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This chapter provides an overview of China’s major antitrust developments in 2021, covering new legislation, conduct enforcement, merger review, private actions, abuse of administrative power, institutional changes and an outlook for 2022.
- Draft amendments to the Anti-Monopoly Law and new antitrust guidelines
- Enhanced scrutiny over digital platforms and key statistics for conduct enforcement
- Developments in merger review (particularly the significantly increased case volume and the first failure-to-file penalty decision with restorative remedies)
- Establishment of the National Anti-Monopoly Bureau
Referenced in this article
- Draft amended Anti-Monopoly Law
- Antitrust Guidelines on the Platform Economy
- Antitrust Guidelines on Active Pharmaceutical Ingredients
- SAMR’s penalty decisions for abusive conduct of Alibaba, Sherpa’s and Meituan
- SAMR’s prohibition decision on the merger between Huya and DouYu
- SAMR’s penalty decisions for Tencent’s acquisition of China Music Corporation
Many have considered 2021 as the ‘year zero’ for China’s antitrust – and this is no exaggeration. China has repeatedly signalled its intention to intensify antitrust scrutiny in scores of leadership meetings – from the Central Economic Working Conference, the foremost meeting on China’s economic planning, to the Sixth Plenary Session of the 19th Central Committee of the Chinese Communist Party, a top forum for Chinese policy directions. Antitrust was invariably part of the agenda of these meetings and is doubtless a key priority for China’s social governance.
Against this background, new rules were promulgated, including the widely anticipated Antitrust Guidelines on the Platform Economy (Platform Economy Guidelines) and the Antitrust Guidelines on Active Pharmaceutical Ingredients (API Guidelines), providing antitrust guidance in these two sectors where China’s antitrust watchdog, the State Administration for Market Regulation (SAMR), has been particularly active. On the merger side, the number of merger notifications has increased dramatically, with legacy issues (such as on VIE notifiability) having been conclusively dealt with. The SAMR also spared no effort in investigating past failure-to-notify transactions – in 2021 alone, the number of the released penalties for failure-to-file exceeded all previous years combined, totalling 95. Among such cases, the SAMR, for the first time ever, imposed restorative remedies. On conduct enforcement, the SAMR imposed its biggest fine ever on Alibaba (18.2 billion yuan), which also marks one of the highest antitrust fines ever imposed globally and shows the SAMR’s determination to effectively regulate digital platforms. Compared with 2020, when the SAMR did not publish any resale price maintenance (RPM) infringements, 2021 saw two RPM penalties, including a record fine in the pharmaceutical sector of 760 million yuan imposed on Yangtze River Pharma, demonstrating continuous enforcement on vertical problems. If these developments still have not alerted companies to comprehensive antitrust compliance, towards year-end, the National People’s Congress published a consultation draft of the amended Anti-Monopoly Law (AML), according to which antitrust violations in China could theoretically lead to a fine of up to 50 per cent of the contravening party’s turnover. In line with escalated enforcement, the Anti-Monopoly Bureau now ascends to a higher level in the administrative hierarchy, becoming a National Bureau. Taking all these into consideration, one should not be surprised if more antitrust developments make headlines in 2022.
In response to the Chinese leadership’s call for improved antitrust regulation, the Antitrust Commission of the State Council released two sector-specific guidelines in 2021. In February, it released the Platform Economy Guidelines and, in November, the API Guidelines. The speed of their implementation is remarkable – the Platform Economy Guidelines allegedly went through the quickest antitrust legislative process ever seen in China, as the draft version was released just four months earlier. In contrast, the four antitrust guidelines published in 2020 (on automobile, intellectual property rights, leniency and commitments) had been shelved for some three years before their final promulgation.
While the API Guidelines are more of a reflection of the SAMR’s past sectoral experience pertaining to API, the Platform Economy Guidelines represent China’s attempts to provide an analytical framework for the novel issues surrounding digital platforms. The two guidelines are also, respectively, the second and third sector-specific guidelines in China, following the Antitrust Guidelines on the Automobile Industry (Automobile Guidelines) released in 2020. In addition to the central-level legislative progress, local Administrations for Market Regulation (AMR) (including those in Beijing, Jiangsu and Sichuan) joined their counterparts in Shanghai, Shandong, Henan, Hebei and Hubei (and many others) in publishing their own antitrust guidance books.
