Weekly Newsletter on Chinese Antitrust 20.12-26.12.2021

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Weekly Newsletter on Chinese Antitrust 20.12-26.12.2021

Review №42 on Chinese Antitrust News from BRICS Antimonopoly Centre Experts

- Three main economic concepts 2021
- Comprehensive deepening of market reforms
- Market regulation based on laws
- Digital development of state-owned enterprises
- Interview with Gan Lin
- Campaign to protect Internet users
- Zhihu network penalty
- The functions of the search service Bing are limited
- The disciplinary committee made recommendations to SAMR
- TikTok became the most visited site in 2021
- Alibaba has confirmed its commitment to ESG criteria
- The regulator commented on the academic monopoly
- Woodpecker-2021 Data Management Forum
- Merger SK Hynix / Intel NAND approved with add. conditions

Three main economic concepts 2021

Xinhua News Agency Half-month Forum (Banyuetan) has published an article listing the three main economic concepts of 2021: cross-cyclical, antimonopoly and shared prosperity "(Common prosperity). The transcyclical approach refers to the application of gradual and moderate policy measures to balance short-term economic fluctuations and medium- / longterm economic growth, thereby ensuring both sustainable growth and risk prevention. The prosperity policy means that wealth is shared fairly among all people by correcting excessive income and encouraging the rich to "give more to society".

Source: The paper

Comprehensive deepening of market reforms

On December 17th, Xi Jinping held the 23rd meeting of the Central Commission on Comprehensive Reform Deepening in Beijing. The meeting noted the need for broad and deep implementation of market reforms; reducing the direct allocation of resources by the government and direct government intervention in microeconomic activities; promoting reforms of the marketization of factors of production (land, capital, labour, knowledge and data); strengthening antitrust measures and combating unfair competition; removing market barriers; improving the efficiency and fairness of the distribution of market resources.

Source: CCPS

Market regulation based on laws

SAMR has published the Implementation Plan for the Establishment of Market Regulation Based on Laws (2021-2025): the document is published as part of the course on the formation of the rule of law and the rule of law (governed by the rule of law). The plan aims to improve the regulatory system (clear functions, performance of official obligations, intelligence and efficiency), develop the legal institution of regulation, and strengthen legal guarantees of regulatory activity. At the same time, lawmaking must adhere to a scientific, democratic and legal approach, and the regulatory system must become inclusive, focused on safety, more transparent and efficient in order to ensure ex-ante, real-time and ex-post regulation. The importance of comprehensive party leadership is especially emphasized.

Source: SAMR

Digital development of state-owned enterprises

China's state-owned enterprises are rapidly moving towards digital development amid the rapid development of the digital economy, according to People's Daily, China's main staterun media outlet. More and more of these enterprises are implementing digital transformation; many are introducing digital technologies in research and development work.

Source: Russian.people

Interview with Gan Lin

Ms Gan Lin, deputy head of SAMR and head of the newly founded State Antitrust Authority, told reporters about the enforcement and success of antitrust activities in China. 

Much effort has gone into the practice of being forced to "choose one of the two" (exclusive collaboration), she said. As a result, during the June and November sales in the online retail market, this disruption was practically avoided, and the competitive order improved, which gave merchants (especially small and medium-sized enterprises) more space. 

Gan Lin said that according to statistics, most antitrust investigations (about 2/3) are initiated by informants. During the investigation, the law enforcement agency has the right to conduct an inspection at the location of the business entity, interrogate those involved, view and copy accounting statements, business correspondence, electronic data and other materials, seal evidence, and also view the entity's bank accounts. At the same time, the subject cannot deny assistance to the law enforcement officer or obstruct the investigation.

Source:  SAMR

Campaign to protect Internet users 

The Chinese cyberspace regulator has decided to launch a two-month campaign against unfair actions that violate Internet users' legitimate rights and interests, embarrass public opinion in the online environment, and violate fair competition. The department's main focus will be fake traffic, deliberate defamation, and paid posts. The campaign will affect platforms for offering services and posting reviews on books, films and music, social networks and video hosting. 

Source: Global Times

Zhihu network penalty

The Beijing branch of the China Cyberspace Administration held a conversation with the officials of the Chinese Q&A Forum Zhihu (an analogue of Quora). The reason was the posting of information prohibited for publication or distribution, which is why an administrative case was initiated against the network. The commenting function is currently disabled on the platform (the official reason is an update), and users can only interact through the "Like" and "Share" buttons. Earlier, social networks Douban (a forum for discussing cultural and social agenda) and Weibo (an analogue of Twitter) have already been fined for a similar violation of 1.5 and 3 million yuan, respectively. 

