LAWS AND REGULATIONS

Anti-monopoly Law of the People's Republic of China

(Adopted at the 29th Meeting of the Standing Committee of the Tenth National People's Congress on August 30, 2007) [3] 

Catalogue

Chapter I General rules

Chapter II Monopoly Agreement

Chapter III Abuse of Market dominance

Chapter IV Concentration of business operators

Chapter V Abuse of administrative power to exclude and restrict competition

The sixth chapter investigates the suspected monopolistic behavior

Chapter VII Legal liability

Chapter VIII Supplementary Provisions

Chapter I General rules

Article one

This Law is enacted with a view to preventing and stopping monopolistic acts, protecting fair market competition, improving the efficiency of economic operation, safeguarding the interests of consumers and the public, and promoting the healthy development of the socialist market economy.

Article 2

This Law shall apply to monopoly acts in economic activities within the territory of the People's Republic of China; This Law shall apply to monopolistic acts outside the territory of the People's Republic of China that have an effect on the exclusion or restriction of competition in the domestic market.

Article 3

Monopolistic practices under this Law include:

(1) The business operator has reached a monopoly agreement;

(2) the business operator abuses its dominant market position;

(3) Concentration of business operators that has or may have the effect of excluding or restricting competition.

Article 4

The state formulates and implements competition rules compatible with the socialist market economy, improves macro-control, and improves a unified, open, competitive and orderly market system.

Article 5

Business operators may, through fair competition and voluntary association, implement concentration in accordance with the law, expand the scale of operation and improve market competitiveness.

Article 6

Have market dominant position Business operators may not abuse their dominant market position to exclude or restrict competition.

Article 7

The State shall protect the lawful business activities of the operators of the industries which are controlled by the state-owned economy and which are related to the lifeline of the national economy and national security, and the industries which are subject to monopoly and monopoly in accordance with the law, and shall supervise and regulate the business activities of the operators and the prices of their commodities and services in accordance with the law, so as to safeguard the interests of consumers and promote technological progress.

Business operators in the industries specified in the preceding paragraph shall operate in accordance with the law, be honest and trustworthy, exercise strict self-discipline, accept supervision by the public, and may not use their controlling position or their exclusive monopoly position to harm the interests of consumers.

Article 8

Administrative organs and organizations authorized by laws and regulations to manage public affairs shall not abuse administrative power to exclude or restrict competition.

Article 9

Establishment of The State Council antitrust committee，responsible for organizing, coordinating and guiding anti-monopoly work, and performing the following duties:

(1) To study and formulate relevant competition policies;

(2) Organize the investigation and assessment of the overall market competition situation, and publish evaluation reports;

(3) To formulate and publish anti-monopoly guidelines;

(4) To coordinate anti-monopoly administrative law enforcement;

(5) Other duties prescribed by The State Council.

Anti-monopoly Commission of The State Council Its composition and working rules shall be formulated by The State Council.

Article 10

The agencies designated by The State Council to undertake anti-monopoly law enforcement duties (hereinafter referred to as the anti-monopoly law enforcement agencies of The State Council) shall be responsible for anti-monopoly law enforcement in accordance with the provisions of this Law.

The anti-monopoly law enforcement agency of The State Council may, according to the needs of its work, authorize the corresponding agencies of the people's governments of provinces, autonomous regions and municipalities directly under the Central Government to be responsible for the relevant anti-monopoly law enforcement work in accordance with the provisions of this Law.

Article 11

The trade association shall strengthen the self-discipline of the trade, guide the operators of the trade to compete according to law, and maintain the order of market competition.

Article 12

The term "business operator" as used in this Law refers to natural persons, legal persons and other organizations engaged in the production or operation of commodities or the provision of services.

The term "relevant market" as used in this Law refers to the commodity scope and geographical scope in which business operators compete for specific commodities or services (hereinafter referred to as commodities) within a certain period of time.

Chapter II Monopoly Agreement

Article 13

It is prohibited to enter into any of the following monopoly agreements between operators having a competitive relationship:

(1) Fixing or changing commodity prices;

(2) limiting the quantity of a commodity produced or sold;

(3) Segmentation of the sales market or raw material procurement market;

(4) restricting the purchase of new technology or new equipment or the development of new technology or new products;

(5) Joint boycott of transactions;

(6) Other monopoly agreements identified by the anti-monopoly law enforcement agency of The State Council.

