Weekly Newsletter on Chinese Antitrust 06.06-12.06.2022

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Weekly Newsletter on Chinese Antitrust 06.06-12.06.2022

Review №19 on Chinese Antitrust News from BRICS Antimonopoly Centre Experts

- 2021 SAMR Antitrust Report
- The first area of exemplary Internet regulation
- Uniformity of Chinese and foreign market standards
- Tender for the creation of an antitrust M&A system
- China's doors open to new foreign investment
- Meeting of the Antimonopoly Bureau with the EEC
- The database of standard contracts has been launched
- Improving the business environment in Guangdong
- Guidance on Price Gouging Investigation Published
- WSJ: Investigation against DiDi close to completion
- BRICS customs and financial cooperation
- Regulator approved 60 video games
- ESG indicators of banking and insurance activities
- June 18th Sale Promotional Order
- Nike to shut down Nike Run Club app in China
- Data Security Management Certification
- Competition on the main theme of the competition week in China
- Illustrative cases of local administrative monopoly

2021 SAMR Antitrust Report

The Market Authority released a detailed 170 page report on enforcement activities in the past year. A total of 175 antitrust cases were heard during the year (61.5% more than in 2020): 11 cases of anti-competitive agreements, 11 cases of abuse of dominance, 107 pending economic concentration transactions and 46 abuse of administrative powers to the detriment of competition. In total, 23.6 billion yuan (≈$3.5 billion) was collected and confiscated – 52 times more than in 2020: most of it (more than $3 billion) came from Alibaba and Meituan, which were fined for forcing entrepreneurs to cooperate exclusively. 

In terms of international cooperation, China has strengthened cooperation with the key market economies of the world, countries and regions of the One Belt, One Road initiative. A separate subchapter is devoted to the successful holding of the VII International Conference on Competition under the auspices of the BRICS.

Source: SAMR

The first area of exemplary Internet regulation

SAMR announced that it has filed an application for the establishment of China's first exemplary area for regulating and serving Internet markets, which will be located in Beijing's Haidian district, where many digital platforms operate. Previously, the agency published Pilot Methods for Establishing and Managing Exemplary Regulatory and Service Areas for Internet Markets, as well as related performance indicators. The creation of exemplary zones will promote the development of innovative management and give new impetus to the healthy development of the Internet sector.

Source: SAMR

Uniformity of Chinese and foreign market standards

SAMR has published guidance on strengthening technical trade measures. They emphasize the need to take into account the peculiarities of both external and internal markets and the rules adopted in them, as well as proceed from the real problems faced by enterprises. One of the important areas of work is participation in global economic governance within the framework of the WTO and other multilateral organizations; coordination of standards and regulations with countries and regions of the One Belt, One Road initiative; linking China's market regulations with highlevel free trade agreement commitments. The importance of developing international trade was also noted: docking the Chinese regulatory system with international rules, increasing the uniformity of Chinese and foreign standards.

Source: SAMR

Tender for the creation of an antitrust M&A system

SAMR has announced a tender for the implementation of a project on antimonopoly risks. A budget of 2.6 million yuan (≈$391 thousand) is allocated for the implementation of the project. The Office is looking for an executor who will develop a technical antitrust enforcement system for economic concentration transactions. The objectives of the project include: 

1) creation of a center for "smart" antimonopoly analysis (assessment and notification of antitrust risks based on big data, modeling and other technologies; creation of a system for assessing and making a decision on M&A with the functions of calculating market share and dominant position, etc); 

2) creation of a knowledge base on antimonopoly law enforcement (collection, systematization and recommendation of Chinese and international experience in economic concentration transactions); 

3) creation of an auxiliary system for analyzing and managing cases (formation of “control blocks” for cases with loading information about the informant's message, associated risks and registration data).

