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SAMR one year on, evaluating the reformed regulatory body of China

01.07.2019
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2018 was a significant year for Anti-Monopoly Law enforcement and development in China. It marked a 10th anniversary of the state’s implementation of Anti-Monopoly Law and saw a reform of the regulatory bodies. Ten-years of enforcement of the Anti-Monopoly Law (AML) in China has achieved great results with the cooperation and support of various competent authorities. Despite this, the multi-sector model also meant non-uniform standards and less transparency of the working process. On the 10th of April 2018, the State Administration for Market Regulation (SAMR) was officially inaugurated as a sole, consolidated Chinese antitrust and competition authority unifying the three previously separate government agencies. The institutional reform of antitrust enforcement agency was the most significant competition event in China last year.

Now after the first anniversary of the regulatory body, it is time to look at what has changed and what has been achieved over the first year of its work. Mr. Zhenguo Wu – the Director General of Anti-Monopoly Bureau of SAMR, has identified five essential aspects for the future development: (i) establishing a unified, authoritative and efficient anti-monopoly law enforcement system; (ii) promoting the anti-monopoly law enforcement to be more normal, professional and normative; (iii) constructing a complete, scientific, standardized and efficient anti-monopoly system; (iv) strengthening the construction of the antimonopoly law enforcement team and their relevant capacities; (v) and deepening international communication and cooperation in competition policy and antimonopoly law.

So far, we can see that SAMR has been increasingly efficient since its establishment, despite the time-consuming institutional reform. It is important to note that the structural reform has not had any impact on the merger filings as well as the anti-monopoly investigations that are currently undergoing since there was limited impact on the working division level. According to the public information, SAMR reviewed 448 cases in 2018, with four major conditional approvals including the Bayern’s acquisition of Monsanto. Prolonged investigations and approval processes have been attributed to human resources shortages at the authorities. This has been a significant concern since the AML came into effect in 2008. Now, with all antitrust matters being under a single agency - SAMR, we seeing more flexibility and more knowledge and information exchange among staff working on the various antitrust matters.

On December 26th SAMR announced the introduction of two new regulations - the Interim Provisions on Administrative Penalty Procedures in Market Regulation and the Interim Measures for Administrative Penalty Hearings in Market Regulation. The Penalty Provisions are an elaborate set of 81 articles spread across seven chapters entitled General Rules, Jurisdiction, Regular Proceedings, Summary Proceedings, Penalty Execution and Closing of Cases, Service of Law Enforcement Documents, and Miscellaneous. These rules are a reflect the progress made by Chinese authorities in the area of administrative penalty legislation and law enforcement practice in recent years, as well as an integration of existing procedural rules administered by different regulatory agencies that have been consolidated into the SAMR.
Furthermore, the Notice on Antitrust Enforcement Authorization issued by SAMR on the 3rd of January 2019, grants 'blanket' authorisation to provincial SAMR branches for antitrust enforcement. This move is expected to unify further the pre-existing arrangements where the former SAIC had to authorise provincial branches actions on a case-by-case basis, and the NDRC granted wholesale authorisation. This means that local market regulators are now able to perform antitrust investigation with delegated authority, thus saving time on bureaucracy and increasing the efficiency in the long-run.

In one of his interviews, Mr. Wu stated that SAMR intends to strengthen the construction of cooperation and communication mechanisms with other anti-monopoly law enforcement agencies, strengthen bilateral and multilateral negotiations in the area of competition regulation. In 2018 and 2019 Chinese authorities have actively participated in multiple international meetings and forums over as well as holding such events ‘at home’. On April 17th-18th round table discussions were held in Beijing as a part of BRICS cooperation initiative. The discussions covered a number of vital issues in the antimonopoly of today in relations to both Chinese markets and BRICS countries’ joint work.

This year has been very fruitful for Chinese Anti-Monopoly authorities. It brought around significant changes and critical initiatives. The establishing of SAMR has helped to work towards avoiding enforcement conflicts, simplifying the enforcement procedures and enhancing the efficiency through integrating the enforcement experience and official’s resources of previous competent authorities, and to face new challenges in the next decades – the anti-monopoly work carried out by SAMR shows us prospects for providing more optimized, coordinated and efficient anti-monopoly law enforcement in China. We are sure to see even more international dialogue in the coming year with the BRICS conference coming up in September, where we will surely be observing meaningful contributions from SAMR representatives. We are looking for more developments and news to come in the following months.