Source: Tech.ifeng

The functions of the search service Bing are limited

Microsoft's Bing search engine in China has disabled automatic search suggestions for 30 days. The company representatives explained this by the requirements of Chinese law. They stated that Bing, as a global search engine, is committed to complying with laws and users' rights to access information and assist in finding information to the fullest extent possible by law.

Source: Baidu

The disciplinary committee made recommendations to SAMR

On November 18th, the State Antimonopoly Administration was established in the SAMR structure. In connection with the opening of the new division, the discipline management team responsible for overseeing SAMR made recommendations: In the previously existing Antimonopoly Bureau, regulatory powers were too concentrated in the relevant departments, and there was no main department for review and verification of cases, which led to the emergence of corruption risks. It was recommended that the party cell be divided and, at the corporate level, limited in powers for antimonopoly enforcement, as well as a revision mechanism should be created. In order to prevent risks when hiring employees, special attention should be paid to their professional qualifications, diversification of sources and standard procedures so that an incompetent employee does not occupy the place.

Source: Ccdi.govWeixin

TikTok became the most visited site in 2021

According to Cloudfare statistics, the video platform, with over 1 billion users, has climbed from seventh to first place this year. It was followed by last year's leader Google, followed by Facebook, Microsoft Corp., Apple Inc., Amazon.com Inc., Netflix Inc., YouTube, and Twitter Inc. Instagram did not make the list - WhatsApp replaced it. 

Source: WSJ

Alibaba has confirmed its commitment to ESG criteria

On Investor Day, Alibaba CEO Daniel Zhang spoke about the company's strategy. He named domestic consumption, globalization and high technologies as three strategic engines. Zhang pointed to growth opportunities in the Chinese market and internationally and expressed a commitment to ESG, with Alibaba aiming to achieve carbon neutrality in its operations by 2030. He outlined 10 strategic initiatives in the framework of achieving the UN sustainable development goals: digitalization of undeveloped regions, creation of new jobs and an increase in the wages of workers in the gig economy, care for socially vulnerable segments of the population, etc. 

Source: Alibaba

The regulator commented on the academic monopoly

On December 23rd, in response to an appeal about the monopoly of China's largest academic database CNKI (China National Knowledge Infrastructure), SAMR responded: "The PRC's antimonopoly law prohibits business entities with a dominant position from abusing it. The Antimonopoly Enforcement Authority needs to investigate the issue of a violation of the Antimonopoly Law by the relevant business entity, analyze the direct evidence and make a decision in accordance with the applicable procedure. The General Directorate for Market Regulation will check and study the question you have addressed. " Earlier, CNKI was hit by multiple accusations of a monopoly position. The 89-year-old professor of the Zhongnan University of Economics and Law Zhao Dexin sued CNKI 700 thousand yuan - the resource posted 160 of his articles without permission and left the author without a fee. Academics called on the market regulator to "respond appropriately to this incident that has generated such a violent public reaction."

Source: Weixin

Woodpecker-2021 Data Management Forum

On December 17th, Southern Metropolis Data Protection Research Center hosted the Woodpecker 2021 Data Governance Forum. At the forum, the research group provided the Platform Antitrust Review 2021. The review lists antitrust trends, measures, and decisions of the Chinese regulator over the past year and describes international practice.

Source: Weixin

Merger SK Hynix / Intel NAND approved with add. conditions

According to the decision of the regulator, the sale by the American corporation Intel of its business for the production of NAND memory chips to the South Korean company SK Hynix may negatively affect competition: after the transaction, the number of players in the market of solid-state drives based on enterprise-class SATA will decrease from 4 to 3 (which will collectively exceed 90% of the global market), and based on PCIe - from 3 to 2 (more than 80% of the global market). The market authority has agreed on the transaction subject to the following conditions:

• not set unreasonable prices for enterprise-class SSDs based on SATA and PCIe for the Chinese market (all other things being equal, such prices should not exceed the average price in the last 24 months before the entry into force of the merger decision); 

• within 5 years after the merger, to consistently increase the volume of production of these products; 

• supply all types of products to the Chinese market according to the FRAND concept; 

• not coerce (overtly or covertly) Chinese customers to buy products from SK Hynix or its controlled companies; not engage the specified products in forced or related sales; 

• help one competitor enter the SATA and PCIe-based enterprise SSD markets; 

• not collude with its key competitors in the Chinese market regarding sales prices, production and sales volumes to limit or eliminate competition. 

Source:  SAMR

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