of the previous year's revenue or CNY 5 million (if no revenue or clear revenue record in the previous year); and (3) the penalty for industry associations that organize monopoly agreements increases tenfold (from CNY 500,000 to CNY 5 million). These changes have greatly enhanced the deterrent effect of the AML.

There have been voices questioning that the cost of antitrust violations in China is too low,18 and it is difficult to deter or warn the parties. For example, for behaviors of monopoly agreements that haven't been implemented, in the monopoly agreement case involving seven companies including Hunan Yongzhou Aodu Concrete Co., Ltd., Hunan Provincial Administration for Industry and Commerce only imposed a fine of CNY 30,000 on the parties.19 For obstruction of investigation, in the case that Anhui Xinyada Company refused to provide relevant materials to enforcement agencies, Anhui Provincial Administration for Industry and Commerce imposed a fine of only CNY 200,000 on Xinyada.20 For monopoly agreement organized by industry associations, in the price monopoly case of Hunan Loudi insurance industry, Hunan Price Bureau only imposed a fine of CNY 200,000 on Loudi Insurance Industry Association.21 Considering the size of the enterprises or the transactions, these amounts are obviously difficult to have a deterrent effect.

F. Keeping up with Trends by Introducing Clauses concerning Internet Industry and Privacy Protection

(a) Adding Factors for Determining Dominant Market Position in the Internet Industry

Article 21 of the Draft Amendment, providing factors for determining dominant market position, adds a provision on the factors for the Internet industry, that is, "the determination of dominant market position of an Internet undertaking shall also consider network effects, economies of scale, lock-in effects, and the abilities to obtain and process relevant data." This provision not only echoes the three departmental regulations issued by SAMR that took effect on 1 September 2019,22 but also reflects the basic attitude that central government and market supervision departments insisted in recent years toward new economy regulation, which should be "broad-minded and prudent."23 In fact, China's Internet industry is developing rapidly and ranks second only to the US in the world. The Wall Street Journal has pointed out that the Internet industry plays a significant role in China's economic structural transformation and overtaking.24

Different from the boom in the Internet field, there have been criticisms at home and abroad of the "absence" of antitrust law enforcement in the Internet field in China for the past twelve years.25 How this Internet clause will eventually be implemented in practice, and whether it means a "zero breakthrough" in antitrust enforcement in the Internet field, certainly worth the attention.

(b) Supplementing Antitrust Authority's Duty of Confidentiality for Personal Privacy

With the promulgation of the Cybersecurity Law and a series of relative regulations, as well as the citizens' increasing awareness of individual privacy, the protection of personal information has become one of the characteristics of this era.26 The latest version of the Draft Civil Code specifically sets up Chapter Six which regulates the right to privacy and personal information protection.27 Meanwhile, the Personal Information Protection Law has been incorporated into this year's legislation plan.28 Represented by "dawn raid", the antitrust raid mechanism is a useful weapon in antitrust administrative enforcement. The current law only stipulates that the antitrust enforcement authority and the officials have confidential obligation of trade secrets learned in the course of enforcement activities. However, as antitrust investigations are usually launched without notice and are like "sudden attacks", a large amount of employees' privacy are inevitably disclosed during the enforcement. The supplement of "personal privacy" into the scope of confidentiality in Article 46 by the Draft Amendment echoes the feature of this era and the demands in reality.


On the basis of the enforcement practices during the past twelve years, the Draft Amendment revises provisions on a series of issues emerging in antitrust practice. These revisions concern various aspects of the antitrust legal system and are of great significance. On the other hand, it goes without saying that the Draft Amendment does have certain deficiencies which remain to be resolved by various communities of the society together. We try to point out some of them from the perspective of lawyers' practical observations.

A. Connecting Antitrust Public Enforcement and Private Actions

There are mainly two ways of antitrust enforcement. One is public enforcement of the antitrust law, which is launched by administrative enforcement authority through administrative investigations or reviews on behalf of the state. In China, public enforcement is carried out by SAMR and provincial AMRs. The other is private enforcement of the antitrust law, which is implemented via private litigations brought up by companies or individuals suffering from monopolistic behaviors and seeking damages. In China, antitrust litigations are heard by the intellectual property courts in Beijing, Shanghai and Guangzhou or the intellectual property tribunals of intermediate courts set up with the Supreme Court's approval.

