On October 12, 2015, the Central Committee of the Communist Party of China and the State Council issued the Several Opinions on Promoting the Price Mechanism Reform(“Opinions”). The Opinions call for strengthening the market price supervision and the antitrust enforcement, and target to establish a scientific, orderly, and transparent price supervision regime and antitrust enforcement mechanism by 2020.
Following the Opinions by the central government, many provincial governments (such as provinces of Henan, Hebei, Hunan, Hubei, Inner Mongolia, etc.) have recently issued their own guidelines to promote price mechanism reform and enhance the antitrust enforcement.
These provincial guidelines mainly focus on the following aspects:
According to the Opinions, the price mechanism reform will focus on the industries closely related to people’s livelihood (e.g. energy, healthcare, public transportation, environment, and education, etc.). The Opinions request to loosen the government’s control on the pricing in these sectors, but in the meantime to enhance the antitrust enforcement.
Provincial guidelines show the same concerns on these key industries. For example, the guidelines of Hebei province have particularly requested the anti-monopoly enforcement agencies (“AMEAs”) to enhance the enforcement on the competition behaviors of large-scale companies and in certain key industries, such as commercial banking, automobile sales, intellectual properties, and insurance industry.
Coordination among different AMEAs
The AMEAs responsible for the enforcements on anticompetitive agreements and abuse of dominance are the State Administration for Industry and Commerce (“SAIC”), the National Development and Reform Commission (“NDRC”), and their respective local AMEAs. Some local guidelines (e.g. Hunan, Inner Mongolia) also encourage AMEAs to explore closer cooperation with each other. It is therefore expected that there will be more antitrust enforcement by local authorities, or even simultaneous enforcement in several provinces.
Proactive Antitrust Enforcement
Some local guidelines also request AMEAs to be more proactive in collecting relevant evidence to open antitrust investigations, or even to prevent the price-related monopolistic behavior in advance by conducting market survey. It is therefore possible that there will be more antitrust enforcement on the AMEA’s own initiative, in addition to investigations triggered by complaints by customers or competitors.
Publication of Antitrust Cases
Some local guidelines specifically request the AMEAs to publish their antitrust cases in accordance with the relevant laws and regulations. In fact, many AMEAs have already been doing the same. We expect to see more cases being published by local AMEAs following the request in the guidelines.
Since 2015, AMEAs have underlined in many ways that the antitrust enforcement will be a “new normal” in China. The Opinions and the local guidelines confirm such attitude of the government again. It is likely that there will be more local antitrust enforcement, particularly relating to the key industries set out in the Opinions. Companies should be cautious with antitrust compliance in their daily operation and pay close and constant attention to the trend of antitrust enforcement by Chinese authorities.