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

Order of the President of the People’s Republic of China

No.68

The 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 of the People’s Republic of China on August 30, 2007, is hereby promulgated and shall go into effect as of August 1, 2008.

Hu Jintao

President of the People’s Republic of China

August 30, 2007

 

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)

 

Contents

Chapter I General Provisions

Chapter II Monopoly Agreements

Chapter III Abuse of Dominant Market Position

Chapter IV Concentration of Undertakings

Chapter V Abuse of Administrative Power to Eliminate or Restrict Competition

Chapter VI Investigation into Suspected Monopolistic Conducts

Chapter VII Legal Liabilities

Chapter VIII Supplementary Provisions

 

Chapter I

General Provisions

Article 1 This Law is enacted for the purpose of preventing and restraining monopolistic conducts, protecting fair market competition, enhancing economic efficiency, safeguarding the interests of consumers and the interests of the society as a whole, and promoting the healthy development of socialist market economy.

Article 2 This Law is applicable to monopolistic conducts in economic activities within the territory of the People’s Republic of China; and it is applicable to monopolistic conducts outside the territory of the People’s Republic of China, which serve to eliminate or restrict competition on the domestic market of China.

Article 3 For the purposes of this Law, monopolistic conducts include:

(1) monopoly agreements reached between undertakings ;

(2) abuse of dominant market position by undertakings; and

(3) concentration of undertakings that lead, or may lead to elimination or restriction of competition.

Article 4 The State shall formulate and implement competition rules which are compatible with the socialist market economy, in order to improve macro-economic regulation and build up a sound market network which operates in an integrated, open, competitive and orderly manner.

Article 5 Undertakings may, through fair competition and voluntary association, get themselves concentrated according to law, to expand the scale of their business operations and enhance their competitiveness on the market.

Article 6 Undertakings holding a dominant position on the market may not abuse such position to eliminate or restrict competition.

Article 7 With respect to the industries which are under the control of by the State-owned economic sector and have a bearing on the lifeline of the national economy or national security and the industries which exercise monopoly over the production and sale of certain commodities according to law, the State shall protect the lawful business operations of undertakings in these industries, and shall, in accordance with law, supervise and regulate their business operations and the prices of the commodities and services provided by them, in order to protect the consumers’ interests and facilitate technological advance.

The undertakings mentioned in the preceding paragraph shall do business according to law, be honest, faithful and strictly self-disciplined, and subject themselves to public supervision, and they shall not harm the consumers’ interests by taking advantage of their position of control or their monopolistic production and sale of certain commodities.

Article 8 Administrative departments or organizations authorized by laws or regulations to perform the function of administering public affairs may not abuse their administrative power to eliminate or restrict competition.

Article 9 The State Council shall establish an anti-monopoly commission to be in charge of organizing, coordinating and guiding anti-monopoly work and to perform the following duties:

(1) studying and drafting policies on competition;

(2)organizing investigation and assessment of competition on the market as a whole and publishing assessment reports;

(3) formulating and releasing anti-monopoly guidelines;

(4) coordinating administrative enforcement of the Anti-Monopoly Law; and

(5) other duties as prescribed by the State Council.

The composition of and procedural rules for the anti-monopoly commission shall be specified by the State Council.

Article 10 The authorities responsible for enforcement of the Anti-monopoly Law specified by the State Council (hereinafter referred to, in general, as the authority for enforcement of the Anti-monopoly Law under the State Council) shall be in charge of such enforcement in accordance with the provisions of this Law.

The authority for enforcement of the Anti-monopoly Law under the State Council may, in light of the need of work, empower the appropriate departments of the people’s governments of provinces, autonomous regions or municipalities directly under the Central Government to take charge of relevant enforcement of the Anti-monopoly Law in accordance with the provisions of this Law.

Article 11 Trade associations shall tighten their self-discipline, give guidance to the undertakings in their respective trades in lawful competition, and maintain the market order in competition.