With more antitrust guidance being made available, China is also accelerating the amendment process of its fundamental antitrust law, the AML. On 23 October 2021, the Standing Committee of the National People’s Congress, the highest legislative body in China, released a consultation draft on the proposed amendments to the current AML (the draft amended AML). While there is currently no detailed timetable for official promulgation, considering the wider sentiment for more effective antitrust regulation, the new legislation is expected to be adopted as early as in the first half of 2022.
More substantive details regarding the two guidelines and the draft amended AML are provided below.
Draft amended AML
The key proposed changes with respect to merger control include the following.
Harsher legal liabilities
The maximum fine would be increased from the current 500,000 yuan to 10 per cent of the notifying party’s turnover in the past financial year, noting that if the unreported transaction has no anticompetitive effects, the fine would be up to 5 million yuan; and if the violation is particularly serious (there is no further explanation on this, and in practice may include, for example, if the unreported transaction has resulted in very serious consequences), the fine could be raised to two to five times the original amount. In theory, therefore, the fine to be imposed can be up to 50 per cent of the notifying party’s turnover in the past financial year.
Provision of false information
The maximum fine would be increased for companies from the current 1 million yuan to 1 per cent of the past financial year’s turnover, and for individuals from 100,000 yuan to 500,000 yuan.
Key sectors of focus
The draft amended AML proposes the sectors relating to people’s livelihood, finance, technology and media to be considered as the focus of merger control in China (these sectors are consistent with the SAMR’s previous enforcement focus).
The draft amended AML formally introduces the ‘stop-the-clock’ mechanism, under which the review period could be suspended if:
- parties fail to provide the requested information;
- there are new circumstances or facts that would substantially impact the review of the case; or
- proposed remedies require further assessment and the parties agree to the suspension. The ‘stop-the-clock’ mechanism would avoid the existing practice of ‘pull-and-refile’ when statutory review limits expire in complex cases, but a potential downside is that this may cause uncertainty or delay in the timeline in less complex cases.
The key proposed changes with respect to anticompetitive conduct include the following.
‘Hub-and-spoke’ practice prohibited
The draft amended AML introduced that organising or providing substantial help to reaching monopoly agreements would be prohibited and would be subject to the same penalties as those of monopoly agreements. Lack of coverage for hub-and-spoke practice has been considered a loophole in the current AML.
Effects-based approach to RPM
The draft amended AML for the first time proposed to clarify under the law that RPM, in the absence of anticompetitive effects, would not be prohibited (although the undertakings concerned shall bear the burden of proof that the RPM concerned does not have anticompetitive effects). This would settle the long-standing inconsistency in the approach to RPM in civil proceedings and administrative enforcement.
‘Safe harbour’ available.
The draft amended AML seeks to provide a safe harbour for horizontal and vertical agreements without substantial harm to the competition. However, it remains unclear whether market share thresholds would follow those in the existing Automobile Guidelines and the Antitrust Guidelines in the Field of Intellectual Property Rights (where market share thresholds are 20 per cent for certain horizontal agreements and 30 per cent for certain vertical agreements). It also calls for clarification as to which agreements would be incapable of benefiting from the safe harbour (such as ‘hardcore restrictions’).