The term "monopoly agreement" as used in this Law refers to an agreement, decision or other cooperative act that excludes or restricts competition.

Article 14

Operators are prohibited from entering into the following monopoly agreements with their trading counterparts:

(1) Fixing the price for resale of commodities to third parties;

(2) setting a minimum price for the resale of commodities to third parties;

(3) Other monopoly agreements identified by the anti-monopoly law enforcement agency under The State Council.

Article 15

The provisions of Articles 13 and 14 of this Law shall not apply if the business operator can prove that the agreement reached falls under any of the following circumstances:

(1) to improve technology, research and develop new products;

(2) in order to improve product quality, reduce costs and increase efficiency, unify product specifications and standards or implement specialized division of labor;

(3) to improve the efficiency of small and medium-sized business operators and enhance their competitiveness;

(4) to achieve social and public interests such as energy conservation, environmental protection, disaster relief and assistance;

(5) due to economic depression, in order to alleviate the serious decline in sales volume or obvious excess production;

(6) to safeguard legitimate interests in foreign trade and foreign economic cooperation;

(7) other circumstances prescribed by law and The State Council.

Where the provisions of Articles 13 and 14 of this Law do not apply in the cases of items 1 to 5 of the preceding paragraph, the business operator shall also prove that the agreement reached will not seriously restrict competition in the relevant market and will enable consumers to share the resulting benefits.

Article 16

A trade association may not organize the operators of its own trade to engage in any monopoly act prohibited by this Chapter.

Chapter III Abuse of Market dominance

Article 17

An operator with a dominant market position is prohibited from engaging in the following acts of abuse of its dominant market position:

(1) selling commodities at unfairly high prices or buying commodities at unfairly low prices;

(2) selling a commodity at a price below its cost without a valid reason;

(3) refusing to transact with the counterparty without valid reasons;

(4) restricting the counterparty of a transaction to transacting only with it or with a designated operator without a valid reason;

(5) linking commodities without a valid reason, or attaching other unreasonable trading conditions to the transaction;

(6) applying differential treatment to trading counterparts with the same conditions in terms of trading prices and other trading conditions without justifiable reasons;

(7) other acts of abuse of dominant market position identified by the anti-monopoly law enforcement agency of The State Council.

The term "dominant market position" as used in this Law refers to a market position in which a business operator is able to control the price, quantity or other trading conditions of commodities in the relevant market, or is able to hinder or affect the ability of other business operators to enter the relevant market.

Article 18

The determination that a business operator has a dominant market position shall be based on the following factors:

(1) the market share of the business operator in the relevant market and the competition situation in the relevant market;

(2) the business operator's ability to control the sales market or the raw material procurement market;

(3) the financial resources and technical conditions of the business operator;

(4) the degree of dependence of other business operators on the business operator in the transaction;

(5) the degree of difficulty for other business operators to enter the relevant market;

(6) other factors related to the determination of the dominant market position of the business operator.

Article 19

Under any of the following circumstances, an operator may be presumed to have a dominant market position:

(1)The market share of a business operator in the relevant market reaches half;

(2) The combined market share of the two business operators in the relevant market reaches two-thirds;

(3) The combined market share of the three operators in the relevant market reaches three-quarters.

Under the circumstances provided for in items 2 and 3 of the preceding paragraph, where the market share of one of the operators is less than one-tenth, the operator shall not be presumed to have a dominant market position.

A business operator presumed to have a dominant market position shall not be deemed to have a dominant market position if there is evidence that it does not have a dominant market position.

Chapter IV Concentration of business operators

Article 20

Concentration of business operators refers to the following situations:

(1) Merger of business operators;

(2) A business operator obtains the right of control over another business operator by acquiring equity or assets;

(3) A business operator obtains the right of control over another business operator or is able to exert a decisive influence over another business operator through contracts or other means.

Article 21

Where the concentration of business operators meets the reporting standards prescribed by The State Council, the business operators shall report to the anti-monopoly law enforcement agency under The State Council in advance, and the concentration shall not be implemented if the concentration fails to report.

Article 22

Under any of the following circumstances, the concentration of business operators may not be reported to the anti-monopoly law enforcement agency under The State Council:

(1) A business operator participating in the concentration owns more than 50 percent of the shares or assets with voting rights of each other business operator;

(2) More than 50 percent of the shares or assets with voting rights of each business operator participating in the concentration are owned by the same business operator not participating in the concentration.