Source: Weixin

China's doors open to new foreign investment

“We welcome foreign investors to expand their business in China so that they too can benefit from the development of our country,” said Gao Feng, spokesman for the Ministry of Commerce. Commenting on Amazon's announcement of the closure of the Kindle e-book store in China, he noted that China is the second largest consumer market in the world, and it is quite normal for market participants - including companies with foreign capital, to reconsider their promotion strategies for their products and services depending on market changes. 

Along with this, the Ministry of Commerce of the People's Republic of China stated that it is revising the list of industries in which foreign participation is encouraged - the list will be expanded. In addition, the Ministry is developing guidelines for foreign investment, which, together with other measures, will provide foreign investors and entrepreneurs with a more comfortable working environment in China.

Source: English.newsGlobal Times

Meeting of the Antimonopoly Bureau with the EEC

Representatives of the National Antimonopoly Bureau of China met with specialists in competition and antimonopoly regulation of the Eurasian Economic Commission. The parties held a discussion on such issues as the definition of digital markets and digital products, the boundaries of digital markets, the calculation of the volume of the digital market and its share. In November 2021, the parties signed a Memorandum of Understanding in the field of competition policy and antimonopoly regulation.

Source: SAMR

The database of standard contracts has been launched 

SAMR has launched a national database of standard contracts for a variety of areas: online purchases, real estate, agricultural production, educational services, etc. The agreement is the basis of market transactions, is declared on the agency's website, and reflects trade and market relations. Therefore, a document with fair, reasonable and clear conditions not only effectively protects the rights of the parties to the transaction, but also allows you to increase market sentiment and ensure the normal functioning of the market. At the moment, about 500 different samples: this will help citizens to protect themselves and reduce transaction risks. Viewing and downloading templates are available for free, and the database will be constantly updated.

Source: SAMR

Improving the business environment in Guangdong

The Guangdong Provincial Legislature approved the Regulations for the Improvement of the Business Environment, which will come into force on July 1st. Separate articles of the document emphasize that all market entities - regardless of their type - have equal rights and opportunities and operate under equal rules. It is noted that the provincial government, the local market department and other competent authorities are required to vigorously develop anti-monopoly laws for new economic sectors (platform, sharing, etc.) and, within their powers, strengthen antimonopoly enforcement.

Source: Weixin

Guidance on Price Gouging Investigation Published

The Price Gouging Investigation Guide lists actions that encourage prices to increase too much or too quickly (for example, falsifying and disclosing production costs or raising prices out of proportion to cost increases). 

The document is issued as a reference for market regulators at all levels and provides operational guidance. In particular, it is noted that during emergencies, prices for first aid and essential goods can fluctuate greatly, and it is the responsibility of the administrative authorities to maintain price order based on laws and market mechanisms. It is also necessary to develop plans for emergency response to sudden fluctuations, strengthen alert mechanisms and closely monitor price dynamics, sensitively reacting to unusual changes. It is also important to take a "leading role" and conduct administrative workshops, explain applicable legislation to business entities and respond to public concerns.

Source: Weixin

WSJ: Investigation against DiDi close to completion 

China is finalizing a cybersecurity investigation against taxi service DiDi and preparing to lift restrictions on new user registrations, according to The Wall Street Journal sources. The regulator will also allow app stores to return DiDi to their catalogues. Restrictions will also be lifted on the Full Truck Alliance logistics service applications and the Kanzhun search and recruitment platform, which have been under similar investigation since the same time. In parallel, Reuters reports that DiDi is in talks with state-owned Sinomach Automobile to buy out a third of the shares in its electric vehicle division, which could mean that regulatory difficulties are behind us and the service is once again aiming for growth.

Source: WSJReuters

BRICS customs and financial cooperation

The customs authorities of the BRICS countries announced their intention to deepen cooperation in the field of intellectual customs. According to Sun Yuning, Deputy Head of the General Administration of Customs of the People's Republic of China, all parties should gradually raise the level of "intellectualization" of the customs infrastructure, methods of supervision and administrative management, as well as the formation of cross-border coordinated management between border services. Along with this, the Ministers of Finance and the heads of the central banks of the BRICS countries issued a joint statement on consensus on the issue of deepening financial cooperation and strengthening the coordination of macroeconomic policies.

