Recently, Decree No.66 of the State Administration of Market Supervision and Administration promulgated regulations prohibiting abuse of dominant market position, which came into effect on April 15, 2023.
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Article 2 The State Administration of Market Supervision and Administration (hereinafter referred to as the General Administration of Market Supervision) is responsible for the unified anti-monopoly law enforcement of the abuse of market dominance. In accordance with the provisions of Article 13, paragraph 2, of the Anti-monopoly Law, the General Administration of
Market Supervision authorizes the market supervision and administration departments of provinces, autonomous regions and municipalities directly under the Central Government (hereinafter referred to as the provincial market supervision departments) to be responsible for the anti-monopoly law enforcement of the abuse of market dominance within their respective administrative areas. The anti-monopoly law enforcement agencies referred to in
these Provisions include the General Administration of Market Supervision and the provincial market supervision departments. Article
3 The General Administration of Market Supervision shall be responsible for investigating and dealing with the following acts of abusing a dominant market position:
(1) acts that cross provinces, autonomous regions and municipalities directly under the Central Government;
(2) acts that are complicated or have a significant impact on the whole country;
(3) The General Administration of Market Supervision deems it necessary to investigate and deal with it directly. The General Administration of Market Supervision may designate provincial market supervision departments to investigate and deal with the abuse of dominant market position listed in the
preceding paragraph. When the
provincial market supervision department investigates and punishes the abuse of dominant market position according to its authorization, it shall report to the General Administration of Market Supervision in a timely manner if it finds that it does not fall within the scope of investigation and punishment of the department, or if it falls within the scope of investigation and punishment of the department, but it is necessary to be investigated and punished by the General Administration of Market Supervision. Article
4 When investigating and dealing with the abuse of dominant market position, the Anti-monopoly Law Enforcement Agency shall treat all business operators equally. Article
5 Relevant markets refer to the scope of commodities and regions in which operators compete for specific commodities or services (hereinafter referred to as commodities) within a certain period of time, including relevant commodity markets and relevant regional markets.
To define the relevant market, demand substitution analysis should be carried out from the perspective of demanders. Supply substitution should also be considered when the competitive constraints of supply substitution on the behavior of operators are similar to demand substitution. To
define the relevant commodity market, from the perspective of demand substitution, we can consider the response of demanders to changes in commodity prices and other factors, the characteristics and uses of commodities, and sales channels. From the perspective of supply substitution, we can consider the difficulty of other operators to change production, the market competitiveness of the goods provided after the change of production and other factors.
To define the relevant commodity market in the economic field of the platform, we can define the relevant commodity market according to the commodities on one side of the platform, or define the platform as a whole as a relevant commodity market according to the multilateral commodities involved in the platform, or define multiple relevant commodity markets separately, and consider the relationship and impact between the relevant commodity markets. To
define the relevant regional market, from the perspective of demand substitution, we can consider the transportation characteristics and costs of commodities, the actual areas where most demanders choose commodities, and the trade barriers between regions. From the perspective of supply substitution, we can consider the timeliness and feasibility of commodities supplied by other regional operators. Article
6 a dominant market position refers to a market position in which an operator has the ability to control the price, quantity or other trading conditions of commodities in the relevant market, or to hinder or affect the ability of other operators to enter the relevant market. The term "other trading terms" as mentioned in
this Article refers to other factors that can have a substantial impact on market transactions in addition to commodity prices and quantities, including commodity varieties, commodity quality, payment terms, delivery methods, after-sales services, trading options, technical constraints, etc. The term "being able to hinder or affect the entry of other operators into the relevant market" as mentioned in
this article includes excluding other operators from entering the relevant market, or delaying other operators from entering the relevant market within a reasonable period of time, or causing other operators to enter the relevant market, but the cost of entry is greatly increased, and they are unable to compete effectively with existing operators. Article
7 In accordance with Item 1 of Article 23 of the Anti-monopoly Law, the market share of an operator in the relevant market may be determined by taking into account the proportion of the sales amount, sales volume or other indicators of a specific commodity of the operator in the relevant market within a certain period of time.
