China: Main developments in Competition Law and Policy by 2024
Legislative developments
In terms of legislative developments, the year of 2024 was marked by the State Council’s issuance of the Regulation on Fair Competition Review. It was a supplement to the 2021 Detailed Rules on the Implementation of Fair Competition Review System, and provided a higher level legal basis for scope, standards, mechanisms and oversight of fair competitive review. In October 2024, the State Administration for Market Regulation also issued the Rules on Handling of Complaints regarding Fair Competition Review. These rules address the emerging practices of some local governments circumventing the fair competition review and engaging in protectionist practices due to limited oversight channels for businesses and the public to monitor the rule-making activities affecting market competition.
The fair competition review procedures were also regulated at the provincial level. Hainan Province, for example, has released a technical assessment document relating to fair competition review. This document applies the Structure-Conduct-Performance analysis model, drawing on the experiences of other regions in assessing market competition conditions. It incorporates various indicators to comprehensively assess factors influencing market competition.
Since the adoption of the Anti-Monopoly Law (AML), more than 50 antitrust cases involving industry associations have been investigated. To clarify the broad wording of AML provisions on associations of undertakings, the State Council issued the Antitrust Guidelines on Industry Associations, which lists specific circumstances in which industry associations may be found in violation of the AML. The Guidelines cover typical scenarios, such as organizing enterprises to engage in anticompetitive agreement, acting as an enterprise engaging in anticompetitive agreement, abusing market dominance or unlawfully concentrating undertakings. They also address situations where industry associations authorized by laws or regulations to perform public administration functions abuse administrative power to restrict competition.
To address anti-competitive practices in China’s rapidly developing digital economy, the State Administration for Market Regulation issued the Interim Provisions on the Regulation of Unfair Competition on the Internet, which entered into force in September 2024. The Interim Provisions build on Article 12 of the Anti-Unfair Competition Law (AUCL) and Article 35 of the E-Commerce Law by enumerating over a dozen types of emerging unfair competition practices in the digital economy, including fake reviews, malicious interception or blocking, unauthorized data acquisition, and unreasonable restrictions or conditions imposed by platform operators on businesses.
As China’s position in the global industrial and value chains continues to rise, balancing the interests of standard-essential patent (SEP) holders and implementers, while ensuring both intellectual property protection and fair market competition, has become a legislative priority. In November 2024 the SAMR issued Antitrust Guidelines on Standard Essential Patents. The Guidelines, which are based on the AML and the Antitrust Guidelines for Intellectual Property Rights and the Provisions on Prohibiting Abuse of Intellectual Property Rights in order to Eliminate and Restrict Competition refine antitrust rules regarding the development and implementation of standard. The Guidelines introduce “a strengthened preemptive and intermediate regulation mechanism” that requires parties to proactively disclose antitrust risks. The enforcement authorities are advised to use a layered regulatory approach that includes reminders, interviews, ex-post investigations, and penalties in order to punish anticompetitive behavior. The Guidelines identify practices which may constitute abuse of dominant market position. These include unfairly high licensing fee, restrictive grant-back agreements, bundled licensing and no-challenge provisions. The Guidelines also provide detailed guidelines for handling sensitive information sharing and exclusive licensing arrangements within patent pools.
In the year 2024, the implementation of the antitrust “Three Letters & One Notice” system will be a prominent theme in the local legislation. In December 2023 the Anti-Monopoly and Anti-Unfair Competition Commission and the SAMR published a notice on the establishment of the “Three Letters and One Notification” antitrust system. The system aims to ensure AML compliance through reminder letters for early warnings, interview notices in order to improve the situation, and investigation notices that initiate formal investigations. This framework establishes an integrated regulatory system that covers prevention, investigation and rectification. The issuance of the “Three Letters and One Notice” was followed up by implementation measures from from several provinces and regions, including Shanghai, Zhejiang, Jiangsu, Heilongjiang, Shanxi, Henan, Shaanxi, Fujian, etc. Chongqing, for example, introduced the first detailed implementation measures at the local level for the “Three Letters & One Notice” system by specifying procedural actions such as initiation, approval, document issuance and rectification, review decisions and case closure. Xinjiang also explored integrating the Fair Competition Review Mechanism with the “Three Letters & One Notice” System. If market supervision departments at different levels in the region find that the fair competition review system is not being implemented by administrative bodies of the same level or lower-level market surveillance departments, they can issue a reminder. If the issue is not resolved within the specified period or remains unresolved, an interview notice may be issued. The manual gives an overview of the legal frameworks, enforcement mechanisms and enforcement procedures under AML and Hong Kong’s Competition Ordinance. It also offers compliance suggestions for Guangdong enterprises and Hong Kong businesses based on examples. The manual is not binding and is meant to guide businesses in adopting voluntary competition compliance standards. It aims to enhance the integration of the Guangdong-Hong Kong-Macao Greater Bay Area by fostering fair and competitive business practices.
