Chinese SAMR to tighten up its oversight in platform economy

On November 6, three Chinese authorities – the State Administration for Market Regulation (the SAMR), the Cyberspace Administration and the State Taxation Administration – held a joint advisory meeting on the effective regulation of digital economy. The meeting was also attended by China’s 27 leading tech companies, including, Meituan, Alibaba, Bytedance, DiDi, Kuaishou etc.

These years, especially since the coronavirus outbreak, digital economy has become a new engine of economic and social development but also a source of new and unprecedented challenges. As the biggest online sale of the year (so called Double Eleven’s sale on November 11) draws closer, the weak points of online platforms are just getting more obvious: marketplaces force vendors to choose only one single platform to publish their product offerings, fake or counterfeit goods are spread widely, consumer rights are hardly respected, one can spot false advertisement etc.

The authorities encouraged tech companies to respect the current laws and to enforce self-discipline. It was explicitly requested not to abuse dominant position on the market, not to limit vendors’ right to choose a platform, not to interfere with their normal operation by any technical means, to improve the price and quality management and to ensure personal data security.

After the Double Eleven’s sale is over, the SAMR will perform a thorough inspection of all illegal actions, handle outstanding issues, report law violations, prepare and release suitable regulations. Recently, the Administration has already published the Interim Provisions on the Review of Concentration of Business Operators, the Interim Provisions Regarding Promotional Behavior and the Guiding Opinions on Strengthening the Supervision of Live-streaming Marketing Activities. The next on the list are the long-awaited Measures of Supervision and Administration of Online Transactions and the Antitrust Guidelines for Internet Platform Economy Industry.

The last one stands in a row with two existing ‘field’guidelines: for automotive industry and active pharmaceutical ingredients. These documents have already proven themselves effective, with, for example, $24 mil fine to Ford Chang’an for price monopoly this September, or $45 mil penalty to three manufacturers of Calcium gluconate for injections. By contrast, no antitrust law enforcement of such scale has ever been performed in platform economy. But some violations still happen and attract the attention of public and media. Apparently, now is the time to restore the order in digital economy, and the promised Antitrust Guidelines will be of great help to prevent and stop anticompetitive behavior on the Internet.