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23 March, 2018
On 13 March 2018, the Chinese government released plans to amalgamate the three agencies currently responsible for antitrust enforcement into a single department. On 17 March 2018, the national legislators, the National People's Congress, voted and approved the plans.
China currently has three separate antitrust enforcement agencies: the Antimonopoly Bureau of the Ministry of Commerce, the Price Supervisions and Antimonopoly Bureau of the National Development and Reform Commission and the Anti-unfair Competition Bureau of the State Administration of Industry and Commerce. MOFCOM is responsible for merger review, NDRC oversees price-related anti-competitive conduct and arrangements and the SAIC deal with non-price-related anti-competitive conduct and arrangements. The consolidated authority will combine the antitrust investigation functions and merger review functions of the three existing agencies, and consolidate their personnel into a single department. The department will be housed within the national administration for market supervision, a newly created administration within the State Council.
The plans are part of a larger reshuffle of the state ministries that will see the number of full ministries reduced by 8 to 26, and the number of reporting agencies reduced by seven.
The plans have a number of potential benefits for businesses active in China and their legal advisers:
- Resolving ambiguity between the responsibilities of the NDRC and SAIC: under the current model, it is not always clear whether an infringement will fall under NDRC or SAIC jurisdiction. In practice, alleged infringements often include both price related and non-price related aspects.
- One stop shop for immunity/leniency applicants: at present, both the NDRC and SAIC have their own separate immunity/leniency policies. Presently, it is not always a straightforward decision as to which agency to apply to (bearing in mind the lack of a clear distinction in their responsibilities). The emergence of a single agency removes this problem. Certainty is critical to ensuring potential whistle-blowers have the right incentives to use a leniency programme. International experience suggests that an effective leniency regime is key to driving antitrust enforcement. Reforms which remove uncertainty are therefore likely to benefit both the business community and the agency.
- Resolving ambiguity in rules/guidelines: at present, NDRC and SAIC have adopted overlapping guidance on how the Antimonopoly Law should be enforced. For example, both agencies published drafts of antitrust guidelines on intellectual property rights[1]. The emergence of a single agency will likely lead to a single set of guidance for how the AML is to be interpreted and applied, providing greater certainty to businesses and their advisers.
- Better division of labour/industry specialisation: the plan may allow for a more effective deployment of resources in respect of antitrust enforcement and merger control in China. It is no secret that MOFCOM in particular has faced resourcing issues, with an ever increasing workload. In the first 10 months of 2017, MOFCOM had received 360 notifications in total. Pooling resources as part of a consolidated authority may better allow for the development of industry expertise and experience (in line with the reorganisation of MOFCOM's Antimonopoly Bureau that took place in September 2015).
It is still unclear who will lead the consolidated authority. Also, it remains to be seen how the existing internal rules of the three agencies regarding to antitrust enforcement will be consolidated.
[1]NDRC published its draft antitrust guidelines on intellectual property rights on 31 December, 2015 for public comments and SAIC published its seventh edition of draft antitrust guidelines on intellectual property rights on 5 February, 2016 for public consultation.
For further information, please contact:
Stephen Crosswell, Partner, Baker & McKenzie
stephen.crosswell@bakermckenzie.com