The key changes with respect to legal liabilities are shown below:
|Violations||Current AML||Draft amended AML|
|Monopoly agreement concluded but not implemented||Up to 500,000 yuan||Up to 3 million yuan|
|Infringing party has no turnover in the past year||No rules||Up to 5 million yuan|
|Trade associations||Up to 500,000 yuan||Up to 3 million yuan|
|Individuals’ liabilities||No rules||Legal representative, principal responsible person, and any directly responsible person who shall be held personally liable: up to 1 million yuan|
|Obstruction of investigations||Individual: up to 100,000 yuan|
Company: up to 1 million yuan
|Individual: up to 500,000 yuan|
Company: up to 1% of the turnover in the past financial year
Platform Economy Guidelines
The draft version of the Platform Economy Guidelines was published in November 2020, which addressed many current issues involving the platform economy, including platform market definition, antitrust significance of data and algorithms, criteria for determining platforms’ dominance, and typical conduct by platforms that could be anticompetitive. The 2021 final version largely follows the draft version, with notable changes, including:
- market definition – a novel proposal in the draft version providing for the flexibility of not defining relevant markets in certain abusive cases was deleted from the final version;
- exclusion of parallel pricing – the final version expressly excludes pure parallel pricing, which is conducted independently from concerted practices;
- price or other trading conditions parity clause – the final version replaces the term ‘MFN (Most Favoured Nation) Clause’ in the draft version with a broader term of ‘parity clause’. Additionally, the final version adds that apart from vertical anticompetitive agreements, a parity clause may also constitute abusive conduct; and
- essential facility – the draft version considered the circumstances under which both platform and data could constitute essential facilities, whereas the final version has retained only platforms as possibly being considered as essential facilities.
The draft version of the API guidelines was published in October 2020, which attempted to provide API-specific antitrust guidance, including market definition, high-risk agreements and determination of abuse. The 2021 final version also largely follows the draft edition but includes the following notable changes:
- market definition: while the consultation draft stated that a single type of API is generally considered a separate product market, the final version clarifies that different types of APIs may also belong to the same market, if they are substitutable;
- monopoly agreements: the final version includes more types of agreements that are potentially anticompetitive, including agreements between competitors to not produce or sell APIs in exchange for compensation, territorial and customer restrictions, hub-and-spoke agreements; and
- determination of collective dominance: the final version includes factors for determining collective dominance undertakings, including market structure, degree of homogeneity of the concerned products, and degree of coordination between the concerned undertakings.
What distinguished 2021 from preceding years is probably the clear focus on enforcement against platform companies. The passing of the Platform Economy Guidelines heralds the beginning of an unprecedented level of antitrust scrutiny on digital platforms. The two PRM fines also received widespread attention.
In 2021, the SAMR published a total of three abuse decisions against platform companies, which are also the first conduct penalties against digital platforms:
- on 10 April 2021, Alibaba was fined 18.228 billion yuan (4 per cent of its 2019 sales) for abuse of dominance in the China online retail platform market. The SAMR found that Alibaba engaged in an exclusory practice (called ‘choose one from two’ in Mandarin) by prohibiting some of its platform merchants from opening stores and participating in promotional activities on competing platforms. This fine was a record high in China’s antitrust enforcement (previously, the largest was the Qualcomm fine of 6.088 billion yuan in 2015) and was also one of the highest antitrust fines that has been imposed on a single firm around the globe;
- on 12 April 2021, Sherpa’s (an English language-based online food delivery platform) was fined 1.17 million yuan (3 per cent of its 2018 sales) for abuse of its dominance in the Shanghai English language-based online food delivery platform market. Similar to the Alibaba case, Shanghai AMR found that Sherpa’s implemented the ‘choose one from two’ conduct and restricted restaurants from selling on platforms competing with Sherpa’s; and
- on 15 October 2021, Meituan (the largest online food delivery platform in China) was fined 3.442 billion yuan (3 per cent of its 2020 sales) for abuse of its dominance in the China online food delivery platform service market. Similar to the Alibaba and Sherpa cases, the SAMR found that Meituan engaged in exclusory practice and prohibited restaurants from operating simultaneously on competing platforms.
What is also notable is that in both the Alibaba and Meituan cases, the SAMR innovatively issued a stand-alone Administrative Guide Book, giving instructions on the respective company’s future antitrust compliance. Both companies were ordered to submit a rectification plan in accordance with their Administrative Guide Book and submit annual compliance reports in the following three years.
In addition to enforcement on abuse, the authority has also engaged in retrospective merger reviews and issued a large number of fines to tech companies. See the ‘Merger review’ section below for more details.
