China to Enhance Anti-Monopoly Enforcement under New Development Outline

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China to Enhance Anti-Monopoly Enforcement under New Development Outline


The Central Committee of the Communist Party of China (CPC) and State Council on August 11 jointly released an implementation outline for the government’s development under the rule of law for the next five years, as reported by Caixin the next day. The outline underscored anti-monopoly as a key area for regulatory improvement and dedicated a section on the construction of a fair and legal business environment. Succeeding a previous 2015 version, this document marked the first time anti-monopoly being stated in a governmental outline of its kind, and placed a greater emphasis on legal enforcement on key markets such as internet platforms, financial services, education and training, as well as food and drugs. It also complemented other relevant policies and legislation, such as the anti-monopoly guide for platform economy by the State Administration for Market Regulation (SAMR) this February and the national antitrust law currently under revision.

The areas highlighted in the outline resonated with some of the recent regulatory moves by the Chinese market authorities. Notably, SAMR’s February anti-monopoly guide first included internet companies that adopt a variable interest entity (VIE) structure in the antitrust M&A inspection. Following the guide, SAMR and two other bureaus convened an antitrust regulatory meeting this April with 34 domestic internet giants before launching a cyberspace inspection in May. During the same period, SAMR also imposed severe penalties on firms for monopolistic behaviors, including an RMB764m fine on Yangtze River Pharmaceutical Group, a leading drug manufacturer, as well as an RMB18.2bn fine on internet conglomerate Alibaba [BABA:US]. As a more recent example, SAMR fined 15 dominant education enterprises including New Oriental [EDU:US], TAL Education [TAL:US], and Tencent’s [0700:HK] Yuanfudao RMB36.5m this June for market misconduct. Later in July, regulators further tightened restrictions on the private tutoring sector, such as specifying training time and scopes for those institutions, aiming to curb the chaos and monopoly in the sector.