Anti-monopoly Law of the People’s Republic of China Ⅰ

Table of Contents

Chapter I
General Provisions

Chapter II
Monopoly Agreement

Chapter III
Abuse of Dominant Market Status

Chapter IV
Concentration of Business Operators

Chapter V
Abuse of Administrative Power to Eliminate or Restrict Competition

Chapter VI
Investigation into Suspicious Monopolistic Conduct

Chapter VII
Legal Liabilities

Chapter VIII
Supplementary Provisions

Chapter I
General Provisions

Article 1 This Law is enacted for the purpose of guarding against and curbing monopolistic conduct, protecting fair market competition, enhancing economic efficiency, maintaining the consumer interests and the public interests, and promoting the healthy development of socialist market economy.

Article 2 This Law is applicable to monopolistic conduct in economic activities within the territory of the People’s Republic of China. This Law is applicable to monopolistic conduct outside the territory of the People’s Republic of China that has the effect of eliminating or restricting competition on the domestic market of China.

Article 3 The term “monopolistic conduct” as mentioned in this Law includes:

1. Monopoly agreements reached between business operators;

2. Abuse of dominant market status by business operators; and

3. Concentration of business operators that may have the effect of eliminating or restricting competition.

Article 4 The State shall formulate and implement competition rules suitable for the socialist market economy, perfect the macro control, and improve a united, open, competitive and well-ordered market system.

Article 5 Business operators may, through fair competition and voluntary association, concentrate themselves according to law, expand the scale of business operations and enhance market competitiveness.

Article 6 No business operator with dominant market status may abuse that dominant status to eliminate or restrict competition.

Article 7 With respect to the industries controlled by the State-owned economy and concerning the lifeline of national economy and national security or the industries implementing exclusive operation and sales according to law, the State shall protect the lawful business operations conducted by the business operators therein, and shall supervise and control the business operations of and the prices of commodities and services provided by these business operators, so as to protect the consumer interests and facilitate technological progress.

The business operators mentioned in the previous paragraph shall operate according to law, be honest, faithful and strictly self-disciplined, and accept public supervision, and shall not harm the consumer interests by taking advantage of their controlling or exclusive dealing status.

Article 8 No administrative organ or organization empowered by a law or administrative regulation to administer public affairs may abuse its administrative powers to eliminate or restrict competition.

Article 9 The State Council shall establish an Anti-monopoly Committee, which is
responsible for organizing, coordinating and guiding the anti-monopoly work and performs the following functions:

1. Studying and drafting relevant competition policies;

2. Organizing the investigation and assessment of overall competition situations, and releasing an assessment report;

3. Formulating and releasing anti-monopoly guidelines;

5. Coordinating the anti-monopoly administrative law enforcement; and

6. Other functions assigned by the State Council.

The composition and working rules of the Anti-monopoly Committee shall be prescribed by the State Council.

Article 10 The anti-monopoly law enforcement agency designated by the State Council (hereinafter referred to as the Anti-monopoly Law Enforcement Agency under the State Council) shall be responsible for the anti-monopoly law enforcement work.

The Anti-monopoly Law Enforcement Agency under the State Council may, as required by the work, empower corresponding agencies in the people’s governments of the provinces, autonomous regions and municipalities directly under the Central Government to be responsible for the anti-monopoly law enforcement work in accordance with this Law.

Article 11 A trade association shall strengthen the self-discipline within the industry, lead the business operators in the industry toward lawful competition, and maintain the market competition order.

Article 12 The term “business operator” as mentioned in this Law refers to a natural person, legal person, or any other organization that engages in the production or business of commodities or provides services.

The term “relevant market” as mentioned in this Law refers to the commodity scope or territorial scope within which the business operators compete against each other during a certain period of time for specific commodities or services (hereinafter referred to as “commodities”).