There were 13 infringement decisions on cartels published in China in 2021. See Table 1 below for a list of these cases. The enforcement agencies were all regional AMRs, which focused on sectors concerning livelihoods, such as construction materials, pharmaceuticals and automobiles.
Table 1: Cartel cases in China published in 2021
|Date of release of penalty decision||Undertakings||Conduct||Enforcement agency||Fine||Conﬁscation of illicit gains|
|29 January 2021||Shanghai Tourism Trade Association and its nine members||Price fixing and output restriction||Shanghai AMR||The trade association was fined 200,000 yuan; its members were each fined 1% of their respective turnover in 2015 (1.61 million yuan in total)||No|
|29 January 2021||Hainan Province Fire Protection Association and its 21 members||Price fixing||Hainan AMR||The trade association was fined 400,000 yuan; its members were each fined 1% of their respective turnover in 2018 (9.08 million yuan in total)||No|
|29 January 2021||Nine driver training schools||Market sharing||Jiangsu AMR||The schools were each fined 2% of their respective turnover in 2016 (1.35 million yuan in total)||No|
|29 January 2021||Insurance Industry Association in Bozhou City||Price fixing||Anhui AMR||The trade association was fined 200,000 yuan||No|
|29 January 2021||Jiaxing Second-hand Vehicle Industry Association and its nine members||Price fixing||Zhejiang AMR||The trade association was fined 300,000 yuan; its members were fined 2%–3% of their respective turnover in 2019 (0.68 million yuan in total); one undertaking was exempted from penalty||Yes|
|9 February 2021||Eight cement producers||Price fixing, output restriction and market sharing||Shandong AMR||The producers were each fined 2% of their respective turnover in 2018 (0.14 billion yuan in total)||Yes|
|18 March 2021||Sichuan Provincial Cement Association and its six members||Price fixing or change||Sichuan AMR||The trade association was fined 500,000 yuan; its members were fined 1%–2% of their respective turnover in 2016 (43.7 million yuan in total); one undertaking was exempted from penalty||Yes|
|18 March 2021||Five liquefied petroleum gas suppliers||Price fixing or changes, and market sharing||Chongqing AMR||The suppliers were each fined 3% of their respective turnover in 2019 (0.07 million yuan in total)||No|
|30 April 2021||Three pharmaceutical companies||Price fixing or changes, and market sharing||Tianjin AMR||The companies were fined 2%–4% of their respective turnover in 2019 (38.99 million yuan in total)||Yes|
|15 July 2021||Two concrete manufacturers||Price fixing or changes, and market sharing||Chongqing AMR||The manufacturers were each fined 5% of their respective turnover in 2018 (23.13 million yuan in total)||No|
|16 July 2021||Three active pharmaceutical ingredient producers||Price fixing or changes, and market sharing||Jiangsu AMR||The producers were fined 1%–5% of their respective turnover in 2018 (9.76 million yuan in total)||Yes|
|19 August 2021||Fengcheng City Premixed Concrete Association and its eight members||Price fixing or changes, output restriction, market sharing and joint boycotting||Jiangxi AMR||The trade association was fined 500,000 yuan; its members were fined 1%–8% of their respective turnover in 2018 (27.59 million yuan in total); one undertaking was exempted from penalty||Yes|
|18 November 2021||NYK Automotive Logistics (China) and two other logistics firms||Price fixing and market sharing||Zhejiang AMR||The firms were fined 1%–2% of their respective turnover in 2017 (2.23 million yuan in total); NYK Automotive Logistics (China) was exempted from 90% of the penalty||No|
The SAMR and its local counterparts were more active in enforcement against RPM in 2021. There were two published infringement decisions concerning RPM in 2021, compared with none in 2020. In addition to being the highest fine in the pharmaceutical sector, the RPM fine for Yangtze River Pharma also marked a record high in penalty amount of all RPM cases, being over four times the previous highest RPM fine (imposed on Changan Ford Automobile (162.8 million yuan)).