To analyze the competition in the relevant market, factors such as the development of the relevant market, the number and market share of existing competitors, market concentration, the degree of commodity differentiation, innovation and technological changes, sales and procurement patterns, and potential competitors can be taken into account. Article
8 According to Item 2 of Article 23 of the Anti-monopoly Law, the ability of an operator to control the sales market or the raw material procurement market may be determined by considering the ability of the operator to control the upstream and downstream markets of the industrial chain, to control the sales channels or procurement channels, and to influence or determine the price, quantity, contract duration or other transactions. As well as the ability to obtain raw materials, semi-finished products, spare parts, related equipment and other resources necessary for the production and operation of enterprises. Article
9 In accordance with Item 3 of Article 23 of the Anti-monopoly Law, the financial and technical conditions of an operator may be determined by taking into account the scale of assets, profitability, financing capacity, research and development capacity, technical equipment, technological innovation and application capacity, and intellectual property rights owned by the operator. And how and to what extent the financial and technical conditions can promote the business expansion of the operator or consolidate and maintain its market position. Article
10 In accordance with Item 4 of Article 23 of the Anti-monopoly Law, the degree of dependence of other operators on the operator in the transaction may be determined by taking into account such factors as the transaction relationship between other operators and the operator, the volume of transactions, the duration of transactions, and the difficulty of turning to other trading counterparts within a reasonable time. Article
11 In accordance with Item 5 of Article 23 of the Anti-monopoly Law, factors such as market access, difficulty in obtaining necessary resources, control of procurement and sales channels, scale of capital investment, technical barriers, brand dependence, user switching costs and consumption habits may be taken into account in determining the degree of difficulty for other operators to enter the relevant market. Article
12 According to Article 23 of the Anti-monopoly Law and Articles 7 to 11 of these Provisions, the operators in the field of platform economy are determined to have a dominant market position. Factors such as competition characteristics of related industries, business model, transaction amount, transaction quantity, number of users, network effect, lock-in effect, technical characteristics, market innovation, ability to control traffic, ability to master and process relevant data, and market power of operators in related markets can also be considered. Article
13 When determining that two or more operators have a dominant market position, in addition to the factors specified in Articles 7 to 12 of these Provisions, such factors as the consistency of operators'behavior, market structure, transparency of relevant markets and homogeneity of relevant commodities shall also be taken into account. Article
14 Operators with dominant market positions are prohibited from selling commodities at unfair high prices or purchasing commodities at unfair low prices. The
determination of "unfair high price" or "unfair low price" may take into account the following factors:
(1) whether the selling price or purchase price is significantly higher or lower than price at which other operators sell or purchase the same or comparable commodity under the same or similar market conditions;
(2) Whether the selling price or purchasing price is obviously higher or lower than price of the same or comparable commodities sold or purchased by the same operator in other areas under the same or similar market conditions;
(3) Whether the selling price is raised or the purchase price is lowered beyond the normal range under the condition that the cost is basically stable;
(4) Whether the range of price increase of the sold commodities is obviously higher than range of cost increase, or whether the range of price reduction of the purchased commodities is obviously higher than range of cost reduction of the trading counterpart;
(Five) other relevant factors that need to be considered.
In the field of platform economy, we can also consider the cost correlation between the relevant markets in the multilateral market involved in the platform and its rationality.
To determine that the market conditions are the same or similar, factors such as business model, sales channels, supply and demand, regulatory environment, transaction links, cost structure, transaction situation and platform type should be taken into account. Article
15 An operator with a dominant market position shall be prohibited from selling commodities at a price lower than cost without justified reasons.