Article 23

To declare concentration to the anti-monopoly law enforcement agency of The State Council, a business operator shall submit the following documents and materials:

(1) a declaration form;

(2) a description of the impact of concentration on the relevant market competition;

(3) centralized agreements;

(4) the financial accounting report of the business operator participating in the concentration for the previous fiscal year audited by an accounting firm;

(5) other documents and materials prescribed by the anti-monopoly law enforcement agency under The State Council.

The declaration shall specify the name, domicile, business scope, scheduled date for the implementation of the concentration and other matters prescribed by the anti-monopoly law enforcement agency of The State Council.

Article 24

Where the documents and materials submitted by the business operator are incomplete, the business operator shall submit the documents and materials within the time limit prescribed by the anti-monopoly law enforcement agency under The State Council. Business operators who fail to submit documents and materials within the time limit shall be deemed to have failed to declare.

Article 25

The anti-monopoly law enforcement agency under The State Council shall, within 30 days from the date of receipt of the documents and information submitted by the business operators in compliance with the provisions of Article 23 of this Law, conduct a preliminary examination of the declared concentration of business operators, make a decision on whether to conduct further examination, and notify the business operators in writing. Before the anti-monopoly law enforcement agency of The State Council makes a decision, business operators shall not implement concentration.

Where the anti-monopoly law enforcement agency of The State Council decides not to conduct further review or fails to make a decision within the time limit, the business operators may implement concentration.

Article 26

Where the anti-monopoly law enforcement agency of The State Council decides to conduct further review, it shall, within 90 days from the date of the decision, complete the review, make a decision on whether to prohibit the concentration of business operators, and notify the business operators in writing. When a decision is made to prohibit the concentration of business operators, the reasons shall be stated. During the period under review, business operators may not implement centralization.

Under any of the following circumstances, the anti-monopoly law enforcement agency under The State Council may, upon written notice to the business operator, extend the period of review provided for in the preceding paragraph, but the maximum period shall not exceed 60 days:

(1) The business operator agrees to extend the examination period;

(2) The documents and information submitted by the business operator are inaccurate and need to be further verified;

(3) Major changes have occurred in the relevant circumstances after the business operator's declaration.

If the anti-monopoly law enforcement agency of The State Council fails to make a decision within the time limit, the business operators may implement concentration.

Article 27

In examining the concentration of business operators, the following factors shall be taken into account:

(1) The market share of the operators participating in the concentration in the relevant market and their control over the market;

(2) The market concentration of the relevant market;

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

(4) The impact of the concentration of business operators on consumers and other relevant business operators;

(5) The impact of the concentration of business operators on the development of the national economy;

(6) Other factors affecting market competition that the anti-monopoly law enforcement agency of The State Council considers should be taken into account.

Article 28

Where the concentration of business operators has or may have the effect of excluding or restricting competition, the anti-monopoly law enforcement agency of The State Council shall make a decision to prohibit the concentration of business operators. However, if a business operator can prove that the positive impact of the concentration on competition is significantly greater than the negative impact, or is in line with the public interest, the anti-monopoly law enforcement agency of The State Council may make a decision not to prohibit the concentration of business operators.

Article 29

Where concentration of business operators is not prohibited, the anti-monopoly law enforcement agency of The State Council may decide to attach restrictive conditions to reduce the adverse effects of concentration on competition.

Article 30

The anti-monopoly law enforcement agency under The State Council shall make public in a timely manner the decision to prohibit the concentration of business operators or the decision to impose restrictive conditions on the concentration of business operators.

Article 31

Where the acquisition of a domestic enterprise by a foreign capital or participation in the concentration of business operators by other means involves national security, in addition to the examination of the concentration of business operators in accordance with the provisions of this Law, a national security examination shall also be conducted in accordance with the relevant provisions of the State.

Chapter V Abuse of administrative power to exclude and restrict competition

Article 32

Administrative organs and organizations authorized by laws and regulations to manage public affairs may not abuse their administrative power to restrict or restrict in disguised form the operation, purchase and use of commodities provided by their designated business operators.