Article 12 For the purposes of this Law, undertakings include natural persons, legal persons, and other organizations that engage in manufacturing, or selling commodities or providing services.

For the purposes of this Law, a relevant market consists of the range of the commodities for which, and the regions where, undertakings compete each other during a given period of time for specific commodities or services (hereinafter referred to, in general, as “commodities”).

Chapter II

Monopoly Agreements

Article 13 Competing undertakings are prohibited from concluding the following monopoly agreements:

(1) on fixing or changing commodity prices;

(2)on restricting the amount of commodities manufactured or marketed;

(3)on splitting the sales market or the purchasing market for raw and semi-finished materials;

(4)on restricting the purchase of new technologies or equipment, or the development of new technologies or products;

(5) on joint boycotting of transactions; and

(6)other monopoly agreements confirmed as such by the authority for enforcement of the Anti-monopoly Law under the State Council.

For the purposes of this Law, monopoly agreements include agreements, decisions and other concerted conducts designed to eliminate or restrict competition.

Article 14 Undertakings are prohibited from concluding the following monopoly agreements with their trading counterparts:

(1) on fixing the prices of commodities resold to a third party;

(2) on restricting the lowest prices for commodities resold to a third party; and

(3)other monopoly agreements confirmed as such by the authority for enforcement of the Anti-monopoly Law under the State Council.

Article 15 The provisions of Article 13 and 14 of this Law shall not be applicable to the agreements between undertakings which they can prove to be concluded for one of the following purposes:

(1) improving technologies, or engaging in research and development of new products; or

(2) improving product quality, reducing cost, and enhancing efficiency, unifying specifications and standards of products, or implementing specialized division of production;

(3) increasing the efficiency and competitiveness of small and medium-sized undertakings;

(4) serving public interests in energy conservation, environmental protection and disaster relief;

(5) mitigating sharp decrease in sales volumes or obvious overproduction caused by economic depression;

(6) safeguarding legitimate interests in foreign trade and in economic cooperation with foreign counterparts; or

(7) other purposes as prescribed by law or the State Council.

In the cases as specified in Subparagraphs (1) through (5) of the preceding paragraph, where the provisions of Articles 13 and 14 of this Law are not applicable, the undertakings shall, in addition, prove that the agreements reached will not substantially restrict competition in the relevant market and that they can enable the consumers to share the benefits derived therefrom.

Article 16 Trade associations may not make arrangements for undertakings within their respective trades to engage in the monopolistic practices prohibited by the provisions of this Chapter.

Chapter III

Abuse of Dominant Market Position

Article 17 Undertakings holding dominant market positions are prohibited from doing the following by abusing their dominant market positions:

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

(2) without justifiable reasons, selling commodities at prices below cost;

(3) without justifiable reasons, refusing to enter into transactions with their trading counterparts;

(4) without justifiable reasons, allowing their trading counterparts to make transactions exclusively with themselves or with the undertakings designated by them;

(5) without justifiable reasons, conducting tie-in sale of commodities or adding other unreasonable trading conditions to transactions;

(6) without justifiable reasons, applying differential prices and other transaction terms among their trading counterparts who are on an equal footing; or

(7) other acts of abuse of dominant market positions confirmed as such by the authority for enforcement of the Anti-monopoly Law under the State Council.

For the purposes of this Law, dominant market position means a market position held by undertakings that are capable of controlling the prices or quantities of commodities or other transaction terms in a relevant market, or preventing or exerting an influence on the access of other undertakings to the market.

Article 18 The dominant market position of an undertaking shall be determined on the basis of the following factors:

(1) its share on a relevant market and the competitiveness on the market;

(2) its ability to control the sales market or the purchasing marker for raw and semi-finished materials;

(3) its financial strength and technical conditions;

(4) the extent to which other business mangers depend on it in transactions ;

(5) the difficulty that other undertakings find in entering a relevant market; and

(6) other factors related to the determination of the dominant market position held by an undertaking.

