We have released a Newsletter, titled “Impact of COVID-19 on Companies from the perspective of the PRC Anti-Monopoly Law” on 31 March 2020 to provide information on the impact of COVID-19 on companies from the perspective of the PRC Anti-Monopoly Law (“AML”).
To maintain a fair competition market environment, better serve the prevention and control of the epidemic, and support business operators to resume operation and production, the State Administration for Market Regulation (“SAMR”) posted on its website an Announcement on Supporting the Prevention and Control of Epidemic Situations and Resuming Work and Production and Anti-Monopoly Law Enforcement (“Announcement”) on 5 April 2020.
This Newsletter is an update to our Newsletter of 31 March 2020 briefing on the content of the Announcement.
a) Online submission of application documents
Article 1 of the Announcement states that during the period of Covid-19 the submission of application documents for notification of concentrations should not be done onsite. The application documents should be submitted by the notifying parties to the Anti-Monopoly Bureau (“AMB”) of the SAMR online or by post. Similarly, the AMB’s documents and decisions will be delivered by the AMB to the applicants either via email or by fax.
b) Establishment of a “green review channel” by the SAMR
(1) The SAMR has established a “green review channel” for such concentrations which fall in the areas below, including:
(2) In order to facilitate the merger control review process in the areas mentioned in Item 1 b) above, the SAMR will:
It should be noted that according to the Announcement only the concentrations falling in the areas mentioned in Item 1 b) (1) above can follow the “green review channel” procedure during the period of Covid-19. Thus, this should not be mixed up with or mistaken with the simple case procedure for merger control notification purposes under the AML.
a) Exemptions to be granted by the SAMR
According to Article 2 of the Announcement, the SAMR will grant exemptions according to the AML to those cooperation agreements concluded by business operators, which are beneficial to technological progress, improving efficiency, realizing the public interest and protecting the interests of consumers, including any cooperation agreements which are for the purposes of:
(1) improving technology and R&D of new products in the fields of pharmaceutical vaccines, testing technology, medical devices and protective equipment, etc.;
(2) unifying product specifications and standards or implementing specialized division of labor in order to improve the quality of prevention and control materials, reduce costs and increase efficiency;
(3) implementing social and public benefits such as disaster relief; or
(4) improving the operating efficiency and strengthening the competitiveness of small and medium-sized business operators.
According to the publicly available decisions of the PRC competition authorities, before Covid-19 there have been no monopoly agreements as stated in Articles 13 and 14 of the AML which have been exempted according to Article 15 of the AML. Therefore, the “exemptions” to be granted by the SAMR to the agreements mentioned in Item 2 a) above will be a noteworthy change in competition law enforcement practices during the period of Covid-19.
b) Adoption of stricter and faster competition law enforcement methods
According to Article 3 of the Announcement, the SAMR and provincial level AMRs shall adopt stricter and faster law enforcement methods towards monopolistic behaviors which impede the prevention and control of epidemic situations and the resumption of work and/or production, and harm the interests of consumers.
(1) The focus of competition law enforcement of the SAMR and provincial level AMRs will be on the following areas, including:
(2) The focus of law enforcement of the SAMR and provincial level AMRs will be on the following monopoly agreements in the areas mentioned in Item 2 b) above, including monopoly agreement which are for purposes of:
(3) According to Article 3 of the Announcement, those typical cases of violation will be disclosed to the public in a timely manner by the PRC competition authorities.
a) According to Article 3 of the Announcement, the SAMR and provincial level AMRs will also focus their enforcement powers in the areas mentioned in Item 2 b) (1) above under the circumstances where the dominant business operators abuse their dominance by conducting any of the following activities, including:
b) Same, according to Article 3 of the Announcement, those typical cases of violation will be disclosed to the public in a timely manner by the PRC competition authorities.
Further, according to Article 6 of the Announcement, during the period of Covid-19, the SAMR will establish a quick response system, i.e. if any unit or individual finds that a business operator is engaged in monopoly agreements, abuse of market power or other suspected monopolistic behaviors, or an administrative authority or organization authorized by laws and regulations with the function of managing public affairs has abused administrative power to exclude or restrict competition, it may file a complaint or a report to the SAMR. The SAMR will get in touch with the contact person within two working days and actively provide response to the concerned business operators and consumers.