According to incomplete statistics, in the past twelve years, the number of antitrust public enforcement cases was more than 200 (not including the approx. 3,000 merger cases) and the number of private litigations was more than 600.29 However, despite the 200 administrative enforcement cases in which the companies investigated were found committing monopoly agreements or abuse of dominance, there were only four private litigations in which the plaintiff prevailed.30 In fact, the number of private litigation cases won by plaintiffs nationwide is extremely small, but it does not mean that there are very few monopolistic behaviors for which the victims should be compensated. On the contrary, the statistic shows that plaintiffs in antitrust cases bear a heavy burden of proof and are stuck in a dilemma that they cannot use evidence collected in administrative enforcement as proof before the court.31

The Draft Amendment does not address the issue of connection between administrative enforcement and private actions. Unlike China, the penalty decision made by the EU's competition enforcement authority can at least be taken as prima facie evidence in follow-on litigations, and the EU laws have specific provisions on the discovery of evidence regarding documents from the enforcement authority.32 In addition, the EU court in private litigations will assess whether to suspend the case in order to avoid made decisions inconsistent with administrative enforcement decision. There are various ways to lower the plaintiff's burden of proof in antitrust private litigations, of which the most effective one is to allow the court or the parties to have access, through reasonable channels, to the evidence materials in administrative enforcement. If the final amendment to the AML does not provide even general provisions for this mechanism, a gap will still be left in this institutional arrangement that could not support a balance between public and private enforcement.

B. Failing to Provide Rules of Single Economic Entity

The Single Economic Entity doctrine refers to the situation in which one or more economic entities actually belong to the same controller, and should be considered as a single unit under the antitrust law. The Single Economic Entity doctrine has vital practical significance for the determination of the subject of a monopoly agreement, the factors to be considered in merger control, and the calculation of fines and legal liability in investigations including those concerning the abuse of market dominance.33

The Draft Amendment fails to clarify this major practical issue as well as many confusions associated with it in reality.

C. Other Realistic Issues: Rules of Vertical Price Monopoly Agreements, Effective Regulation of Administrative Monopolies, and Calculation of Illegal Gains and Fines

In the course of antitrust enforcement in the past twelve years, it has been found that some legal provisions are incomplete, unclear or ambiguous. To give just four examples:

First, there is a divergence between the administrative enforcement and the judicial rules on how to deal with RPM. The administrative enforcement obviously adopts the "strict prohibition + exemption" principle, while the courts not only require the defendant's conduct of vertical price restriction, but also require the plaintiff to prove the effect of elimination or restriction of competition, which is referred as the "rule of reason." It was represented by the case, Beijing Ruibang Yonghe Technology & Trade Co., Ltd. v. Johnson & Johnson Medical (Shanghai) Co., Ltd. (2013), the first antitrust civil lawsuit won by the plaintiff in China.34 Although the Draft Amendment lists the definition of a monopoly agreement as a separate article, it has not yet clarified which approach should be adopted or how to reconcile the divergence.

Second, administrative monopoly behavior is actually the most serious problem faced by China's antitrust enforcement. Enforcement agencies' enforcement power against administrative monopoly under the current AML is limited to giving suggestions to the superior authorities of the administrative organs suspected of administrative monopoly behaviors. The deterrence is obviously insufficient. The Draft Amendment only mentions that "the antitrust authorities can order corrections," which is unlikely to change this situation in effect.

Third, when it comes to punishment, the current AML lists "confiscation of illegal gains" as a mandatory option, but in actual enforcement cases, some had illegal gains confiscated while others did not.35 Besides, there is the problem that a claim for compensation in civil suits would actually repeat the confiscation of illegal gains.36

Finally, regarding the calculation of the base number for the fine of monopolistic behaviors, which should be 1% to 10% of the previous year's sale, there are also disputes in practice because the subject company, the products concerned, and the geographical scope of the annual sale are not clearly defined.37 The Draft Amendment does not clarify the above issues either.

At the back of the shortcomings of the Draft Amendment rest issues arising from the overall system and the complex realities. For example, the issue of administrative monopoly involves the entire national institutions and economic system, which cannot simply be solved by the AML. It needs to be changed systematically from the administrative law or even the constitutional level. In addition, the current amendment work is in the working stage of the competent authority. The Draft Amendment is proposed by SAMR, which plays the role as an enforcement agency, and the authority just naturally focuses on the improvement of the administrative enforcement system. In a country like China that focuses on the statute law system, laws are often presented in the form of principles rather than having many specific technical details. Perfecting these details will still await implementing rules or judicial interpretations in the future.

