CHINESE UPDATE – Chinese Antitrust Regulators Vow to Increase Transparency
- China’s two governmental regulators for anti-monopoly conducts in China announced that they will increase the transparency of their enforcement actions under the Anti-Monopoly Laws.
- One head of SAIC discussed its future goals: (1) to investigate those typical antitrust cases having serious impact on market competition; (2) to investigate monopoly conducts of public utility enterprises such as electricity, water and gas suppliers; (3) to break the industrial monopolies and regional blockades; and (4) to push forward the drafting of the guidance on antitrust enforcement involving intellectual property rights.
- So far the limited published information and lack of detailed provisions on procedural and substantive matters together has resulted in the distrust of the public.
On the International Symposium on Controversial Issues regarding Chinese Anti-Monopoly Laws (“AML”) Enforcement held in Hangzhou this month, both the National Development and Reform Commission (“NDRC”) and the State Administration for Industry and Commerce (“SAIC”) announced that they will increase the transparency of their enforcement actions under the AML.
NDRC and SAIC are the regulators for anti-monopoly conducts in China. The powers are divided between the two authorities in the way that NDRC is responsible for price-related monopoly conducts, and SAIC is responsible for non-price related monopoly conducts.
NDRC Promised to disclose all the AML cases in due course.
Ms.Li Qing (李青), Deputy Director of the Price Supervision and Anti-monopoly Bureau of NDRC, admitted on the symposium that NDRC was not able to disclose all their antitrust investigations due to reasons such as existence of confidentiality arrangement. However, Ms. Li promised that NDRC will release information about all the AML cases to the public in due course.
Ms. Li disclosed that among those cases which NDRC has investigated in or decided on, most of them are about price monopoly agreements, some others involve abuse of dominance, and only a small amount relates to administrative monopoly.
According to Ms. Li, anti-monopoly cases have been rising steadily in the recent years. No matter whether the complaint is from business operators or from consumers, NDRC will take it seriously and launch investigation in each and every one of them as long as there is a legal basis under the AML regime.
SAIC will improve the system to publish its AML investigations.
On the same symposium, Mr. Yang Jie (杨洁), a division head of the Anti-Monopoly and Anti-Unfair Competition Enforcement Bureau of SAIC, made a brief introduction of SAIC’s enforcement efforts. According to Mr. Yang, SAIC has authorized provincial AICs of Jiangsu, Jiangxi, Chongqing, Zhejiang, Liaoning, etc., to investigate in 16 AML cases (including 15 cartel cases and 1 case of abuse of dominance), out of which 4 have been decided.
The future focus of SAIC, as indicated by Mr. Yang, includes four prongs: (1) to investigate those typical antitrust cases having serious impact on market competition; (2) to investigate monopoly conducts of public utility enterprises such as electricity, water and gas suppliers; (3) to break the industrial monopolies and regional blockades; and (4) to push forward the drafting of the guidance on antitrust enforcement involving intellectual property rights.
Similar to NDRC’s commitment, Mr. Yang announced that SAIC will introduce rules aiming for greater transparency, and the rules will bring clarifications on when, how and through what media to publish the AML cases. In line with this announcement, Mr. Yang disclosed a former action against operators in the building materials industry of Liaoning province, where Liaoning AIC imposed a total of RMB 15 million fines on an industrial association and 13 companies.
Currently, among the three AML enforcers, only the Ministry of Commerce (“MOFCOM”), which is responsible for merger review, publishes all its decisions of prohibition or conditional approval. NDRC and SAIC, on the other hand, is inclined to stay away from the public spotlight. The limited published information and lack of detailed provisions on procedural and substantive matters together make the enforcement actions of NDRC and SAIC cloaked in mystery. Some basic aspects of the investigations, such as what procedures to follow in order to apply for leniency, when the business operator under investigation will be notified, how illegal proceedings and fines are calculated and determined, etc., have not been clarified. Moreover, the lack of transparency has resulted in the distrust of the public. For example, many people raised queries on NDRC’s decision on settling with China Telecom and China Unicom instead of imposing fines on the two large state-own companies.
Without a doubt, NDRC and SAIC have taken welcome steps towards a more open system. However, this is only a start. Detailed provisions on the system need to be discussed and provided. For example, will the authorities publish all their formal decisions? Will they disclose information about an on-going investigation? Can market players or consumers proactively request the authorities to make disclosure? We will pay a close attention to any further information in this regard.