Source: Russian.people

Regulator approved 60 video games

On June 7th, the State Press and Print Service approved a new batch of video games: 60 programs received licenses. “The licensing of new games has breathed new life into a dead industry,” writes Time Finance. According to experts in the gaming industry, the fact that the authorities are once again approving video games is undoubtedly a positive signal. The issuance of licenses was suspended for regulatory purposes, and if they were achieved, the process will resume. It is worth noting that the list of approved games again did not include products from NetEase and Tencent. On April 11th - after a 263-day pause - the State Press and Print Service resumed issuing licenses for online games and approved 45 games for release. The list did not include the products of the giants of the Chinese gaming industry Tencent Holdings, NetEase and Bilibili, as well as foreign developers.

Source: Finance

ESG indicators of banking and insurance activities

The Banking and Insurance Regulatory Commission has issued a Guide to Green Finance: it requires strengthening support for a green, low-carbon and circular economy, and preventing environmental, social and governance risks. Banking and insurance structures are required to implement ESG requirements in the risk management system and publish relevant reports. The board of directors or the board of such structures should be responsible for fulfilling ESG responsibility, setting goals and creating mechanisms for "green finance". 

Source: Cs.com

June 18th Sale Promotional Order 

SAMR issued a warning to all Chinese internet platforms to "streamline" promotional activities for its annual June sale. The warning contains 12 instructions, including enhanced inspection of goods and services, fight counterfeiting, monitor advertising content, prohibit unfair competition, ensure stable supply of key commodities at stable prices, strengthen financial support for micro, small and medium-sized sellers, ensure the rights of employees (for example, couriers), as well as actively assist regulators in eliminating violations and, together with the authorities, form a respectful attitude towards the law among businesses.

Source: SAMR

Nike to shut down Nike Run Club app in China

Nike did not provide a clear reason for the move. The application appeared in China in 2010 and has attracted more than 8 million users since then. Users will have access to the Nike mini-program on the WeChat platform: it offers video workouts and records how much time the user spent doing them. “We are building an ecosystem from China and for China, specifically designed for the unique user needs of the region,” the company said.

Source: WSJ

Data Security Management Certification

SAMR and the China Cyberspace Administration have jointly issued the Data Security Management Certification Rules. They describe the direct certification procedure, which consists of the stages of technical examination, on-site verification and monitoring after the issuance of the certificate. The certificate is valid for 3 years. Authorities encourage network operators to use the certification tool to regulate their data security management activities and enhance the protection and security of network information.

Source: Cac.gov

Competition on the main theme of the competition week in China

SAMR has announced a call for proposals on what the "headline" of China's Fair Competition Awareness Week will be this year. From June 7th to June 22nd, anyone can submit their idea. Requirements: no more than 20 characters (≈10 words), concise, inspiring, memorable. Suggestion address: jingzhengzhou@samr.gov.cn.

Source: SAMR

Illustrative cases of local administrative monopoly

SAMR has published the first series of the most illustrative case studies on government agencies misusing their administrative powers to the detriment of competition. The publication confirms the success of the campaign to combat this practice, which is now underway in all regions of the country. The General Market Administration spoke about cases where local government agencies, for example, appointed specific companies as exclusive suppliers of certain goods or services (bicycle sharing services in Gaomi, Shandong Province; supplies of medicines and medical equipment in one of the counties of Guangxi Zhuang Autonomous Prefecture), or under threat punishments force companies to divide the market among themselves (for example, the wholesale fireworks market in Guangxi Zhuang Autonomous District). Local market regulators recognized these actions as a violation of Articles 32 and 33 of the Antimonopoly Law of the PRC: restriction of the freedom of consumer choice, freedom of circulation of goods, freedom of choice of supplier.

Source: SAMR

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