Article 19 The conclusion that an undertaking holds a dominant market position may be deduced from any one of the following circumstances:

(1) the market share of one undertaking accounts for half of the total in a relevant market;

(2) the joint market share of two undertakings accounts for two-thirds of the total, in a relevant market; or

(3) the joint market share of three undertakings accounts for three-fourths of the total in a relevant market.

Under the circumstance specified in Subparagraph (2) or (3) of the preceding paragraph, if the market share of one of the undertakings is less than one-tenths of the total, the undertakings shall not be considered to have a dominant market position.

Where an undertaking that is considered to hold a dominant market position has evidence to the contrary, he shall not be considered to hold a dominant market position.

Chapter IV

Concentration of Undertakings

Article 20 Concentration of undertakings means the following:

(1) merger of undertakings;

(2) control over other undertakings gained by an undertaking through acquiring their shares or assets; and

(3) control over other undertakings or the ability capable of exerting a decisive influence on the same gained by an undertaking through signing contracts or other means.

Article 21 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.

Article 22 In any of the following circumstances, undertakings may dispense with declaration to the authority for enforcement of the Anti-monopoly Law under the State Council:

(1) one of the undertakings involved in the concentration owns 50 percent or more of the voting shares or assets of each of the other undertakings; or

(2) one and the same undertaking not involved in the concentration owns 50 percent or more of the voting shares or assets of each of the undertakings involved in the concentration.

Article 23 To declare concentration to the authority for enforcement of the Anti-monopoly Law under the State Council, the undertakings shall submit the following documents and materials:

(1) declaration in writing;

(2) explanation of the impact to be exerted by the concentration on competition in a relevant market;

(3) concentration agreement;

(4)the financial report of each of the undertakings in the previous fiscal year, which is audited by a certified public accountant firm; and

(5) other documents and materials as specified by the authority for enforcement of the Anti-monopoly Law under the State Council.

In the written declaration shall clearly be stated the titles of the undertakings involved in the concentration, their domiciles, business scopes, the anticipated date for concentration and other matters specified by the authority for enforcement of the Anti-monopoly Law under the State Council.

Article 24 In case documents or materials submitted by the undertakings are incomplete, the undertakings concerned shall supplement the relevant documents or materials within the time limit prescribed by the authority for enforcement of the Anti-monopoly Law under the State Council. If they fail to do so at the expiration of the time limit, they shall be deemed to have made no declaration.

Article 25 The authority for enforcement of the Anti-monopoly Law under the State Council shall, within 30 days from the date it receives the documents or materials submitted by the undertakings which conform to the provisions of Article 23 of this Law, make a preliminary review of the concentration declared by the businesses and make a decision whether to conduct a further review, and notify the undertakings of its decision in writing. Before the authority for enforcement of the Anti-monopoly Law under the State Council makes such decision, the undertakings shall not implement concentration.

Where the authority for enforcement of the Anti-monopoly Law under the State Council decides not to conduct further review or fails to make such a decision at the expiration of the specified time limit, the undertakings may implement concentration.

Article 26 Where the authority for enforcement of the Anti-monopoly Law under the State Council decides to conduct further review, it shall, within 90 days from the date of decision, complete such review, decide whether to prohibit the undertakings from concentrating, and notify them of such decision in writing. Where a decision on prohibiting the undertakings from concentrating is made, the reasons for such decision shall be given. The undertakings shall not implement concentration during the period of review.

Under any of the following circumstances, the authority for enforcement of the Anti-monopoly Law under the State Council may extend the period for review as specified in the preceding paragraph on condition that it notifies the undertakings of the extension in writing, however, the extension shall not exceed the maximum of 60 days:

(1) The undertakings agree to the extension;

(2)The documents or materials submitted by undertakings are inaccurate and therefore need further verification; or

(3) major changes have take place after the undertakings made the declaration.

Where the authority for enforcement of the Anti-monopoly Law under the State Council fails to make a decision at the expiration of the time limit, the undertakings may implement concentration.

