China’s AML Increases Regulatory Oversight

An amended Anti-Monopoly Law (AML) (中华人民共和国反垄断法) took effect in China on August 1, 2022, marking the first overhaul of the law since it was originally enacted in 2007. The revamped AML expands the powers of the State Administration for Market Regulation (SAMR) (国家市场监督管理总局), which issued six draft implementation rules in preparation for its extended remit. In Prof. Mark Cohen’s view, “a new environment for anti-monopoly law enforcement is beginning to emerge in China.”

SAMR can now require that parties report any transaction that could have an anti-competitive effect, even if the transaction does not reach the turnover threshold that would trigger a mandatory filing. In addition, the amended AML significantly increases penalties for violations. Per Article 63, fines for violating the AML may be multiplied up to five times in [a case that] “has especially serious circumstances, has an especially heinous impact, and causes especially serious consequences” (H/T China Law Translate). For its part, Article 56 authorizes the imposition of fines of up to RMB 1 million on individuals who bear personal responsibility for monopoly agreements.

Among the provisions of the amended law that have drawn the most attention are those directed at the digital economy. Under the amended AML, operators shall not use data and algorithms, technology, capital advantages, and platform rules to engage in the monopolistic behaviors prohibited by the law. Similarly, the use of these resources to engage in the abuse of a dominant market position is also prohibited.

Despite this focus on the digital economy, its development “has not brought fundamental changes to the analysis framework of the Anti-Monopoly Law,” Prof. Han Wei notes. That will be left to “more specific rulemaking to be optimized through administrative regulations and departmental rules.”

For international businesses, the takeaways should be clear.

First, the trend of increasing oversight of business activities by the Chinese authorities continues. As readers of this blog will have noted, this is a recurring theme in much recent Chinese legislation, even that coming out of the special administrative regions, such as Macau’s new gaming law.

Second, engaging in monopolistic practices in China is now a riskier endeavor, with increased penalties for companies and personal liabilities for responsible officers. When dealing with competitors and trading partners, businesses must beware the AML and give a wide berth to any activity that could be construed as a monopolistic practice.

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