Table 2: RPM cases in China published in 2021
|Date of release of penalty decision||Undertakings||Relevant products||Relevant geographical market||Conduct||Enforcement agency||Fine||Conﬁscation of illicit gains|
|15 April 2021||Yangtze River Pharmaceutical Group Co Ltd||Key types of drugs||China||Price fixing and price restriction||SAMR||The company was fined 3% of its turnover in 2018, amounting to 0.76 billion yuan||No|
|27 September 2021||Bull Group Co Ltd||Converter, wall switch sockets and other civil electrical products||China||Price fixing and price restriction||Zhejiang AMR||The company was fined 3% of its turnover in 2020, amounting to 0.29 billion yuan||No|
Abuse of dominance
There were 11 published infringement decisions concerning abuse of dominance in 2021. Apart from digital platforms, the utilities and pharmaceutical sectors remain the focus of enforcement. Table 3 below lists all the abuse cases in China published in 2021.
Table 3: Cases concerning abuse of dominance in China published in 2021
|Release date||Undertakings||Relevant market||Abusive conduct||Enforcement agency||Fine||Conﬁscation of illicit gains|
|22 January 2021||Simcere Pharmaceutical Group Limited (an API distributor)||Product market –sales of batroxobin API|
Geographic market – China
|Refusal to deal||SAMR||The undertaking was fined 2% of its turnover in 2019, amounting to 100.7 million yuan||No|
|18 February 2021||Mengzi Sitong Taixing Water Supply Co Ltd (a local public tap water supplier)||Product market – urban public tap water supply services|
Geographic market – a designated area of Mengzi City, Yunnan province
|Tying and imposing unreasonable trading conditions||Yunnan AMR||The undertaking was fined 6% of its turnover in 2018, amounting to 2.5 million yuan||No|
|1 April 2021||Fushun County Natural Gas (a local piped natural gas supplier)||Product market – pipeline gas supply services|
Geographic market – seven towns in Sichuan province
|Tying and imposing unreasonable trading conditions||Sichuan AMR||The undertaking was fined 1% of its turnover in 2019, amounting to 1.66 million yuan||No|
|10 April 2021||Alibaba Group Holding Limited (an online retail platform)||Product market – online retail platform services|
Geographic market – China
|Exclusive dealing||SAMR||The undertaking was fined 4% of its turnover in 2019, amounting to 18.2 billion yuan||No|
|12 April 2021||Shanghai Sherpa’s Commerce Development Co Ltd (an English language-based online food delivery platform)||Product market – English language-based online food delivery platform services|
Geographic market – Shanghai City
|Exclusive dealing||Shanghai AMR||The undertaking was fined 3% of its turnover in 2018, amounting to 1.17 million yuan||No|
|30 August 2021||Shaanxi Water Group Jingyang Water Supply Co Ltd (a local public tap water supplier)||Product market – urban public tap water supply services|
Geographic market – the urban area of Jingyang County, Shannxi province
|Tying and imposing unreasonable trading conditions||Shaanxi AMR||The undertaking was fined 2% of its turnover in 2017, amounting to 0.16 million yuan||Yes|
|31 August 2021||China National Aviation Fuel Group Limited Yunnan Branch (an aviation kerosene supplier)||Product market – aviation kerosene supply and filing services|
Geographic market – Yunnan province
|Tying and imposing unreasonable trading conditions||Yunnan AMR||The undertaking was fined 1% of its turnover in 2018, amounting to 2.34 million yuan||Yes|
|8 October 2021||Meituan (an online food delivery platform)||Product market – online food delivery platform services|
Geographic market – China
|Exclusive dealing||SAMR||The undertaking was fined 3% of its turnover in 2020, amounting to 3.44 billion yuan||No|
|29 October 2021||Shangqiu Xinxianfeng Pharmaceutical (an API distributor)||Product market – phenol API|
Geographic market – China
|Excessive pricing||Henan AMR||The undertaking was fined 1% of its turnover in 2016, amounting to 9.40 million yuan||Yes|
|18 November 2021||Yixing Towngas Co Ltd (a local piped natural gas supplier)||Product market – piped natural gas (PNG) supply and pipeline installation services|
Geographic market – Yixing city, Jiangsu province
|Excessive pricing, exclusive dealing and imposing unreasonable trading conditions||Jiangsu AMR||The undertaking was fined 2% of its turnover in 2018, amounting to 34.86 million yuan||Yes|
|18 November 2021||Nanjing NingWei Medicine Co Ltd (an API distributor)||Product market – injection-use calcium gluconate APIs|
Geographic market – China
|Excessive pricing and imposing unreasonable trading conditions||Shanghai AMR||The undertaking was fined 4% of its turnover in 2019, amounting to 4.04 million yuan||Yes|
In 2021, the SAMR conditionally cleared four transactions and prohibited one transaction. While the numbers for conditional and prohibition cases do not deviate materially from those of prior years, this does not mean that the SAMR has no capacity strain. Notably, there was a significantly increased volume of simple cases (615 in 2021 compared with 373 in 2020, representing a 65 per cent increase). In addition to routine cases, the SAMR also had to handle a large ramp-up in past failure-to-file transactions (largely due to the confirmed notifiability for VIE transactions and an enduring focus on technology companies).