When determining whether a commodity is sold at a price below cost, the key consideration shall be whether the price is lower than average variable cost. Average variable cost is the cost per unit that varies with the quantity of goods produced. In the field of platform economy, we can also consider the cost correlation between the relevant markets in the multilateral market involved in the platform and its rationality.The "legitimate reasons" mentioned in
this Article include:
(1) disposal of fresh and live commodities, seasonal commodities, commodities whose validity period is about to expire or overstocked commodities at a reduced price;
(2) sale of commodities at a reduced price for paying off debts, changing the line of production or closing the business;
(3) sales promotion for the purpose of promoting new commodities within a reasonable period of time;
(4) other reasons that can justify the act. Article
16 It is prohibited for a business operator with a dominant market position to refuse to conduct transactions with its trading counterpart by the following means without justified reasons:
(1) substantially reducing the number of existing transactions with its trading counterpart;
(2) delaying or interrupting the existing transactions with its trading counterpart;
(3) Refusing to conduct new transactions with the trading counterpart;
(4) Making it difficult for the trading counterpart to conduct transactions with the trading counterpart by setting restrictive conditions such as unacceptable prices for the trading counterpart, repurchasing commodities from the trading counterpart, and conducting other transactions with the trading counterpart;
(5) Refusing the trading counterpart to use its necessary facilities under reasonable conditions in the production and operation activities.
When determining that a business operator has abused its dominant market position in accordance with item 5 of the preceding paragraph, Comprehensive consideration shall be given to such factors as the feasibility of investing in or developing and constructing the facility with reasonable investment, the degree of dependence of the trading counterpart on the facility for effectively carrying out production and operation activities, the possibility of the operator providing the facility and the impact on its own production and operation activities. The "legitimate reasons" referred to in
this Article include:
(1) The transaction cannot be conducted due to objective reasons such as force majeure;
(2) The transaction counterpart has a bad credit record or the business situation deteriorates, which affects the safety of the transaction;
(3) The transaction with the transaction counterpart will cause improper impairment of the interests of the operator;
(4) The transaction counterpart clearly expresses or actually fails to comply with the fair, reasonable and non-discriminatory rules of the platform;
(5) Other reasons that can prove the legitimacy of the act. Article
17 It is prohibited for a business operator with a dominant market position to engage in any of the following restrictive transactions without a proper reason:
(1) Restricting the trading counterpart to conduct transactions only with it;
(2) Restricting the trading counterpart to conduct transactions only with the business operator designated by it;
(3) The counterpart of the restricted transaction shall not conduct transactions with specific operators. The act of
engaging in the above-mentioned restricted transactions may be directly restricted, or may be restricted in disguised form by means of punitive or incentive measures. The term "legitimate reasons" as mentioned in
this Article includes:
(1) necessary to meet product safety requirements;
(2) necessary to protect intellectual property rights, business secrets or data security;
(3) necessary to protect specific investments made for transactions;
(4) Necessary to maintain the reasonable business model of the platform;
(5) Other reasons that can prove the legitimacy of the act. Article
18 It is prohibited for an operator with a dominant market position to tie in the sale of commodities without justified reasons or to attach other unreasonable trading conditions to the transaction:
(1) Violating trading practices, consumption habits or ignoring the functions of commodities. Bundle sale or combined sale of different commodities by means of contract terms or pop-up windows, necessary steps for operation, etc., which are difficult for the trading counterpart to choose, change or refuse;
(2) imposing unreasonable restrictions on the contract term, payment method, transportation and delivery method of commodities or service provision method;
(3) imposing unreasonable restrictions on the sales areas, sales targets and after-sales services of the commodities;
(4) imposing unreasonable fees on the prices of the commodities during the transaction; and
(5) imposing transaction conditions unrelated to the subject matter of the transaction. The term "legitimate reasons" as mentioned in
this Article includes:
(1) compliance with legitimate trade practices and trading practices;
(2) necessary for meeting product safety requirements;
(3) necessary for the realization of a specific technology;
