Weekly Newsletter on Chinese Antitrust 14.03-20.03.2022

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Weekly Newsletter on Chinese Antitrust 14.03-20.03.2022

Review №7 on Chinese Antitrust News from BRICS Antimonopoly Centre Experts

- Big tech stocks soar after announcement of market support
- Protection of underage users on the platforms
- Campaign to "streamline" algorithms
- Judicial interpretations of competition law
- The Beijing IP Court established the Antimonopoly Commission
- Rising foreign investment in China
- Statistics on the eve of World Consumer Rights Day
- Meeting of the All-China Market Regulation System
- Successes of "cleansing" on the Internet
- The Plan of scientific and technical development of market regulation in the 14th Five-Year Plan was published
- Price controls and competition in 2022
- New competition review model in Heilongjiang
- China called on the US to stop its unjustified harassment of Chinese companies
- Wall Street Journal: WeChat Pay fine for money laundering
- Ant Group sold its stake in 36Kr 

Big tech stocks soar after announcement of market support

State Council Vice Premier Liu He held a meeting of the Finance Committee to discuss current economic issues. He stated that the Chinese government will continue to support companies of all types and forms in conducting IPOs on foreign exchanges. In the platform economy, the competent departments should improve existing plans and projects to promote their marketization, legal management and internationalization, persevere in progress while maintaining stability, through regulated, transparent and predictable regulation, confidently promote and quickly complete the elimination of infringements on large digital platforms, put in place "red and green signals" [traffic lights], promote the stable and healthy development of the platform economy, and enhance international competitiveness. The announcement saw many of China's tech stocks skyrocket, with giants Alibaba, JD and Pinduoduo, for example, up more than 40% after protracted declines amid tighter regulation.

Source: Politics.people

Protection of underage users on the platforms

The Cyberspace Administration of the People's Republic of China has submitted a draft regulation on the protection of minors on the Internet for public consultation. A separate chapter is devoted to measures against Internet addiction: this includes, among other things, special “teenage regimes”, restrictions on time, duration and certain functions of connecting to Internet platforms. It also limits the one-time and daily amounts that a teenager can spend on purchases on the platform, etc. The most popular services may be required to take into account the physical and mental health of minors at the stages of design, development and operation, create compliance systems and maintain regular reporting.

Source:  Cac.gov

Сampaign to "streamline" algorithms

China's Cyberspace Administration has announced that it will soon launch a themed campaign to "streamline" algorithms, which will last until the end of the year. Administration representatives stressed that they would “strike” against illegal activities related to algorithms and would call for correcting all cases of their unreasonable use, including “information bubbles”, discrimination using algorithms, preferential treatment of new users over old ones, and so on. "In parallel with the campaign, we also welcome the concerns of all Internet users regarding Internet violations," said Yu Yonghe, head of Network Management Technology Division. 

Source: M.mp

Judicial interpretations of competition law

The Supreme People's Court of China has published interpretations of certain issues regarding the application of the PRC Law on Combating Unfair Competition. The interpretations contain 29 points and specify signs of four of the seven types of unfair competition (fake third-party brands, dishonest advertising, damage to business reputation and unfair competition on the Internet). The law was adopted in 1993 and revised in 2017 and 2019. In 2006, the Supreme Court already issued interpretations, but in modern conditions they can no longer satisfy practical needs.

Source: Weixin.qq

The Beijing IP Court established the Antimonopoly Commission 

On March 16, the Beijing Intellectual Property Rights Court announced the establishment of the Competition and Monopoly Commission. The Commission, together with a specialized judiciary team, will perform the following functions: 

(1) hear civil cases related to anti-competitive practices in order to protect a fair competitive order and create a fair, transparent and predictable business environment; 

(2) actively and effectively deal with administrative cases in this area to create a strong mechanism for judicial-administrative cooperation; 

(3) to educate judicial specialists in the field of competition and antitrust law in order to form a reserve of highly qualified personnel; 

(4) to conduct in-depth research in the field of competition and the fight against monopolies; 

(5) to study the mechanisms for dealing with antitrust cases involving foreign countries to improve international competitiveness and become the foremost court for resolving international disputes.

Source: Weixin 

Rising foreign investment in China

The recovering economy, huge market potential and improving business environment in China are attracting foreign enterprises and strengthening their confidence in doing business in China. A joint report from the American Chamber of Commerce in China and PwC found that nearly two-thirds of member companies view China as the most important or one of the top three investment markets in the world in the short term. However, in the Business Confidence Report 2021- 2022. (German Chamber of Commerce in China and KPMG), it is noted that in 2021, almost 60% of German companies operating in China achieved business growth, and 71% of surveyed enterprises expressed their willingness to continue to increase investment in China.

Source: Russian.people

Statistics on the eve of World Consumer Rights Day

In 2021, SAMR managed to organically combine the regulation of Internet transactions and the protection of the rights and interests of consumers in its work. Methods for regulating network transactions were published, which specifically regulated various “ problem areas” of online commerce: the use of personal data, automatic renewal of subscriptions, the imposition of goods, etc. Statistics showed that the average time to process consumer complaints across the 34 major digital platforms has dropped from 27 days to 12 days. In total, 176 antitrust cases were reviewed, fines and confiscations in the amount of 23.6 billion yuan (≈$3.7 billion) were collected. SAMR considered 727 applications for economic concentration transactions, approved 4 transactions with additional conditions, and blocked one transaction. 