In a word, at the beginning of the 2020s, an age marked by the pressure of economic structural transformation and the mission of deepening reform in China, the amendment of the AML – the "economic constitution", which concerns the economic operation and the broad masses of business entities – is loaded with the earnest expectations of people from all walks of life, including practitioners as lawyers, to push the rule of law and the development of market economy in China.

To read Appendix, please click here.


1. The authors would like to thank the Dentons China Antitrust Team particularly Rangi He, Edith Qu, Goodall Feng, Zoe Zhu, Leah Li, Cindy Xu, David Ye, Shirley Ding and Stella Zhao for their valuable contribution.

2. Before 2018, the State Council's legislative department was the Legislative Affairs Office. In 2018, the National People's Congress ("NPC") of the new term passed the reform plan of central ministries and commissions. The functions of the former Legislative Affairs Office merged with the current Ministry of Justice.

3. Ericsson: Raided for Antitrust Investigation in China, TENCENT NEWS (15 Apr. 2019), https://new.qq.com/rain/a/20190415A0MJRM.

4. Xianlin Wang, Establishment and Development of China's Anti-monopoly Rules on Abuse of Intellectual Property, 2(00) COMPETITION LAW AND POLICY REVIEW 53 (2016).

5. Xianling Wang, Implementation and Perfection of the Chinese Fair Competition System, BI-MONTHLY ISSUE OF MARKET SUPERVISION AND REGULATION (30 Aug 2019).

6. Chun Zhong, Administrative and Judicial Criteria for the Legality of RPM, 7 CHINA MARKET REGULATION (16 July 2019).

7. Fagen Jiang, The Substantive Law Theory concerned by the Merger Control of the AML — Commenting on Chapter IV of the Antitrust Law of the PRC (Draft), 3 JOURNAL OF ANHUI RADIO & TV UNIVERSITY 17 (2007).

8. See the Guiding Opinions of the Anti-monopoly Bureau of the Ministry of Commerce on the Declaration of Concentrations Between Undertakings (2014), http://fldj.mofcom.gov.cn/article/i/201406/20140600614679.shtml; see also the Amendment to the Measures for Reviewing the Concentration of Undertakings (Draft for Comments) (2017), http://tfs.mofcom.gov.cn/article/as/201709/20170902640565.shtml.

9. For the US's current merger notification thresholds, please refer to: https://www.ftc.gov/enforcement/premerger-notification-program/current-thresholds.

10. https://ec.europa.eu/competition/mergers/procedures_en.html.

11. https://ec.europa.eu/commission/presscorner/detail/en/IP_17_1369.

12. https://ec.europa.eu/commission/presscorner/detail/en/IP_19_2049.

13. Xu Liu, Antitrust Enforcement Should Not Tolerate Internet Oligopoly, THE PAPER (29 Aug 2018), https://www.thepaper.cn/newsDetail_forward_2390564.

14. The SAMR Notice on Authorization of Anti-monopoly Enforcement (SAMR Antitrust, No. 265, 2018), http://www.gov.cn/xinwen/2019-01/04/content_5354782.htm.

15. https://www.jftc.go.jp/regional_office/.

16. https://www.justice.gov/jmd/antitrust-division-field-offices.

17. For example, the focus of criminal charges in the United States in practice is the core cartels, and the United Kingdom and Ireland have only stipulated crimes against the core cartels.

18. See Jian Wang & Jing Zhang, Deterrence Theory and the Perfection of China's Anti-Monopoly Penalty System – Research Approaches in Law and Economics, 34(04) SCIENCE OF LAW (JOURNAL OF NORTHWEST UNIVERSITY OF POLITICAL SCIENCE AND LAW) 124 (2016); see also Yanbo Jiang, Research on the Penalty of Antitrust Confiscated Illegal gains – Based on the Perspective of Law and Economics, 1 ECONOMIC LAW REVIEW 119 (2017).

19. http://www.competitionlaw.cn/info/1025/23932.htm.

20. http://www.samr.gov.cn/fldj/tzgg/xzcf/201703/t20170309_301560.html.

21. http://www.gov.cn/jrzg/2012-12/28/content_2301393.htm.