(4) Necessary to protect the interests of the trading counterpart and consumers;
(5) Other reasons that can prove the legitimacy of the act. Article
19 An operator with a dominant market position is prohibited from applying the following differential treatment to trading counterparts with the same conditions in terms of trading conditions without justified reasons:
(1) applying different trading prices, quantities, varieties, and quality grades;
(2) Different quantity discounts and other preferential terms;
(3) Different payment terms and delivery methods;
(4) Different warranty items and time limits, maintenance items and time, spare parts supply, technical guidance and other after-sales service conditions. The same
condition means that there is no substantial difference in transaction security, transaction cost, scale and ability, credit status, transaction link and transaction duration between the trading counterparts. The differences in transaction data, individual preferences and consumption habits of the trading counterparts obtained according to law in the transaction do not affect the identification of the same conditions of the trading counterparts. The "legitimate reasons" referred to in
this Article include:
(1) implementing different trading conditions according to the actual needs of the trading counterpart and in line with the legitimate trading practices and industry practices;
(2) carrying out preferential activities within a reasonable period of time for the first transaction of new users;
(3) Random transactions based on fair, reasonable and non-discriminatory platform rules;
(4) Other reasons that can prove the legitimacy of the act. Article
20 When the General Administration of Market Supervision determines other acts of abusing a dominant market position, the following conditions shall be met at the same time:
(1) The business operator has a dominant market position;
(2) The business operator has conducted acts of eliminating or restricting competition;
(3) There is no legitimate reason for the operator to carry out the relevant acts;
(4) The relevant acts of the operator have the effect of eliminating or restricting market competition. Article
21 Operators with dominant market position shall not use data and algorithms, technology and platform rules to engage in abuse of dominant market position as stipulated in Articles 14 to 20 of these Provisions.Article
22 When determining the "unfairness" referred to in Article 14 and the "legitimate reasons" referred to in Articles 15 to 20 of these Provisions, the Anti-monopoly Law Enforcement Agency shall also consider the following factors:
(1) whether the relevant act is prescribed by laws and regulations;
(2) The impact of the relevant act on national security, network security, etc.;
(3) The impact of the relevant act on the efficiency of economic operation and economic development;
(4) Whether the relevant act is necessary for the normal operation of the operator and the realization of normal benefits; The impact of the
relevant act on the business development, future investment and innovation of the operator;
(6) Whether the relevant act can benefit the trading counterpart or consumers;
(7) The impact of the relevant act on the public interest. Article
23 Operators of public utilities such as water supply, power supply, gas supply, heat supply, telecommunications, cable television, postal services and transportation shall operate according to law and shall not abuse their dominant market position to harm the interests of consumers and the public. Article
24 The Anti-monopoly Law Enforcement Agency shall, in accordance with its functions and powers, or through reporting, handing over by higher authorities, transferring by other authorities, reporting by lower authorities, and voluntary reporting by operators, discover suspected abuse of dominant market position. Article
25 Where a report is made in written form and relevant facts and evidence are provided, the Anti-monopoly Law Enforcement Agency shall conduct necessary investigations. The written report generally includes the following contents:
(1) the basic information of the informer;
(2) the basic information of the informer;
(3) the relevant facts and evidence of the suspected abuse of dominant market position;
(4) Whether the same fact has been reported to other administrative organs or brought a lawsuit to the people's court.
The anti-monopoly law enforcement agency may require the informer to supplement the reporting materials according to the needs of its work.
For a real-name report in written form, the anti-monopoly law enforcement agency may, after the investigation and handling of the case is completed, give feedback to the informer on the results of the handling of the report according to the written request of the informer. Article
26 The Anti-monopoly Law Enforcement Agency shall, after conducting necessary investigations into the suspected abuse of a dominant market position, file a case if the following conditions are met:
(1) There is preliminary evidence of the abuse of a dominant market position;
(2) It falls within the scope of investigation of the department;
(3) Within the statutory time limit for imposing administrative penalties.