Source: SAMR

Meeting of the All-China Market Regulation System

The meeting held on March 17 decided that it is necessary to deeply understand that fair regulation is [part of] the public service, competition policy is development policy, monopolies hinder the development of the economy, and antitrust struggle promotes it. Five main areas of work were identified: (1) improve the level of legal soundness of antitrust measures, (2) increase market expectations and market confidence, (3) stabilize the macro economy and ensure people's welfare, (4) stimulate the establishment of a modernized regulatory system, and (5) create new competitive advantages for the country. The importance of turning the "soft" power of fair competition into a "hard" driving force of development is emphasized. 

Source: SAMR

Successes of "cleansing" on the Internet 

The Cyberspace Administration of China has summed up the interim results of the campaign to “clean up” the Internet space: over the year, “manifestations of chaos” (online fan communities, content management, etc.) were effectively curbed, and a conscious attitude of platforms to their responsibility was formed. In 2022, the campaign will be characterized by “specialization” (targeted action to address critical issues), “stringency” (regulation with strict methods against strict standards) and “practicality” (real steps to achieve real results). Separately, the activation of party work in Internet companies and the strengthening of the guiding role of party cells are stipulated. The seminar was attended by representatives of 7 digital platforms: Weibo (similar to Twitter), Tencent, Alibaba, Baidu (search service), Kuaishou (Chinese version of TikTok), Meituan and Zhihu (similar to Quora). 

Sources: The paperWeixin

The Plan of scientific and technical development of market regulation in the 14th Five-Year Plan was published 

The Plan emphasizes that during the 14th Five-Year Plan, the concept of "big market, excellent quality and great regulation" should be developed. This implies, among other things, the creation of an environment favorable for regulatory innovation and the development of thematic research activities. The main goals until 2025 are defined: the formation of a relatively complete system of scientific and technical innovations in market regulation, the strengthening of strategic scientific and technical capacities, the constant improvement of the innovation environment, the significant role of innovations in the modernization of market regulation. 

Source: Weixin 

Price controls and competition in 2022

SAMR's Price Supervision and Competition Department summed up the results of the past year and set goals and objectives for the next one. In 2021, the regulator focused on illegal intermediary fees from businesses (6 billion yuan returned - ≈$943 million), fined 5 joint procurement platforms for price dumping, handled 8,563 cases of unfair competition, and collected 573 million yuan (≈$90 million) in fines and confiscations. Further work will be related to the reduction of taxes and fees, the control of price fluctuations, the fight against unfair competition for the sake of the stability of the market system, functioning according to high standards, the “search for development in stability”, the development of the digital economy and the increase in regulatory capacity. Specific tasks include calling on platforms to lower service fees, speed up the review of the Law on Combating Unfair Competition, launch a campaign to combat unfair competition on the Internet, and others.

Sources: SAMRWeixin 

New competition review model in Heilongjiang

From the end of March, Heilongjiang province will begin to implement a new model for checking administrative decisions for the absence of anti-competitive provisions, from now on this function will be transferred to special departments within the structure of local market departments. The model of "special internal verification department" is an innovative improvement of the "selfverification" currently used in China. The innovation will help to carry out a deeper analysis of documents and, to a certain extent, avoid discrepancies in the standards typical for “self-checks”. 

Source: SAMR 

China called on the US to stop its unjustified harassment of Chinese companies

The US Federal Communications Commission has decided to revoke the license to provide telecommunications services in the United States from the Chinese company Pacific Networks Corp. and its child structure ComNet. Chinese Ministry of Commerce spokesman Gao Feng urged the United States to immediately stop the unjustified oppression of Chinese companies: according to him, China promises to take the necessary measures to protect the legitimate rights and interests of national enterprises. He noted that the US actions are contrary to the principles of non-discrimination and fair competition, undermine international trade and economic rules and violate the normal market order. Earlier, the American side deprived two other Chinese telecom operators - China Unicom Americas and China Telecom Americas - of licenses to provide such services in the country.

Source: Russian.people

Wall Street Journal: WeChat Pay fine for money laundering

The publication reports that Internet giant Tencent Holdings' WeChat Pay payment service could face a record fine for participating in money laundering operations. Financial regulators found that the platform violates relevant legislation, and also incorrectly performs the “know your customer” and “know your business” procedures - verification of persons on which personal and business accounts are registered. The information has not yet received official confirmation, and in the Chinese media it is given only with reference to the WSJ. 

Source: WSJ

Ant Group sold its stake in 36Kr 

As part of the restructuring, the Ant Group corporation sold its entire stake (15.1%) in the 36Kr information portal. The move comes amid regulatory efforts to ensure the sustainability of the fintech sector. “ An important underpinning of the reforms is strengthening the separate regulation of finance and technology, and Ant Group is actively promoting the implementation of this policy,” said Yu Xi, an independent expert in the field of financial technology. In November 2020, Chinese regulators stopped the company's planned dual IPO on the Shanghai and Hong Kong exchanges. In April 2021, Ant Group reduced its stake in Indian food delivery service Zomato and sold shares to Caixin Media in October. 

Source: Global Times

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