China's efforts to protect competition in the latest anti-monopoly law
Wu Peicheng


Editor's note: Wu Peicheng is a PhD candidate in law at Shanghai Jiao Tong University and University of New South Wales, Sydney. The article reflects the author's opinions and not necessarily the views of CGTN.

On June 24, 2022, the 35th standing committee session of the 13th National People's Congress passed the amendments of China's anti-monopoly law. The new anti-monopoly law will become effective from August 1, 2022. These amendments indicate China's efforts to protect competition in the socialist market economy, particularly based on the development of digital economy.

China has announced that it will strengthen anti-monopoly push and prevent disorderly capital expansion since late 2020. In order to protect competition and online consumers, Chinese anti-monopoly authority took several investigations against Chinese giant platforms, such as Alibaba, Tencent, Meituan and CNKI. The anti-monopoly law, China's first comprehensive competition law, was enacted in 2007 and became effective in 2008. After the implement of the law for over a decade, China decided to amend the law to provide further protection of competition and consumers. There are some aspects that should be noted in the latest anti-monopoly law.

Firstly, the new law makes it clear that China implements the competition policy compatible with the development of socialist market economy. This means that China will not use competition policy as a tool to achieve other industrial goals. At the same time, the new anti-monopoly law requires the Chinese competition agency and courts to coordinate anti-monopoly enforcement in order to establish a fair and common market in China.

Secondly, the latest anti-monopoly law intends to solve anti-competitive problems arising from platform monopoly. Article 9 of the new law prohibits firms from taking advantages of big data, algorithm, capital advantages or platform rules to conduct anti-competitive practices. It also stipulates that a dominant platform is prevented from abusing market dominance by using data, algorithm and platform rules. These provisions aim at prohibiting monopolistic practices of digital platforms, such as the so-called "choose one out of two" practice, so that online consumers can have a better and more competitive market.

China's national anti-monopoly bureau was inaugurated in Beijing on November 18, 2021. /Xinhua

China's national anti-monopoly bureau was inaugurated in Beijing on November 18, 2021. /Xinhua

Thirdly, the new anti-monopoly law polishes up provisions of monopoly agreements and establishes the safe-harbor system. The old anti-monopoly law prohibits both horizon and vertical monopoly agreements in principle. However, the new anti-monopoly law allows firms which conduct vertical agreements to prove that the agreements would not result in anti-competitive effects. The latest law also provides a safe-harbor provision for undertakings of a vertical agreement. According to the safe-harbor provision, Chinese competition authority will not prohibit vertical agreements of which the parties do not possess sufficient market shares.

Additionally, the new law further strengthens anti-monopoly enforcement in China. For example, according to the law, Chinese anti-monopoly regulators can not only punish monopoly firms but also impose fines on the individuals who conduct anti-competitive practices. Monopolistic practices may lead to the harm of public interests, especially when giant platforms abuse market dominance to harm millions of online users. The latest anti-monopoly law also authorizes Chinese procuratorates to initiate public interest lawsuits against monopoly undertakings.

China has decided to establish a unified and common market around the country. As the legal foundation of competition policy, the anti-monopoly law and its enforcement plays a rather important role in the establishment of common market. As digital economy becomes a significant driving force of China's future development, China pays attention to the encouragement of digital economy and the prevention of anti-competitive practices of a digital platform at the same time. The new anti-monopoly law provides a clearer standard for commercial undertakings and will better protect consumers and competitive process in China.

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