Remarkably, 2021 also saw China’s first case with restorative remedies. While restorative remedies are always at the regulator’s disposal (see, eg, article 48 of the AML and article 57 of the Interim Provisions on the Review of the Concentration of Undertakings), they had never previously been utilised.
The only transaction prohibited in 2021 was Huya/DouYu. This was the third proposed merger blocked by the Chinese antitrust authority since the AML came into force in 2008, and the first concerning the platform economy. It was also the first prohibition decision imposed on concentrations between purely domestic Chinese companies.
Huya and DouYu are the two largest players in the China videogame livestreaming market. Huya is solely controlled by Tencent, while DouYu is jointly controlled by Tencent and its founder. Tencent is active in the upstream market for online game operations. The SAMR noted that the merger would significantly strengthen Tencent’s market power in the downstream videogame livestreaming market, and that the merged entity would have abilities and incentives to implement a two-way vertical foreclosure in both the upstream online game market and the downstream videogame livestreaming market. Given the lack of effective commitments, the SAMR decided to block the merger.
The conditional cases in 2021 were:
- Eaton Hydraulics/Danfoss;
- MTS/Illinois Tool Works; and
- Intel Storage/SK Hynix.
In three of these four conditional clearance cases (other than Acacia/Cisco), it was horizontal overlap rather than vertical issues that prompted the SAMR’s concerns.
With respect to remedies, the SAMR continued its preference for behavioural remedies and imposed purely behavioural remedies in all cases except Eaton Hydraulics/Danfoss.
Regarding the SAMR’s inclination of ‘wait and see’, in two of the four conditional cases (ie, Acacia/Cisco and Intel Storage/SK Hynix), China was the last jurisdiction to clear the transactions.
Failure to file, and gun-jumping
There were 95 failure-to-file penalty decisions published by the SAMR in 2021, a large hike compared with 2020 (14 cases). The SAMR imposed a fine of 500,000 yuan in most of the cases, being the highest possible fine under the current AML.
In line with the enforcement focus on the digital sector, companies subject to the pecuniary penalties include most major digital platforms such as Alibaba, Baidu, JD.com, Suning, Tencent, Didi, Meituan, etc. Some of these companies proactively reported their antitrust violations to the SAMR after they conducted internal checks and became aware of the illegal practice.
Also, 2021 saw the first failure-to-file decision in China where anticompetitive effects were identified and restorative remedies were imposed. On 24 July 2021, the SAMR fined Tencent for failing to notify its acquisition of a 61.64 per cent equity interest in China Music Corporation (CMC). The SAMR held that the relevant market was the China market for online music streaming, in which both Tencent and CMC are active. The SAMR identified several concerns with the transaction, including increased market share, decrease of the number of major competitors and heightened barriers to market entry. Eventually, the SAMR imposed a 500,000 yuan fine as well as certain remedies to restore competition, including restricting Tencent from: reaching exclusive agreements with upstream music copyright owners; asking for more favourable terms from upstream copyright owners; and raising rivals’ costs by excessive advance payments to upstream copyright owners. Furthermore, Tencent was ordered to notify the SAMR of any future transactions that meet the Chinese filing thresholds or that may eliminate or restrict competition, and to report other transactions as part of its annual reports to the SAMR.
