24 September, 2018
In our last alert, we reported on the Chinese government’s consolidation of its three antitrust enforcers, previously within National Development and Reform Commission (NDRC), the State Administration for Industry and Commerce (SAIC), and the Ministry of Commerce of China (MOFCOM) into a single authority, the State Administration for Market Regulation (SAMR). The detailed personnel assignments and division structures of the Anti-monopoly Bureau within SAMR have now been revealed. This alert looks at what to expect from the SAMR in terms of its future enforcement, and summarises SAMR's organisational structure and leadership.
What to expect
More active antitrust enforcement. Even though the final structure and leadership have only just been announced, SAMR has continued to enforce the AML since it was first established, imposing penalties for price fixing in respect of "cargo tallying" services (services provided to shipping lines and shippers to verify maritime cargo) and tug boat operations, as well as resale price maintenance in respect of natural gas supplies.
Industry focus. Madam Gan Lin, the vice minister of SAMR assigned to oversee antitrust enforcement, has issued a statement that SAMR will strengthen enforcement in the following industries: information technology and telecoms, integrated circuits, pharmaceuticals and biology, agriculture and chemical and innovative materials.
Maintaining the prominent position in global merger review. We expect SAMR to continue to cement China’s growing relationship as the “third pillar” of global merger control. SAMR has continued to pursue companies for failure to notify reportable transactions. Since SAMR took over the merger review function in April, it has published three penalty decisions against failure to notify.
Adapting and publishing unified anti-monopoly regulations and guidelines. Six antitrust-related draft guidelines remain pending since the drafts were published for consultation. SAMR is expected to carry on the task of drafting and publishing the unified antitrust enforcement guidelines to provide practical guidance for market players.
SAMR's organisational structure and leadership
SAMR consists of 27 bureau/departments covering various functions of market regulation, such as enterprise registration, AML enforcement, price regulation and anti-unfair competition enforcement, product quality supervision and inspection, food safety supervision and inspection, and leading the State Drug Administration and the State Intellectual Property Office, etc.
The Anti-monopoly Bureau within SAMR (the AMB) is responsible for the enforcement of the AML, including merger control, investigations and abuses of administrative monopoly power. Besides the antitrust enforcement functions, the Anti-monopoly Bureau is also responsible for implementing competition policy, steering the fair competition review mechanism, providing supplementary rules and/or guidelines of the AML, coordinating the international cooperation and communication for antitrust enforcement, providing guidance to Chinese companies in their overseas antitrust investigations or litigation, as well as undertaking the daily work of the Anti-monopoly Commission under the State Council.
Structure of the Anti-monopoly Bureau of SAMR
The AMB will have ten divisions, organised along functional lines, with three dedicated to merger review, three to antitrust enforcement and three dedicated to policy work, and international and intergovernmental outreach, etc.
Please click no the image to enlarge.
Leadership of the Anti-monopoly Bureau of SAMR
The AMB will be headed by Mr. Wu Zhenguo, former head of the Anti-monopoly Bureau of MOFCOM. He will be assisted by an inspector and three deputy directors general:
Please click on the image to enlarge.
Other important bureau within SAMR
The Price Supervision and Anti-Unfair Competition Bureau is established for price supervision and anti-unfair competition initiatives. Some former antitrust officials from NDRC have been housed in this bureau. The Price Supervision and Anti-Unfair Competition Bureau does not have jurisdiction overlaps with the Anti-monopoly Bureau. While the latter has jurisdiction over certain price-related violations within the scope of AML, the Price Supervision and Anti-Unfair Competition Bureau focuses on enforcement of the Price Law and Anti-Unfair Competition Law of China.
The Inspection and Enforcement Bureau (the Enforcement Bureau) focuses on inspections and enforcement and is responsible for nationwide and cross-province violations. However, antitrust investigations, including dawn raids, are expected to be handled by the Antitrust Bureau, with the Enforcement Bureau cooperating with its probes.
Conclusion
As mentioned in our previous alert, it is expected that the institutional reform will be positive resolving the previous ambiguity in responsibility of the NDRC and SAIC, providing a one-stop shop for immunity/leniency applicants, harmonising and unifying the enforcement approach, and better utilising limited personnel and allowing increased industry specialisation.
For further information, please contact:
Stephen Crosswell, Partner, Baker & McKenzie
stephen.crosswell@bakermckenzie.com
