On 1 December 2020, the Shanghai Municipal Administration for Market Regulation (Shanghai AMR) published the local "Anti-Monopoly Compliance Guidelines for Undertakings" (Shanghai Guidelines), which will come into effect on 1 March 2021. This makes the Shanghai AMR the first region in China to issue recommended local standards guiding undertakings in constructing a comprehensive antitrust compliance model, after the State Administration for Market Regulation published the "Guidelines on Anti-Monopoly Compliance for Undertakings" (SAMR Guidelines) on 11 September 2020. In fact, most of the articles in the Shanghai Guidelines correspond to or supplement those in the SAMR Guidelines.
The Shanghai Guidelines target undertakings in Shanghai and can also be referenced by trade and industry associations. They set out the basic requirements that undertakings have to fulfil to compete in the market and encourage them to establish their own competition compliance management systems to prevent and reduce risks of breaching antitrust law.
Ten Major Compliance Mechanisms
In establishing a comprehensive competition compliance management system, the Shanghai Guidelines suggest undertakings to set up the following compliance mechanisms:
- Competitive Culture Cultivation Mechanism: enhancing employees' awareness of competition compliance, and reinforcing the values of honesty, integrity, and fair competition;
- Reporting Mechanism: reporting to the internal decision-making level and management level, and proposing risk evaluation suggestions and coping measures;
- Review Mechanism: conducting internal review of importation decisions and agreements, and seeking the opinions of in-house counsel or lawyers on antitrust risks;
- Risk Identification and Assessment Mechanism: developing a system which can accurately identify and assess the compatibility between undertakings' business and management activities and antitrust laws;
- Compliance Consulting Mechanism: establishing a mechanism involving internal consultation, external consultation with experts, and consultation with antitrust enforcement agencies;
- Commitments Mechanism: the top management level taking the lead in giving written personal commitments regarding competition compliance;
- Internal Discovery Mechanism: establishing an internal self-examination system within undertakings, through which employees could submit potential competition compliance issues to the internal compliance department on an anonymous basis;
- Training Mechanism: providing regular internal or external trainings on compliance management to employees;
- Division of Labour Mechanism: dividing personnel in an undertaking to four different levels including the (i) decision-making level; (ii) management level; (iii) supervision level; and (iv) competition compliance management person-in-charge or department. Each level performs different duties and responsibilities to achieve the ultimate goal of building an effective competition compliance management system for the undertaking; and
- Plan-do-check-act Mechanism: evaluating their own competition compliance system on a regular basis and taking effective corrective measures to rectify any problems, as well as to continue to improve such system.
What Should Undertakings in China Do?
Although the Shanghai Guidelines are not mandatory, undertakings based in Shanghai are advised to closely comply with them in addition to the SAMR Guidelines and to build (and continuously evaluate and improve on) an effective competition compliance management system, with duties and responsibilities of different tiers of relevant personnel clearly delineated. Undertakings based elsewhere in China are advised to also refer to the Shanghai Guidelines, as local authorities of other regions may start rolling out their own local standards soon.
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