22. The Interim Provisions on the Prohibition of Monopoly Agreements, the Interim Provisions on the Prohibition of Abusing Dominant Market Position and the Interim Provisions on the Prohibition of Abusing Administrative Power to Eliminate or Restrict Competition.

23. For example, at the State Council's regular policy briefing on 8 August 2019, Premier Li Keqiang stressed that, insisting broad-minded and prudent regulation as well as supporting new business forms and models play significant roles in strengthening digital economy. The Draft Regulation on Improving Business Environment adopted on 8 October 2019 also proposes to determine regulatory approaches and standards for new industries, new forms of business, new technologies and new models in accordance with the principle of encouraging innovation, open-mindedness and prudence.

24. See Charles Hutzler, China's Growing Power, and a Growing Backlash, WALL STREET JOURNAL (17 Dec. 2019), https://www.wsj.com/articles/chinas-growing-power-and-a-growing-backlash-11576630800; see also, THE GLOBAL TIMES (11 Jan. 2018), https://opinion.huanqiu.com/article/9CaKrnK6j63 ("the development of artificial intelligence in China is not slow, big data and artificial intelligence have increased China's possibility of corner overtaking").

25. See Xu Liu, Antitrust Enforcement Should Not Tolerate Internet Oligopoly, THE PAPER (29 Aug 2018), https://www.thepaper.cn/newsDetail_forward_2390564 (criticizing the Internet giant for not filing merger notifications and circumventing antitrust reviews); see also Shanming Jin, Reflection and Transformation of China's Antitrust Law Research Approach, 34(04) LAW BUSINESS STUDIES 71 (2017); Yang Cao, Legal Regulations of Behaviors of Abusing Comparative Advantage in the Internet Field, 34(03) FORUM ON LAW 79 (2019).

26. According to statistics, privacy protection legislation has been enacted in more than 107 countries around the world and the overall global trend of personal information legislation has been strengthened gradually. See Xiangang Liu & Yanzhe He, Research on the Path to Strengthening the Protection of Personal Information with a Balanced Approach of Development and Protection, 8 CHINA INFORMATION SECURITY 96 (2019).

27. The Part of Personality Rights of the Draft Civil Code for Third Review: Strengthening the Protection of Privacy and Personal Information, CHINA PEOPLE'S CONGRESS (22 Aug. 2019), http://www.npc.gov.cn/npc/cw36/201908/70b9b2fa5b72475dada54ec33121d4bf.shtml.

28. Shu Wang, Personal Information Protection Law among Others Included in Next Year's Legislation Plan, THE BEIJING NEWS (21 Dec. 2019), http://epaper.bjnews.com.cn/html/2019-12/21/content_774666.htm?div=-1.

29. On 16 November 2018, the Supreme Court held a symposium to commemorate the tenth anniversary of the implementation of the AML. The Presiding Judge Xiaoming Song of the Intellectual Property Tribunal of the Supreme People's Court briefed on the basic situation of antitrust civil litigations in the past ten years. It was disclosed that from the implementation of the AML to the end of 2017, courts nationwide have accepted a total of 700 civil cases and closed 630 cases concerning monopoly at first instance. According to public statistics, nationwide courts at all levels closed thirty-seven cases in total concerning monopoly at first instance in 2018 and closed eighteen cases in total in 2019.

30. Here, "prevailing" refers to the circumstance that the defendant's behavior was found by court as monopoly and the plaintiff was compensated. These four cases are: (1) Beijing Ruibang Yonghe Science and Technology Trade Co., Ltd. v. Johnson & Johnson Medical (Shanghai) Co., Ltd. (2013); (2) Huawei Technology Co., Ltd. v. InterDigital, Inc. (2013); (3) Xiaoqin Wu v. Shaanxi Broadcasting and TV Network Media (Group) Co., Ltd. (2016); (4) Zongli Wu v. Yongfu County Water Supply Company (2019).

