Anti-Monopoly Law better regulates firms, ensures fair play

Since the adoption of the first five-year plan and its pledge to establish the rule of law, China has introduced and amended many laws to promote the country's development and build a harmonious society. One such significant legal move is the amendment to the Anti-Monopoly Law, which aligns with the approach to socialist law with Chinese characteristics.

The amended Anti-Monopoly Law reflects such essential principles of rule of law as consideration of real national conditions, giving priority to people's interests, centralization and unification of the Communist Party of China's leadership as the guarantor of the rule of law, and steady digitalization of the judicial process.

One of the most important changes made to the Anti-Monopoly Law is on the control over anti-monopoly authorities, which prohibit them from creating obstacles to market competition through local protection, unequal treatment or other means. This amendment conforms to the rule of law principle of streamlining local governance system and cultivating the moral and virtuous behavior of both the people and the officials.

Yet when the anti-competitive behavior of a company threatens public interests, local procurators can bring a civil public interest lawsuit against it.

Another significant amendment concerns increased fines and liabilities for violating the Anti-Monopoly Law. It includes increased penalty for merger-related conduct (maximum fine up to 10 percent of annual sales if the conduct is likely to eliminate or restrict competition, and maximum fine up to 5 million yuan－$739,900－when concentration does not cause the said effect); penalty on cartel facilitators that act as third parties assisting the inking of anti-competitive agreements (a maximum fine of 1 million yuan); and individual penalty on those personally engaged in and responsible for reaching anti-competitive agreements (maximum fine of 1 million yuan).

Moreover, the amended Anti-Monopoly Law has a provision for penalties for failure to cooperate with an investigation, that is, refusal to provide relevant materials or give false information to the anti-monopoly enforcement agency (the maximum fine in this case is 5 million yuan for companies and 500,000 yuan for individuals).

In case of severe violations which lead to significant negative consequences, the fine for each violation can be multiplied from two to five times. In addition, all the violations of companies will now be registered in their credit record, which emphasizes China's goal of creating a transparent and fair business environment by rewarding or punishing entities depending on their compliance with the law and legal norms.

All these measures are aimed at ensuring the fundamental role of law in building a society fully governed by the rule of law and marked by economic and social stability.

The lower threshold for antitrust review for planned mergers or acquisitions is a significant amendment to the Anti-Monopoly Law. Now, entities are obliged to declare the consolidation if the global annual revenue of all the consolidation's participants exceeds 12 billion yuan and domestic annual sales of at least two of the participants are more than 800 million yuan.

One amendment empowers the anti-monopoly authorities to ask a company to submit an antitrust review even if it does not cross the set threshold but "there is evidence that the consolidation has or could have the effect of eliminating or restricting competition".

Finally, the new clauses of the Anti-Monopoly Law prohibit entities from using technology to engage in anti-competitive acts. Article 22 of the Anti-Monopoly Law says that "an undertaking with a dominant market position shall not use data, algorithms, technologies, platform rules, etc. to engage in the abuse of a dominant market position…". This new provision shows China now focuses on the application of advanced technology and its comprehensive regulation to promote equal competition and strengthen the rule of law.

In short, the amended Anti-Monopoly Law regulates more efficiently the activities of companies and anti-monopoly authorities. It also facilitates the growth of smaller companies, thereby ensuring the rule of law principles of equal participation and equal development.

Besides, the new Anti-Monopoly Law is more focused on the implementation of such characteristics of China's rule of law as harmonization of law at the central and local levels, and building a smart society governed by rule of law by regulating big data, artificial intelligence, the digital economy, and China's social credit system.

The author is co-founder of Lehman, Lee & Xu, a law firm in China. The views don't necessarily represent those of China Daily.

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