Chapter II
Monopoly Agreement

Article 13 The competing business operators are prohibited from reaching any of the following monopoly agreements with each other:

1. Fixing or changing the price of commodities;

2. Restricting the production quantity or sales volume of commodities;

3. Dividing the sales market or the raw material procurement market;

4. Restricting the purchase of new technology or new facilities or the development of new technology or new products;

5. Conducting boycott transactions; or

6. Other monopoly agreements as determined by the Anti-monopoly Law Enforcement Agency under the State Council.

The term “monopoly agreements” as mentioned in this Law refers to agreements, decisions or other concerted behaviors that eliminate or restrict competition.

Article 14 Business operators are prohibited from reaching any of the following monopoly agreements with their trading parties:

1. Fixing the price of commodities for resale to a third party;

2. Restricting the minimum price of commodities for resale to a third party; or

3. Other monopoly agreements as determined by the Anti-monopoly Law Enforcement Agency under the State Council.

Article 15 Where the business operators can prove that a monopoly agreement reached by them falls under any of the following circumstances, the monopoly agreement shall be exempt fromArticles 13 and 14 of this Law:

1. For the purpose of improving technologies, researching and developing new products;

2. For the purpose of upgrading product quality, reducing costs, improving efficiency, unifying product specifications or standards, or carrying out professional labor division;

3. For the purpose of enhancing operational efficiency and reinforcing the competitiveness of small and medium-sized business operators;

4. For the purpose of realizing public interests such as conserving energy, protecting the environment and providing disaster relief, etc.;

5. For the purpose of mitigating the severe decrease of sales volume or obviously excessive production during economic recessions;

6. For the purpose of protecting the justifiable interests in the foreign trade or foreign economic cooperation; or

7. Other circumstances prescribed by the law or the State Council.

Where a monopoly agreement falls under any of the circumstances prescribed in Items 1-5 and is exempt fromArticles 13 and 14 of this Law, the business operators shall also prove that the reached agreement shall not substantially restrict competition in the relevant market and can enable the consumers to share the benefits from the agreement.

Article 16 No trade association may organize the business operators in its own industry to implement the monopolistic conduct as prohibited by this Chapter.

Chapter III
Abuse of Dominant Market Status

Article 17 Business operators with a dominant market status are prohibited from committing any of the following acts of abusing the dominant market status:

1. Selling products at unfairly high prices or buying products at unfairly low prices;

2. Selling products at prices below cost without any justifiable cause;

3. Refusing to trade with a trading party without any justifiable cause;

4. Restricting their trading party so that it may conduct deals exclusively with themselves or with the designated business operators without any justifiable cause;

5. Implementing tie-in sales or imposing other unreasonable trading conditions at the time of trading without any justifiable cause;

6. Applying discriminatory treatments on trading prices or other trading conditions to their trading parties with equal standing without any justifiable cause; or

7. Other forms of abusing the dominant market status as determined by the Anti-monopoly Law Enforcement Agency under the State Council.

The term “dominant market status” as mentioned in this Law refers to a market status held by business operators that can control the price or quantity of commodities or other trading conditions in the relevant market or can block or affect the entry of other business operators into the relevant market.

Article 18 The dominant market status shall be determined according to the following factors:

1. The market share of a business operator and its competitive situation in the relevant market;

2. The ability of the business operator to control the sales market or the raw material procurement market;

3. The financial and technical conditions of the business operator;

4. The extent of reliance on the business operator by other business operators in the transactions;

5. The degree of difficulty for other business operators to enter the relevant market; and

6. Other factors relevant to the determination of the dominant market status of the said business operator.

Article 19 Under any of the following circumstances, a business operator may be presumed to have a dominant market status:

1. The market share of one business operator accounts for 1/2 or more in the relevant market;

2. The joint market share of two business operators accounts for 2/3 or more in the relevant market; or

3. The joint market share of three business operators accounts for 3/4 or more in the relevant market.

Under the circumstance prescribed in Item 2 or 3 of the previous paragraph, if any of the business operators has a market share of less than 1/10, that business operator shall not be considered to have a dominant market status.

A business operator that has been presumed to have a dominant market status shall not be determined as having a dominant market status, provided that there is opposite evidence.