Article 33

Administrative organs and organizations authorized by laws and regulations with the function of managing public affairs may not abuse their administrative power to carry out the following acts to hinder the free circulation of commodities between regions:

(1) Setting discriminatory fee items, applying discriminatory fee standards, or setting discriminatory prices for commodities from other places;

(2) Setting different technical requirements and inspection standards for commodities of foreign origin from those of similar local commodities, or adopting discriminatory technical measures such as repeated inspection and repeated certification for commodities of foreign origin to restrict the entry of commodities of foreign origin into the local market;

(3) Adopt administrative licenses specifically for non-local commodities to restrict non-local commodities from entering the local market;

(4) To set up checkpoints or take other means to impede the entry of non-local commodities or the transport of local commodities;

(5) Other acts that impede the free circulation of commodities between regions.

Article 34

Administrative organs and organizations authorized by laws and regulations to manage public affairs shall not abuse their administrative power to exclude or restrict foreign business operators from participating in local tendering and bidding activities by setting discriminatory qualification requirements, evaluation standards or not releasing information according to law.

Article 35

Administrative organs and organizations authorized by laws and regulations with the function of managing public affairs shall not abuse administrative power, adopt unequal treatment with local business operators, or exclude or restrict foreign business operators from investing or setting up branches locally.

Article 36

Administrative organs and organizations authorized by laws and regulations to manage public affairs may not abuse their administrative power to force business operators to engage in monopoly acts as provided for in this Law.

Article 37

An administrative organ may not abuse its administrative power to formulate provisions that exclude or restrict competition.

The sixth chapter investigates the suspected monopolistic behavior

Article 38

The anti-monopoly law enforcement agency shall investigate the suspected monopolistic behavior in accordance with the law.

Any unit or individual shall have the right to report any suspected monopoly act to the anti-monopoly law enforcement agency. The anti-monopoly law enforcement agency shall keep the confidentiality of the informant.

Where a report is made in writing and relevant facts and evidence are provided, the anti-monopoly law enforcement agency shall conduct necessary investigations.

Article 39

The anti-monopoly law enforcement agency may take the following measures to investigate suspected monopoly acts:

(1) entering the business premises of the business operator under investigation or other relevant places for inspection;

(2) interrogating the business operator under investigation, interested persons or other relevant units or individuals and requesting them to explain the relevant information;

(3) to consult and copy documents, agreements, accounting books, business correspondence, electronic data and other documents and materials of business operators under investigation, interested persons or other relevant units or individuals;

(4) sealing up and detaining relevant evidence;

(5) inquire the bank account of the operator.

To take the measures prescribed in the preceding paragraph, a written report shall be submitted to the principal person in charge of the anti-monopoly law enforcement agency and approved.

Article 40

When the anti-monopoly law enforcement agency investigates suspected monopoly acts, there shall be no less than two law enforcement officers, and they shall present their law enforcement documents.

Law enforcement officers conducting inquiries and investigations shall make written records, which shall be signed by the person being questioned or investigated.

Article 41

The anti-monopoly law enforcement agency and its staff shall have the obligation to keep confidential the trade secrets they come to know in the course of law enforcement.

Article 42

Business operators, interested parties or other relevant units or individuals under investigation shall cooperate with the anti-monopoly law enforcement agency in performing their duties according to law, and may not refuse or obstruct the investigation of the anti-monopoly law enforcement agency.

Article 43

Business operators and interested persons under investigation have the right to state their opinions. The anti-monopoly law enforcement agency shall verify the facts, reasons and evidence presented by the business operator under investigation and the interested party.

Article 44

The anti-monopoly law enforcement agency, after investigation and verification of the suspected monopoly conduct, considers that it constitutes monopoly conduct, shall make a decision to deal with it according to law, and may announce it to the public.

Article 45

For the suspected monopoly conduct investigated by the anti-monopoly law enforcement agency, where the business operator under investigation undertakes to take specific measures to eliminate the consequences of the conduct within the time limit recognized by the anti-monopoly law enforcement agency, the anti-monopoly law enforcement agency may decide to suspend the investigation. The decision to suspend the investigation shall specify the specific content of the undertaking of the business operator under investigation.

Where the anti-monopoly law enforcement agency decides to suspend the investigation, it shall supervise the performance of undertakings by business operators. If the business operator fulfills its commitment, the anti-monopoly law enforcement agency may decide to terminate the investigation.

Under any of the following circumstances, the anti-monopoly law enforcement agency shall resume the investigation:

(1) The business operator fails to fulfill its commitment;

(2) There has been a major change in the facts on which the decision to suspend the investigation was made;

(3) The decision to suspend the investigation was made on the basis of incomplete or untrue information provided by the operator.