31. For example, in the follow-on action, Junwei Tian v. Beijing Carrefour Shuangjing Store (2013), "the plaintiff lost trials at both first and second instances. The Court of second instance held that the plaintiff failed to prove that a monopoly agreement exists between Carrefour Shuangjing and Abbott. The reason is that in the penalty decision issued by the National Development and Reform Commission regarding Abbott's vertical price maintenance and monopoly agreement restricting the price of goods reselling to third parties which was reached and implemented with the counterparty in transaction, the specific counterparty in transaction, i.e. the distributor, was not identified. The consumers were unable to give sufficient proof and, therefore, was unable to seek compensation from the milk powder distributors." Yanbo Jiang, A Study on Antitrust Penalty of Confiscating Illegal gains: Based on the Perspective of Law and Economics, 1 ECONOMIC LAW FORUM 119 (2017). In response to this issue, Professor Xianlin Wang pointed out, "relatively, antitrust enforcement authority has their unique advantages in evidence collection. The answer of how to provide the evidence collected by authority to parties in litigations and how the courts consider the effectiveness of these evidences is an important aspect of coordinating antitrust administrative enforcement and antitrust civil litigations. If antitrust enforcement authority can support private plaintiffs in terms of evidence and the court would recognize the effectiveness of these evidences in principle, it will be beneficial to the realization of the parties' civil litigation rights and will also help to save the cost of evidence collection as well as to minimize the difficulty in pursuing the responsibility of illegal acts caused by insufficient evidence...In China, although there is no relevant laws in this regard, based on our tradition and the reality, it is suggested that the courts shall recognize the effectiveness of the evidence in antitrust enforcement authority's decision in civil cases, unless there is other evidence to the contrary."

32. Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, and Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union.

33. Unlike illegal acts in other areas of departmental law, in antitrust cases, although the parent company does not directly implement the illegal act, the business model or price policy of the subsidiary company is often part of the overall business strategy of the parent company. In cases where only the subsidiaries are held accountable, it will be difficult to have effective deterrence on the parent company, and may even lead the parent company to implement illegal acts through the subsidiaries and easily circumvent sanctions. To solve such issues, EU competition law created "Single Entity" rules. Wuchao Liu, Single Entity Rule in EU Competition Law and Its Use for Reference, 4 COMPARATIVE LAW JOURNAL 135 (2014). In merger review, "an undertaking" not only refers to the enterprises involved in the transaction, but also includes the group to which the enterprise belongs. According to the Regulation (EC) 139/2004 (Merger Regulation), it refers to "enterprises that collectively form an economic entity with independent decision-making power" ("single economic entity"). For state-owned enterprises ("SOE"), the Commission's Consolidated Jurisdictional Notice provides more detailed rules. If the independent decisionmaking power of an SOE is controlled by the state or other public entities, by which it can "coordinate with other state-owned enterprises", then the aforementioned SOEs together form a single economic entity and jointly form an operator. When the European Commission determines that SOEs do not have independent decision-making power, it will review the competition impact of the single economic entity to which they belong. However, even if the Commission does not determine that the company have no independent decision-making power, it still uses the "worst-case assumption" for the test. That is, if it is not clear that whether the trading party and other SOEs constitute a single economic entity, the Commission would conduct the review on assumption that they do. In the Dyestuffs case (1969), the European Court of Justice first adopted the Single Economic Entity doctrine, stating that "the fact that a subsidiary has independent legal personality status is not sufficient to rule out the possibility of attributing its actions to the parent company ...In the application of competition law under this circumstance, the formal separation caused by the independent legal status of each company cannot be more important than the integrity of their actions." The American International Law Association has repeatedly reviewed the theory of extraterritorial application since 1964, and confirmed the Single Economic Entity doctrine at the New York Conference in 1972. It was pointed out that when the anticompetitive conducts of domestic subsidiaries was carried out as a result of instructions from a foreign parent company, or that the former's behavior was attributable to the latter, the victim country's extraterritorial jurisdiction can be recognized. Yan Gao, Extraterritorial Application of Merger Regulations in European and American Antitrust Laws, GRADUATION THESIS OF CHINA UNIVERSITY OF POLITICAL SCIENCE AND LAW (2004).

34. In Beijing Ruibang Yonghe Technology & Trade Co., Ltd. v. Johnson & Johnson Medical (Shanghai) Co., Ltd. (2013), the Shanghai court clarified the attitude of applying the rule of reason to vertical monopoly agreements. The main disputes about vertical monopoly agreements includes: (1) whether the principle of per se illegal or the rule of reason should be applied; (2) whether the market share of the undertaking in the relevant market should be considered; (3) whether the punishment measures for violation of the price-fixing policy should be an element to prove the existence of the vertical monopoly agreement. The Shanghai First Intermediate People's Court clearly applied the rule of reason in the first instance, holding that the analysis of RPM behavior should take into account the relevant undertakings' share in the relevant market, the level of competition in the relevant market, the changes in product supply and prices, etc. The collegiate panel of the Shanghai High Court also stated that whether a vertical agreement violate antitrust laws depends on whether it has the effect of eliminating or restricting competition.