Chapter IV
Concentration of Business Operators

Article 20 The “concentration of business operators” refers to any of the following circumstances:

1. Merger of business operators;

2. A business operator acquires control over other business operators by acquiring their equities or assets; or

3. A business operator acquires control over other business operators or is able to exert a decisive influence on other business operators by contract or any other means.

Article 21 Business operators shall declare in advance the concentration reaching the threshold of declaration prescribed by the State Council to the Anti-monopoly Law Enforcement Agency, and otherwise, they shall not implement the concentration.

Article 22 Under any of the following circumstances, business operators may not file a concentration declaration to the Anti-monopoly Law Enforcement Agency under the State Council:

1. Among all business operators involved in the concentration, one business operator possesses 50% or more of the voting shares or assets of every other business operator; or

2. A business operator not involved in the concentration possesses 50% or more of the voting shares or assets of every business operator that is involved in the concentration.

Article 23 To make a concentration declaration to the Anti-monopoly Law Enforcement Agency under the State Council, business operators shall submit the following documents and materials:

1. A declaration paper;

2. Explanations on the effects of the concentration on the relevant market competition situations;

3. The concentration agreement;

4. The financial and accounting reports for the previous fiscal year of the business operators involved in the concentration, as audited by an accounting firm; and

5. Other documents and materials as required by the Anti-monopoly Law Enforcement Agency under the State Council.

The declaration paper shall contain the names of the business operators involved in the concentration, their domiciles, business scopes, the date on which the concentration is to be implemented, and other matters prescribed by the Anti-monopoly Law Enforcement Agency under the State Council.

Article 24 Where the documents or materials submitted by the business operators are not complete, the business operators concerned shall supplement the relevant documents or materials within the time limit prescribed by the Anti-monopoly Law Enforcement Agency under the State Council. Otherwise, the declaration shall be deemed as not filed.

Article 25 The Anti-monopoly Law Enforcement Agency under the State Council shall, within 30 days upon receipt of the documents and materials submitted by the business operators pursuant toArticle 23 of this Law, conduct a preliminary examination of the declared concentration of business operators, make a decision on whether to conduct further examination or not, and notify the business operators of that decision in written form. The business operators shall not implement the concentration until the Anti-monopoly Law Enforcement Agency under the State Council makes such a decision.

Where the Anti-monopoly Law Enforcement Agency under the State Council makes a decision that no further examination shall be conducted or where the Anti-monopoly Law Enforcement Agency fails to make a decision within the time limit, the business operators may implement the concentration.

Article 26 Where the Anti-monopoly Law Enforcement Agency under the State Council decides to conduct further examination, it shall, within 90 days from the date of decision, complete the examination, make a decision on whether to prohibit the concentration, and notify the business operators concerned of the decision in written form. If the Anti-monopoly Law Enforcement Agency under the State Council decides to prohibit the concentration, it shall explain the reasons. The business operators shall refrain from implementing the concentration within the period of examination.

Under any of the following circumstances, the Anti-monopoly Law Enforcement Agency under the State Council may, after notifying the business operators concerned in written form, extend the time limit of examination as prescribed in the preceding paragraph, with the extension being no more than 60 days:

1. The business operators agree to extend the time limit of examination;

2. The documents or materials submitted by business operators are inaccurate and need further verification; or

3. The relevant circumstances have significantly changed after the declaration by the business operators.

Where the Anti-monopoly Law Enforcement Agency under the State Council fails to make a decision within the time limit, business operators may implement the concentration.

Article 27 The following factors shall be taken into account in the examination of the concentration of business operators:

1. The involved business operators’ market share in the relevant market and their controlling power over that market;

2. The degree of market concentration in the relevant market;

3. The impact of the concentration of business operators on the market access and technological progress;

4. The impact of the concentration of business operators on the consumers and other business operators;

5. The impact of the concentration of business operators on the national economic development; and

6. Other factors that may affect the market competition and shall be considered as deemed by the Anti-monopoly Law Enforcement Agency under the State Council.