The provincial market supervision department shall file the case with the General Administration of Market Supervision within seven working days from the date of filing the case. Article
27 When investigating and dealing with the abuse of dominant market position, the General Administration of Market Supervision may entrust the provincial market supervision department to conduct an investigation. When investigating and dealing with the abuse of dominant market position, the
provincial market supervision department may entrust the lower market supervision department to conduct an investigation. Within the scope of entrustment, the entrusted
market supervision department shall carry out the investigation in the name of the entrusting organ, and shall not entrust other administrative organs, organizations or individuals to carry out the investigation. Article
28 When investigating and dealing with the abuse of dominant market position, the provincial market supervision department may consult with the relevant provincial market supervision department to assist in the investigation, and the relevant provincial market supervision department shall assist. Article
29 Where the Anti-monopoly Law Enforcement Agency imposes an administrative penalty on an act of abusing a dominant market position, it shall, before making a decision on the administrative penalty, inform the party concerned in writing of the content, facts, reasons and basis of the administrative penalty to be imposed, and inform the party concerned of the right to state, the right to defend and the right to request a hearing in accordance with the law. Article
30 After informing the parties of the administrative penalty decision to be made, the Anti-monopoly Enforcement Authority shall fully listen to the opinions of the parties and review the facts, reasons and evidence put forward by the parties. Article
31 where the anti-Monopoly Law Enforcement Agency decides to impose administrative penalty on an act of abusing a dominant market position, it shall make a written decision of administrative penalty in accordance with the law and affix the seal of its own department. The contents of a written decision of
administrative penalty shall include:
(1) the name, address and other basic information of the party;
(2) the source of the case and the course of the investigation;
(3) the facts and evidence of the violation of laws, regulations and rules;
(4) The acceptance of and reasons for the party's statement and defense;
(5) The content and basis of the administrative penalty;
(6) The method and time limit for the performance of the administrative penalty;
(7) The channel and time limit for applying for administrative reconsideration or bringing an administrative lawsuit;
(8) The name of the anti-monopoly law enforcement agency that made the decision on the administrative penalty and the date on which the decision was made. Article
32 During the period of investigation, an operator suspected of abusing its dominant market position may apply for suspension of the investigation and promise to take specific measures to eliminate the impact of the act within the time limit approved by the anti-monopoly law enforcement agency. The application for
suspension of investigation shall be submitted in writing and signed and sealed by the person in charge of the operator. The application shall contain the following items:
(1) the facts of the suspected abuse of the dominant market position;
(2) the commitment to take specific measures to eliminate the consequences of the act;
(3) the time limit for fulfilling the commitment; and
(4) other items that need to be committed. Article
33 The Anti-monopoly Law Enforcement Authority shall decide whether to suspend the investigation according to the application for suspension of the investigation by the business operator under investigation, taking into account the nature, duration, consequences, social impact of the act, the measures promised by the business operator and its expected results. After investigating and verifying the suspected abuse of dominant market position,
the anti-monopoly law enforcement agency shall not suspend the investigation if it considers that it constitutes an abuse of dominant market position, and shall make a decision to deal with it according to law. Article
34 Where the Anti-monopoly Law Enforcement Agency decides to suspend the investigation, it shall make a written decision on the suspension of the investigation. The decision to
suspend the investigation shall specify the facts of the suspected abuse of dominant market position by the operator under investigation, the specific content of the commitment, the specific measures to eliminate the impact, the time limit for fulfilling the commitment and the legal conse quences of failing to fulfill or fully fulfill the commitment. Article
35 Where a decision is made to suspend the investigation, the Anti-monopoly Law Enforcement Agency shall supervise the performance of the undertakings.
The undertakings shall report in writing the fulfillment of their commitments to the Anti-monopoly Law Enforcement Agency within the prescribed time limit. Article
36 If the Anti-monopoly Law Enforcement Agency determines that the undertakings have been fulfilled, it may decide to terminate the investigation and make a written decision to terminate the investigation. The decision to
terminate the investigation shall specify the facts of the suspected abuse of market dominance by the operator under investigation, the circumstances of the decision to suspend the investigation, the specific contents of the commitment, the fulfillment of the commitment, and the supervision.
In any of the following circumstances, the Anti-monopoly Law Enforcement Agency shall resume the investigation:
(1) The undertakings fail to perform or fail to fully perform their commitments;
(2) The facts on which the decision to suspend the investigation is based have undergone major changes;
(3) The decision to suspend the investigation is made on the basis of incomplete or untrue information provided by the operator. Article
37 Where an operator is suspected of violating these Provisions, the Anti-monopoly Law Enforcement Agency may interview its legal representative or person in charge.