Article 27 The following factors shall be taken into consideration in the review of concentration of undertakings:

(1) the market shares of the undertakings involved in concentration in a relevant market and their power of control over the market;

(2) the degree of concentration in relevant market;

(3) the impact of their concentration on assess to the market and technological advance;

(4) the impact of their concentration on consumers and the other relevant undertakings concerned;

(5) the impact of their concentration on the development of the national economy; and

(6) other factors which the authority for enforcement of the Anti-monopoly Law under the State Council deems to need consideration in terms of its impact on market competition.

Article 28 If the concentration of undertakings leads, or may lead, to elimination or restriction of competition, the authority for enforcement of the Anti-monopoly Law under the State Council shall make a decision to prohibit their concentration. However, if the undertakings concerned can prove that the advantages of such concentration to competition obviously outweigh the disadvantages, or that the concentration is in the public interest, the authority for enforcement of the Anti-monopoly Law under the State Council may decide not to prohibit their concentration.

Article 29 Where the authority for enforcement of the Anti-monopoly Law under the State Council does not prohibit the concentration of undertakings, it may decide to impose additional, restrictive conditions for lessening the negative impact exerted by such concentration on competition.

Article 30 The authority for enforcement of the Anti-monopoly Law under the State Council shall, in a timely manner, publish its decisions on prohibition against the concentration of undertakings or its decisions on imposing additional restrictive conditions on the implementation of such concentration.

Article 31 Where a foreign investor participates in the concentration of undertakings by merging and acquiring a domestic enterprise or by any other means, which involves national security, the matter shall be subject to review on national security as is required by the relevant State regulations, in addition to the review on the concentration of undertakings in accordance with the provisions of this Law.

Chapter V

Abuse of Administrative Power to Eliminate or Restrict Competition

Article 32 Administrative departments and other organizations authorized by laws or regulations to perform the function of administering public affairs may not abuse their administrative power to require, or require in disguised form, units or individuals to deal in, purchase or use only the commodities supplied by the undertakings designated by them.

Article 33 Administrative departments and other organizations authorized by laws or regulations to perform the function of administering public affairs may not abuse their administrative power to impede the free flow of commodities between different regions by any of the following means:

(1) setting discriminatory charging items, implementing discriminatory charge rates, or fixing discriminatory prices for non-local commodities;

(2) imposing technical specifications or test standards on non-local commodities, which are different from those on local commodities of similar types, or taking discriminatory technical measures, such as repeated test and repeated certification, against non-local commodities, for the purpose of restricting the access of non-local commodities to the local market;

(3) adopting a special practice of administrative licensing for non-local commodities, for the purpose of restricting the access of non-local commodities to the local market;

(4) erecting barriers or adopting other means to prevent non-local commodities from coming in or local commodities from going out; or

(5) other means designed to impede the free flow of commodities between regions.

Article 34 Administrative departments and other organizations authorized by laws or regulations to perform the function of administering public affairs may not abuse their administrative power to exclude non-local undertakings from participating, or restrict their participation, in local invitation and tendering by imposing discriminatory qualification requirements or assessment standards, or by refusing to publish information according to law.

Article 35 Administrative departments and other organizations authorized by laws or regulations to perform the function of administering public affairs may not abuse their administrative power to exclude non-local undertakings from making investment or restrict their investment locally or exclude them from establishing branch offices locally or restrict their establishment of such offices, by treating them unequally as compared with the local undertakings, or by other means.

Article 36 Administrative departments and other organizations authorized by laws or regulations to perform the function of administering public affairs may not abuse their administrative power to compel undertakings to engage in monopolistic conducts that are prohibited by this Law.

Article 37 Administrative organs may not abuse their administrative power to formulate regulations with the contents of eliminating or restricting competition.

Chapter VI

Investigation into Suspected Monopolistic Conducts

Article 38 The authority for enforcement of the Anti-monopoly Law shall investigate any suspected monopolistic conduct according to law.

All units and individuals shall have the right to report to the authority for enforcement of the Anti-monopoly Law against suspected monopolistic conducts. The latter shall keep the informations confidential.