With antitrust enforcement gaining force, China also saw more antitrust litigations with ground-breaking features.
SAMR’s abuse decision challenged before the Beijing High Court
On 22 November 2021, the Beijing High Court heard the administrative lawsuit brought by Weifang Puyunhui Pharmaceutical (Puyunhui) and Shandong Kanghui Medicine (Kanghui) (collectively, the Plaintiffs) against the SAMR. The case concerns an appeal against the SAMR’s abuse decision released in April 2020, which imposed a then record-breaking fine of 204.5 million yuan on three distributors of calcium gluconate APIs, including the Plaintiffs, for selling at an unfairly high price and imposing unfair trading conditions. The Plaintiffs first filed their administrative appeals individually to Beijing No. 1 Intermediate Court, where the cases were heard in December 2020. In 2021, the cases were transferred to the Beijing High Court and combined as a joint action. This is reportedly the first case where the SAMR has been sued for an antitrust penalty decision.
First monopoly suit involving refusal to data access accepted
In November 2021, Hunan Eefung Software (Eefung), a data analysis company, brought a lawsuit before the Changsha Intermediate People’s Court against Weibo, which runs China’s largest microblogging platform. Eefung collects data obtained from platforms including Weibo and provides monitoring and analysis services for government authorities. Eefung alleged that Weibo had refused to grant Eefung access to Weibo’s data and therefore had abused its dominant position in the Chinese microblogging market. The lawsuit showcased that the stance on antitrust brought about by administrative enforcement appears to have raised public awareness of the availability of antitrust-based private remedies.
Essential facilities doctrine debated in patent monopoly lawsuit
On 23 April 2021, Ningbo Intermediate People’s Court (Ningbo Court) issued its ruling against Hitachi Metals Ltd (Hitachi Metals) in a civil lawsuit initiated by Ningbo Ketian Magnet Co Ltd (Ketian) concerning Hitachi Metals’ abuse of dominance by refusal to deal. Hitachi Metals is one of the largest sintered neodymium-iron-boron (NdFeB) magnets manufacturers in the world and holds all the relevant patents required to manufacture NdFeB magnets. Ketian claimed that Hitachi Metals abused its dominance by refusing to license to Chinese manufacturers the relevant patent portfolio that is essential to manufacture NdFeB magnets.
In its assessment of abuse, Ningbo Court applied the essential facilities doctrine to the patent licensing context, finding that Hitachi Metals’ patents constituted essential facilities and refusal to license such patents would constitute abuse of dominant position. In particular, the relevant patents were indispensable and therefore the third-party manufacturers of NdFeB magnets relied heavily on such patents. This is probably the first time that the essential facilities doctrine has been applied in a Chinese antitrust ligation. Hitachi Metals appealed the judgment of Ningbo Court to the Supreme People’s Court, which heard the case on 23 November 2021. The final judgment is yet to be released.
Abuse of administrative power
There were 38 published cases related to the abuse of administrative power in 2021 (compared with eight in 2020). The relevant sectors included gas supply, construction, farm machinery, education, finance and transportation. Following the joint announcement by the SAMR and other ministries to enhance the fair competition review on 9 May 2020, and the enactment of Detailed Rules for the Implementation of the Fair Competition Review System on 29 June 2021, enforcement against the abuse of administrative power was strengthened in 2021.
Institutional changes: establishment of the National Anti-Monopoly Bureau
On 18 November 2021, the Anti-Monopoly Bureau under the SAMR was escalated to an upper level in the country’s administrative hierarchy to become the National Anti-Monopoly Bureau. The new bureau consists of three newly established divisions:
- the Competition Policy Co-ordination Division, which is tasked with promoting the implementation of competition policies and the coordination of antitrust-related work;
- Anti-Monopoly Enforcement Division I, which is in charge of monopoly agreements, abuse of market dominance, and abuse of intelligence property rights to eliminate and restrict competition; and
- Anti-Monopoly Enforcement Division II, which takes responsibility for merger control filings.