35. For example, in the Chlorphenamine APIs Monopoly Case (2019) announced in January 2019, SAMR confiscated CNY 2,394,700 of illegal gains from Hunan Erkang and imposed a fine of CNY 8,479,400 on this company, which counted for 8% of its annual sale in the previous year, while the authority only imposed a fine of CNY 1,557,300 on Henan Jiushi, which counted for 4% of its annual sale in the previous year, and did not confiscate illegal gains. Professor Jian Wang pointed out, "among the twenty-seven cases investigated and dealt with by the National Development and Reform Commission, only the fourth case (in its series) was both confiscated and fined, and the remaining twenty-six cases did not involve the punishment of confiscation of illegal gains. Of the twenty-two cases punished by the State Administration for Industry and Commerce, nine cases were both punished with confiscation of illegal gains and fines, four cases were not punished for confiscation of illegal gains because they could not calculate the illegal gains, one case did not involve the confiscation of illegal gains because the enterprise failed to generate additional income, and another seven cases were fined separately without involving the confiscation of illegal gains." Jian Wang, Pursuing the Certainty of Antitrust Fines – Analysis Based on Typical Anti-Monopoly Fines in China, 12 LAW SCIENCE 66 (2016). There is also controversy in practice concerning this phenomenon. E.g., "in recent years, China's antitrust administrative fines have hit record highs and their international influence has increased. However, domestic and foreign media have also questioned and criticized the sizes of China's antitrust fines. Firstly, due to the difficulty in calculating the confiscation of illegal gains – applying in less than 10% cases – and there is a tendency of 'fines centralism', which refers to the behavior of replacing confiscation of illegal gains with fines." Bo Feng, Influencing Factors and Empirical Test of the Penalty Amount in Anti-Monopoly Law – Based on the Past Ten Years' Data since the implementation of China's Anti-Monopoly Law, 3 JOURNAL OF SHANDONG UNIVERSITY(PHILOSOPHY AND SOCIAL SCIENCES) 11 (2019).

36. E.g., "in the area of follow-on action, the sum of fines and damages may cause excessive deterrence to offenders. On the one hand, excessive deterrence may cause legal business behavior to be deterred, and on the other hand, it may impose an unreasonable economic burden on the undertaking, resulting in its inability to bear the punishment or even the risk of bankruptcy." Sen La, Coordination Mechanism of Fines and Damages in Antitrust Enforcement, 4 LAW APPLICATION 117 (2016).

37. E.g., "the determination of the fine base is the first step in antitrust fines. According to Articles 46 and 47 of the AML, the base for antitrust fines is 'sales in the previous year'. Based on this, the following two questions need to be resolved: first, how to determine 'sales'; and second, how to determine 'previous year' ...The understanding of 'sales' is not consistent in the practice, and there is great uncertainty." Jian Wang, Pursuing the Certainty of Antitrust Fines – Analysis Based on Typical Anti-Monopoly Fines in China, 12 LAW SCIENCE 66 (2016). See also, "with the gradual deepening of the implementation of the AML and the significant increase in fine cases, the disadvantages of the uncertainty of antitrust fines gradually appear. Uncertain fines may violate the principles of fairness, proportionality, and full measurement in administrative law, causing excessive or insufficient deterrence. In addition, the fact that the law enforcement authority has too much discretion accompanied by the uncertainty of antitrust fines will lead to arbitrary law enforcement, deterring both illegal acts and acts that may be legal and efficient ... China's regulations on antitrust fines often appear in the form of principles, leading to a lot of uncertainty in practice. Jian Wang, The Development Trend of Anti-Monopoly Fine, 1 ECONOMIC LAW FORUM 91 (2017). In addition, in response to issues regarding the antitrust fine base, Zhenguo Wu, the Director General of the Anti- Monopoly Bureau, said in an interview in May 2019 that the base of antitrust fine should be the total sales of the company in the previous year rather than the sales of the products involved. In this regard, SAMR had specifically requested the Legislative Affairs Commission of the NPC's Standing Committee and had received a clear reply. At present, SAMR is studying and formulating working rules of the administrative sanctions for monopoly cases in order to unify law enforcement standards.

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