Enforcement developments
In terms of enforcement data, the pace and intensity of antitrust enforcement slowed down in 2024. The SAMR disclosed seven cases of abuses of market dominance and anti-competitive agreements, as well as three cases of illegal implementations of concentrations of enterprises without required notification. The SAMR has opted for softer compliance-enhancing measures instead of imposing fines and investigating anti-competitive conduct. SAMR issued a Warning letter
in relation to AML Compliance of its Patent Pool. This was the first time the “Three Letters & One Notice” system had been used publicly. SAMR did disclose the specific concerns about Avanci’s possible violations of the AML but this action shows a proactive and prevention approach. SAMR also held a Guidance Meeting
for representatives of the pesticides industry, while the Administration for Market Regulation of the Ningxia Autonomous Region hosted a similar Guidance Meeting for undertakings in the Cement Industry. These efforts show a clear focus to promote compliance and raise awareness across industries in order to prevent anticompetitive practices. In the gas industry, for example, monopoly power could be used to leverage competitive upstream or downstream segments. Hainan Kunlun Ganghua Gas Co. Ltd., for example, was penalized for abusing its dominant position by the Hainan Administration for Market Regulation for requiring developers of residential complexes exclusively to use its services for gas pipeline installation projects. After an investigation into Datong China Resources Gas Co. Ltd.‘s alleged abuses of market dominance, the Shanxi Administration for Market Regulation imposed a series of administrative penalties. The Sichuan Administration for Market Regulation fined Jianyang Haitian Water Co. Ltd.
for abusing their market dominance. They required downstream users to buy water meters and installation service exclusively from the company. They also mandated the use of its recommended manufacturer for secondary water supply. Weihai Water Group received sanctions for abusing its dominant position in the urban public supply water market, including confiscation of illegal gains as well as a fine of 3% of the company’s 2022 turnover. The Market Regulation Administration of the Guangxi Zhuang Autonomous Region imposed administrative penalties on Shanglin County Sanli Liuxian Water Co., Ltd. for abuse of market dominance.The disclosed anti-competitive agreement cases also concern livelihood-related sectors. In Anhui, bottle gas enterprises worked together to divide the market and split sales profits. They operated a company that disrupted competition and hurt consumer interests. In Hunan the vehicle inspection agencies
decided to raise service prices uniformly. Driving schools in Chongqing coordinated price increases with the local transportation association. Mineral wool manufacturers in Xinjiang concluded agreements to reduce market competition by limiting production and fixing prices. These cases involve price fixing, division of markets, or production restrictions, which restricted competition in livelihood-critical markets and negatively impacted consumer welfare. Courts and competition law enforcementOn 24 2024, the Supreme People’s Court (SPC) issued the Interpretation concerning the Application of Law in the Trial of Civil Dispute Cases Arising from Monopolistic Conduct
. The 2012 version
provided a basic procedural framework to private antitrust litigation, but did not include judicial interpretations of substantive provisions of AML for civil cases. The 2024 interpretation
retained nine articles from the 2012 version and substantively revised or supplemented five articles. It introduces 37 new articles that mainly address interpretations and applications of substantive provisions. This includes 2022 amendments to the AML. The new judicial interpretation strengthens ties between administrative enforcement and private litigation. It states explicitly that the facts determined in administrative cases dealing with AML violations are presumed to be true in principle, but can be rebutted. It clarifies the methods for calculating damages to victims of anticompetitive conduct. The SPC reminded courts that they have the discretion to determine a reasonable compensation depending on the facts of each case. The courts have a tendency to protect investments in platforms, content and other resources. This is reflected in the unfair competition cases they handle. In the first unfair competition case against virtual reality in China, for example, the defendant sold his membership account to gain profit. This allowed many users to access resources that are only available through paid accounts without registering for or paying for them. The plaintiff’s revenue model was undermined, as were the plaintiffs’ potential transaction opportunities and their business income from providing gaming services. The court classified the defendant’s actions as unfair competition.Similarly, the Guangdong High People’s Court adjudicated the first unfair competition case involving data scraping and trading. The defendant changed IP addresses and accounts repeatedly to access plaintiff’s APIs fraudulently, extracting and then selling unauthorized backend information for profit. The court ruled this was unfair competition under Article 2 AUCL. The court’s judgment confirmed and protected the right of Internet platform companies and other data processors to independently control, lawfully use, and derive legitimate benefit from the data they hold, in compliance with the laws. It also ensured that their investment in data resources generates reasonable compensation.
In 2024, the SPC published four typical AML cases, all focused on livelihood-related sectors, including food, digital television services, natural gas supply, and wholesale of vegetables. These cases covered a wide range of anti-competitive practices, including price fixing, boycotts and tying. They also included unfairly high prices and discriminatory practices. In a horizontal agreement case involving rice noodle manufacturers, the court clarified the criteria for identifying coordinated boycotts and price-fixing practices. In a case of abuse of market power involving cable digital TV services
the court established clear standards to determine tying arrangements or refusals to deal. In the tying case involving a natural gas company the court ruled the defendant’s requirement that users install designated boilers was a tying agreement. The court incorporated findings from an administrative infringement decision in order to reduce the plaintiff’s burden of proof and awarded damages based upon actual losses and lost profit, aligning itself with the latest SPC interpretations on private antitrust litigation. In the vegetables wholesale market
abuse of dominance case, the court ruled that an arbitration agreement cannot not exclude the court’s jurisdiction over private antitrust disputes, thereby reinforcing the judiciary’s role in resolving AML-related disputes. ConclusionThe legislative, enforcement, and judicial developments in 2024 reflect China’s course towards refining its competition law framework in alignment with the growing complexities of its economy. Legislative developments show an effort to strike the right balance between ensuring fairness in competition and maintaining a business-friendly environment. Enforcement trends reveal a deliberate shift towards softer regulatory approaches and prevention, such as “Three Letters & One Notice” and compliance guidance meetings. These demonstrate an emphasis on cultivating a compliance culture, while addressing antitrust concerns systemic in critical sectors, like energy, public utilities, and water resources. The enforcement agencies’ role is highlighted by the emphasis on curbing monopolistic practice in sectors that are critical to livelihoods. In the area of judicial practice private antitrust litigation has evolved under SPC guidance summarized by the latest judicial interpretaions. Cases in the unfair-competition domain show judicial innovation by recognizing new types conduct as unfair competition. This trend reflects the shift from extensive intervention into the digital platform economy in AML to addressing unfair competition practices that involve smaller-scale operators.
