China Imposes More Antitrust Fines for Failure to Notify Business Consolidation

On November 20, China’s State Administration of Market Regulation (SAMR) issued decisions imposing fines on companies involved in 43 antitrust cases related to anti-competitive practices. Fined companies include major tech companies Alibaba, Baidu, JD, and Tencent.

According to the SAMR announcement (link in Chinese), in 43 cases, the companies failed to declare business deals involving consolidations (including mergers and acquisitions), which have or may have the effect of eliminating or restricting competition. As a result, they violated Article 21 of the Anti-Monopoly Law, which states that:

When their intended concentration reaches the threshold level as set by the State Council, undertakings shall declare in advance to the authority for enforcement of the Anti-monopoly Law under the State Council; they shall not implement the concentration in the absence of such declaration.

Alibaba and its subsidiaries are involved in nine cases and Tencent was involved in thirteen cases. The fine is 500,000 yuan ($78,300) in each case, which is the current cap for fines.

Antitrust has become an increasingly important policy tool in China. The Chinese government recently upgraded the status of the antitrust bureau from a unit under the SAMR to the National Anti-Monopoly Bureau (which is still under the SAMR framework). The new female director of the Bureau, Gan Lin, is also the deputy director of the SAMR. The new bureau will now have three divisions: One for formulating and carrying out competition policy, and two for antitrust investigation and law enforcement.

This change allows the agency to expand and recruit more personnel and resources. It "attach[es] great importance to anti-monopoly work,” according to Wang Yong, head of the Anti-Monopoly Commission of the State Council. Another expert, Zhu Lijia, professor of the Chinese Academy of Governance, said (link in Chinese) that “the establishment of the National Anti-Monopoly Bureau has given the agency greater authority in rules and policy formulation, international cooperation, and coordination.”

In addition, China is working on amending its Anti-Monopoly Law. Under the proposed amendments, the fine would be up to ten times (5 million yuan) the current cap. The proposal also has new rules for e-commerce platforms and adds “platform operators with dominant market positions using data, algorithms, technology, platform rules and others to create obstacles and imposing unreasonable restrictions to other businesses” as one of the scenarios of companies abusing their dominant market position.