Chapter VII Legal liability

Article 46 Where a business operator, in violation of the provisions of this Law, reaches and implements a monopoly agreement, the anti-monopoly law enforcement agency shall order him to cease his illegal act, confiscate his illegal income and impose a fine of not less than one percent but not more than ten percent of the sales volume of the previous year; If the monopoly agreement reached has not been implemented, a fine of not more than 500,000 yuan may be imposed.

Where a business operator takes the initiative to report to the anti-monopoly law enforcement agency the relevant information on the conclusion of a monopoly agreement and provides important evidence, the anti-monopoly law enforcement agency may, at its discretion, reduce or exempt the business operator from punishment.

Where a trade association, in violation of the provisions of this Law, organizes the operators of its own trade to reach a monopoly agreement, the anti-monopoly law enforcement agency may impose a fine of not more than 500,000 yuan; If the circumstances are serious, the public organization registration administration department may revoke the registration according to law.

Article 47 Where a business operator, in violation of the provisions of this Law, abuses its dominant market position, the anti-monopoly law enforcement agency shall "order it to stop the illegal act, confiscate the illegal income" and impose a fine of not less than 1 percent but not more than 10 percent of the previous year's sales.

Article 48 Where a business operator violates the provisions of this Law by carrying out a concentration, the anti-monopoly law enforcement agency of The State Council shall order it to stop carrying out the concentration, dispose of its shares or assets within a time limit, transfer its business within a time limit, and take other necessary measures to restore the situation before the concentration, and may be fined not more than 500,000 yuan.

Article 49 When determining the specific amount of the fine provided for in Articles 46, 47 and 48 of this Law, the anti-monopoly law enforcement agency shall take into account factors such as the nature, extent and duration of the illegal act.

Article 50 A business operator who commits a monopoly act and causes losses to others shall bear civil liability according to law.

Article 51 Where an administrative organ or an organization authorized by laws or regulations to manage public affairs abuses its administrative power and carries out an act of excluding or restricting competition, the higher organ shall order it to make corrections; The persons directly in charge and other persons directly responsible shall be given sanctions according to law. The anti-monopoly law enforcement agency may put forward proposals to the relevant higher authorities for handling the case according to law.

Where laws and administrative regulations provide otherwise for the treatment of acts of excluding or restricting competition by abuse of administrative power by administrative organs and organizations authorized by laws and regulations with functions of managing public affairs, such provisions shall apply.

Article 52 If an anti-monopoly law enforcement agency refuses to provide relevant materials or information, or provides false materials or information, or conceals, destroys or transfers evidence, or commits other acts of refusing or obstructing the investigation, the anti-monopoly law enforcement agency shall order the individual to make corrections, and may impose a fine of not more than 20,000 yuan on the individual. The unit may be imposed a fine of not more than 200,000 yuan; If the circumstances are serious, a fine of not less than 20,000 yuan but not more than 100,000 yuan shall be imposed on individuals and a fine of not less than 200,000 yuan but not more than one million yuan shall be imposed on units; If the case constitutes a crime, criminal responsibility shall be investigated according to law.

Article 53 If an anti-monopoly law enforcement agency refuses to accept the decision made in accordance with Articles 28 and 29 of this Law, it may first apply for administrative reconsideration according to law; If an administrative reconsideration decision is not accepted, an administrative suit may be brought in accordance with law.

If a party is not satisfied with the decision made by the anti-monopoly law enforcement agency other than the one provided for in the preceding paragraph, it may apply for administrative reconsideration or bring an administrative lawsuit according to law.

Article 54 Where a staff member of an anti-monopoly law enforcement agency abuses his power, neglects his duty, engages in malpractices for personal gain or divulges a business secret he has learned in the course of law enforcement, if the case constitutes a crime, he shall be investigated for criminal responsibility according to law; If the case does not constitute a crime, he shall be punished according to law.

Chapter VIII Supplementary Provisions

Article 55 This Law shall not apply to the exercise of intellectual property rights by business operators in accordance with the provisions of laws and administrative regulations concerning intellectual property rights. However, this Law shall apply to acts of business operators that abuse intellectual property rights to exclude or restrict competition.

Article 56 This Law shall not apply to joint or cooperative acts of agricultural producers and rural economic organizations in the production, processing, marketing, transportation, storage and other business activities of agricultural products.

Article 57 This Law shall come into force as of August 1, 2008.