The interview shall point out that the operator is suspected of abusing the dominant market position, listen to the explanation of the situation, conduct a reminder conversation, and may ask him to propose improvement measures to eliminate the harmful consequences of the act.
Operators shall make improvements in accordance with the requirements of the Anti-monopoly Law Enforcement Agency, put forward specific measures to eliminate the harmful consequences of their actions, time limits for performance, and submit written reports. Article
38 Before making a decision not to impose an administrative penalty, a decision to suspend an investigation, a decision to resume an investigation, a decision to terminate an investigation or a notification of an administrative penalty, the provincial market supervision department shall report to the General Administration of Market Supervision and accept the guidance and supervision of the General Administration of Market Supervision.
The provincial market supervision department shall file with the General Administration of Market Supervision within seven working days after serving the decision not to impose administrative penalty, the decision to suspend the investigation, the decision to resume the investigation, the decision to terminate the investigation or the decision to impose administrative penalty to the operator under investigation. Article
39 After the Anti-monopoly Law Enforcement Agency has made a decision on administrative handling, it shall announce it to the public in accordance with the law. Administrative penalty information shall be publicized to the public through the national enterprise credit information publicity system according to law. Article
40 The General Administration of Market Supervision shall strengthen the guidance and supervision of provincial market supervision departments in investigating and dealing with the abuse of market dominance, and unify the procedures and standards for law enforcement.
Provincial market supervision departments shall strictly investigate and punish the abuse of market dominance in accordance with the relevant provisions of the General Administration of Market Supervision. Article
41 Where an operator abuses its dominant market position, the Anti-monopoly Law Enforcement Agency shall order it to stop the illegal act, confiscate its illegal income and impose a fine of not less than 1% but not more than 10% of its sales in the previous year. When determining the specific amount of fines,
the Anti-monopoly Law Enforcement Agency shall consider such factors as the nature, extent, duration and elimination of the consequences of the illegal acts. In case of
violation of these Provisions, if the circumstances are particularly serious, the impact is particularly bad and the consequences are particularly serious, the General Administration of Market Supervision may determine the specific amount of fines at least twice and less than five times the amount of fines prescribed in the first paragraph.
Operators who abuse their dominant market position due to the abuse of administrative power by administrative organs and organizations authorized by laws and regulations with the functions of managing public affairs shall be dealt with in accordance with the provisions of the first paragraph. Operators who can prove that they are authorized by administrative organs and organizations authorized by laws and regulations to manage public affairs to abuse administrative power compulsion or disguised compulsion to abuse market dominance may be given lighter or mitigated punishment according to law. Article
42 Any staff member of the Anti-monopoly Law Enforcement Agency who abuses his power, neglects his duty, engages in malpractices for personal gain or divulges business secrets, personal privacy and personal information known in the course of law enforcement shall be dealt with in accordance with the relevant provisions. Article
43 The clues of suspected duty violations and duty crimes of public officials discovered by the Anti-monopoly Law Enforcement Agency during the investigation shall be handed over to the disciplinary inspection and supervision organs in a timely manner. Article
44 Where there are no provisions in these Provisions on the investigation and punishment procedures for abuse of dominant market position, they shall be implemented in accordance with the Provisions on Administrative Punishment Procedures for Market Supervision and Administration, except for the provisions on time limit, filing of cases and jurisdiction of cases. Where
an anti-monopoly law enforcement agency organizes an administrative penalty hearing, it shall be implemented in accordance with the Measures for the Hearing of Administrative Penalties for Market Supervision and Administration. Article
45 These Provisions shall come into force on April 15, 2023. The Interim Provisions on the Prohibition of Abuse of Market Dominant Position promulgated by Decree No.11 of the State Administration of Market Supervision and Administration on June 26, 2019 shall be repealed at the same time.
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