This organisational revamp highlights China’s determination to expand antitrust enforcement manpower in order to further strengthen the antitrust clampdown.
Outlook for 2022
It is expected that China will continue its antitrust momentum in 2022; in particular, the passing of the AML amendment will be a milestone. If the amended AML is adopted in its draft form, more companies would file their transactions to err on the side of caution and cease conducting suspicious antitrust violations. This also means that more guidance, certainty and transparency will be required from the authorities. It remains to be seen how the Chinese regulator will strike a balance between the competing interests of a robust antitrust check over the economy, and the corporate side seeking more legal certainty and lower compliance costs.
 Guidance of Beijing Municipality on Antitrust Compliance in the Field of Platform Economy (2021), the full text is available at: http://scjgj.beijing.gov.cn/zwxx/scjgdt/202112/P020211209348968988087.pdf; Guidance of Jiangsu Province on Antitrust Compliance of Undertakings, the full text is available at: http://scjgj.jiangsu.gov.cn/art/2021/9/22/art_78968_10023737.html; Guidance of Sichuan Province on Antitrust Compliance of Undertakings, the full text is available at: http://scjgj.sc.gov.cn/scjgj/c104492/2021/2/26/3caf9c6e16f4450aa371fb007a492bde.shtml.
 The full decision is available at: https://www.samr.gov.cn/fldj/tzgg/xzcf/202104/t20210409_327698.html.
 The full decision is available at: https://www.samr.gov.cn/fldj/tzgg/xzcf/202104/t20210412_327737.html.
 The full decision is available at: https://www.samr.gov.cn/fldj/tzgg/xzcf/202110/t20211008_335367.html.
 The proposed merger between HUYA Inc. (Huya) and DouYu International Holdings Limited (DouYu). The full decision is available at: https://www.samr.gov.cn/fldj/tzgg/ftjpz/202107/t20210708_332421.html.
 The proposed acquisition of Acacia Communications Inc (Acacia) by Cisco Systems, Inc. (Cisco). The full decision is available at: https://www.samr.gov.cn/fldj/tzgg/ftjpz/202101/t20210119_325338.html.
 The proposed acquisition of part of Eaton Corporation’s business (Eaton Hydraulics) by Danfoss A/S (Danfoss). The full decision is available at: https://www.samr.gov.cn/fldj/tzgg/ftjpz/202106/t20210607_330289.html.
 The proposed acquisition of MTS Systems Corporation (MTS) by Illinois Tool Works Inc (Illinois Tool Works). The full decision is available at: https://www.samr.gov.cn/fldj/tzgg/ftjpz/202111/t20211118_336984.html.
 The proposed acquisition of part of Intel Corporation’s business (Intel Storage) by SK Hynix Inc (SK Hynix). The full decision is available at: https://www.samr.gov.cn/fldj/tzgg/ftjpz/202112/t20211222_338317.html.
 The full decision is available at: https://www.samr.gov.cn/fldj/tzgg/xzcf/202107/t20210724_333020.html.
 Weifang Puyunhui Pharmaceutical Co Ltd and Shandong Kanghui Medicine Co Ltd v the State Administration of Market Regulation, Beijing High People’s Court.
 Hunan Eefung Software Co Ltd and Hunan Eefung Software Co Ltd Beijing Branch v Beijing Weimeng Chuangke Network Technology Co Ltd, Changsha Intermediate People’s Court.
 Ningbo Ketian Magnet Co Ltd v Hitachi Metals Ltd, Ningbo Intermediate People’s Court.
 Notice from Four Departments Including the State Administration for Market Regulation regarding Further Promoting Fair Competition Review. The full text is available at: http://www.gov.cn/zhengce/zhengceku/2020-05/15/content_5511833.htm.