If the report is made in writing and relevant facts and evidence are provided, the authority for enforcement of the Anti-monopoly Law shall conduct necessary investigation.

Article 39 When conducting investigations into a suspected monopolistic conduct, the authority for enforcement of the Anti-monopoly Law may take the following measures:

(1) conducting inspection of the business places or the relevant premises of the undertakings under investigation;

(2) making inquiries of the undertakings under investigation, the interested parties, or other units or individuals involved, and requesting them to provide relevant explanations;

(3) consulting and duplicating the relevant documents and materials of the undertakings under investigation, the interested parties and other relevant units and individuals, such as bills, certificates, agreements, account books, business correspondence and electronic data;

(4) sealing up or seizing relevant evidence; and

(5) inquiring about the bank accounts of the undertakings under investigation.

For taking the measures specified in the preceding paragraph, a written report shall be submitted for approval to the principal leading person of the authority for enforcement of the Anti-monopoly Law.

Article 40 For the authority for enforcement of the Anti-monopoly Law to conduct investigation into suspected monopolistic conducts, there shall be at least two law-enforcement officers, who shall produce their law enforcement papers.

The law-enforcement officers shall make written records when conducting inquiry and investigation, which shall be signed by the persons after being inquired or investigated.

Article 41 The authority for enforcement of the Anti-monopoly Law and its staff members are obligated to keep confidential the commercial secrets they come to have access to in the course of law enforcement.

Article 42 The undertakings under investigation, the interested parties or other relevant units or individuals shall cooperate with the authority for enforcement of the Anti-monopoly Law in performing their duties in accordance with law, and they shall not refuse to submit to or hinder the investigation conducted by the authority for enforcement of the Anti-monopoly Law.

Article 43 The undertakings under investigation and the interested parties shall have the right to make statements. The authority for enforcement of the Anti-monopoly Law shall verify the facts, justifications and evidence presented by the said undertakings or interested parties.

Article 44 Where after investigation into and verification of the suspected monopolistic conduct, the authority for enforcement of the Anti-monopoly Law concludes that it constitutes a monopolistic conduct, the said authority shall make a decision on how to deal with it in accordance with law and may make the matter known to the public.

Article 45 With respect to the suspected monopolistic conduct which is under investigation by the authority for enforcement of the Anti-monopoly Law, if the undertakings under investigation commits themselves to adopt specific measures to eliminate the consequences of its conduct within a certain period of time which is accepted by the said authority, the authority for enforcement of the Anti-monopoly Law may decide to suspend the investigation. In the decision shall clearly be stated the details of the undertakings’ commitments.

Where the authority for enforcement of the Anti-monopoly Law decides to suspend investigation, it shall oversee the fulfillment of the commitments made by the undertaking. Where the undertaking fulfills its commitments, the authority for enforcement of the Anti-monopoly Law may decide to terminate the investigation.

In any of the following circumstances, the authority for enforcement of the Anti-monopoly Law shall resume investigation:

(1) The undertakings concerned fail to fulfill its commitments;

(2) Material changes have taken place in respect of the facts on which the decision to suspend investigation was based; or

(3) The decision to suspend investigation was based on incomplete or untrue information provided by the undertaking concerned.

Chapter VII

Legal Liabilities

Article 46 Where an undertaking, in violation of the provisions of this Law, concludes and implements a monopoly agreement, the authority for enforcement of the Anti-monopoly Law shall instruct it to discontinue the violation, confiscate its unlawful gains, and, in addition, impose on it a fine of not less than one percent but not more than 10 percent of its sales achieved in the previous year. If such monopoly agreement has not been implemented, it may be fined not more than RMB 500,000 yuan.

If the business manage, on its own initiative, reports to the authority for enforcement of the Anti-monopoly Law about the monopoly agreement reached, and provides material evidence, the said authority may, at its discretion, mitigate, or exempt the undertaking from, punishment.

Where a trade association, in violation of the provisions of this Law, has arranged the undertaking in the trade to reach a monopoly agreement, the authority for enforcement of the Anti-monopoly Law may impose on it a fine of not more than 500,000 yuan. If the circumstances are serious, the administrative department for the registration of public organizations may cancel the registration of the trade association in accordance with law.

Article 47 Where an undertaking, in violation of the provisions of this Law, abuses its dominant market position, the authority for enforcement of the Anti-monopoly Law shall instruct it to discontinue such violation, confiscate its unlawful gains and, in addition, impose on it a fine of not less than one percent but not more than 10 percent of its sales achieved in the previous year.

Article 48 Where the undertakings, in violation of the provisions of this Law, implement concentration, the authority for enforcement of the Anti-monopoly Law under the State Council shall instruct them to discontinue such concentration, and within a specified time limit to dispose of their shares or assets, transfer the business and adopt other necessary measures to return to the state prior to the concentration, and it may impose on them a fine of not more than 500,000 yuan.

Article 49 To determine the specific amount of fines prescribed in Articles 46, 47 and 48, the authority for enforcement of the Anti-monopoly Law shall consider such factors as the nature, extent and duration of the violations.

Article 50 Where the monopolistic conduct of an undertaking has caused losses to another person, it shall bear civil liabilities according to law.

Article 51 Where an administrative development or an organization authorized by laws or regulations to perform the function of administering public affairs abuses its administrative power to eliminate or restrict competition, the department at a higher level shall instruct it to rectify; the leading person directly in charge and the other persons directly responsible shall be given administrative sanctions in accordance with law. The authority for enforcement of the Anti-monopoly Law may submit a proposal to the relevant department at a higher level for handling the matter according to law.

Where otherwise provided for by laws or administrative regulations in respect of administrative departments or organizations authorized by laws or regulations to perform the function of administering public affairs that abuse their administrative power to eliminate or restrict competition, such provisions shall prevail.

Article 52 Where, during the review and investigation conducted by the authority for enforcement of the Anti-monopoly Law, a unit or individual refuses to provide relevant materials or information, or provides false materials or information, or conceals, or destroys, or transfers evidence, or refuses to submit to or obstructs investigation in any other manner, the authority for enforcement of the Anti-monopoly Law shall instruct it/him to rectify, and a fine of not more than 20,000 yuan shall be imposed on the individual and not more than 200,000 yuan on the unit; 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 the individual and not less than 200,000 yuan but not more than one million yuan on the unit; and if a crime is constituted, criminal liability shall be investigated for in accordance with law.

Article 53 Where an undertaking is dissatisfied with the decision made by the authority for enforcement of the Anti-monopoly Law in accordance with the provisions of Article 28 or 29 of this Law, it may first apply for administrative reconsideration according to law; and if it is dissatisfied with the decision made after administrative reconsideration, it may bring an administrative action before the court according to law.

Where an undertaking is dissatisfied with any decision made by the authority for enforcement of the Anti-monopoly Law other than the decisions specified in the preceding paragraph, it may apply for administrative reconsideration or bring an administrative action before the court according to law.

Article 54 Where a staff member of the authority for enforcement of the Anti-monopoly Law abuses his power, neglects his duty, engages in malpractices for personal gain, or divulges commercial secrets he comes to have access to in the course of law enforcement, which constitutes a crime, he shall be investigated for criminal liability according to law; and if his case is not serious enough to constitute a crime, he shall be given an administrative sanction according to law.

Chapter VIII

Supplementary Provisions

Article 55 This law is not applicable to undertakings who exercise their intellectual property rights in accordance with the laws and administrative regulations on intellectual property rights; however, this Law shall be applicable to the undertakings who eliminate or restrict market competition by abusing their intellectual property rights.

Article 56 This Law is not applicable to the association or cooperation by agricultural producers or rural economic organizations in their business activities of production, processing, sale, transportation, storage of farm products, etc.

Article 57 This Law shall go into effect as of August 1, 2008.