ASIA-PACIFIC ANTITRUST REVIEW 2022 - Clifford Chance
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ASIA-PACIFIC
ANTITRUST REVIEW 2022
© Law Business Research 2022Asia-Pacific Antitrust Review
2022
Reproduced with permission from Law Business Research Ltd
This article was first published in March 2022
For further information please contact insight@globalcompetitionreview.com
© Law Business Research 2022Published in the United Kingdom
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© Law Business Research 2022Contents
OVERVIEW
Cartels and Abuse�������������������������������������������������������������������������������������������������1
Adelaide Luke, Patrick Gay and Joel Rheuben
Herbert Smith Freehills
The Intersection of Competition Law and Data Privacy in APAC����������������� 20
Sébastien Evrard, Connell O’Neill, Hayley Smith, Katherine Tomsett and Nick Hay
Gibson, Dunn & Crutcher LLP
Pharmaceuticals������������������������������������������������������������������������������������������������� 39
Susan Jones
Gilbert + Tobin
AUSTRALIA
Overview�������������������������������������������������������������������������������������������������������������� 57
Linda Evans and Patrick Gay
Herbert Smith Freehills
CHINA
Overview�������������������������������������������������������������������������������������������������������������� 79
Yong Bai, Dayu Man and Nan Lan
Clifford Chance LLP
iii
© Law Business Research 2022Contents
Merger Control�������������������������������������������������������������������������������������������������� 100
Susan Ning, Zhifeng Chai and Weimin Wu
King & Wood Mallesons
INDIA
Overview������������������������������������������������������������������������������������������������������������ 114
Manas Kumar Chaudhuri, Anisha Chand, Tanveer Verma and Armaan Gupta
Khaitan & Co
Cartels���������������������������������������������������������������������������������������������������������������� 132
Ram Kumar Poornachandran, Shreya Singh and Dhruv Chadha
AZB & Partners
Leniency������������������������������������������������������������������������������������������������������������� 153
Dinoo Muthappa and Dhruv Dikshit
Talwar Thakore & Associates
Merger Control�������������������������������������������������������������������������������������������������� 165
Avaantika Kakkar and Vijay Pratap Singh Chauhan
Cyril Amarchand Mangaldas
JAPAN
Overview������������������������������������������������������������������������������������������������������������ 182
Junya Ae, Ryo Yamaguchi and Masayuki Shinoura
Baker & McKenzie (Gaikokuho Joint Enterprise)
Antitrust Litigation������������������������������������������������������������������������������������������� 197
Kentaro Hirayama
Hirayama Law Offices
Cartels���������������������������������������������������������������������������������������������������������������� 207
Hideto Ishida and Atsushi Yamada
Anderson Mōri & Tomotsune
iv
© Law Business Research 2022Contents
Merger Control�������������������������������������������������������������������������������������������������� 223
Hideto Ishida and Takeshi Suzuki
Anderson Mōri & Tomotsune
Settlements������������������������������������������������������������������������������������������������������� 236
Kentaro Hirayama
Hirayama Law Offices
VIETNAM
Merger Control�������������������������������������������������������������������������������������������������� 247
Nguyen Anh Tuan, Tran Hai Thinh and Tran Hoang My
LNT & Partners
v
© Law Business Research 2022Preface
Global Competition Review is a leading source of news and insight on national and
cross-border competition law and practice, with a readership that includes top inter-
national lawyers, corporate counsel, academics, economists and government agencies.
GCR delivers daily news, surveys and features for its subscribers, enabling them to
stay apprised of the most important developments in competition law worldwide.
Complementing our news coverage, the Asia-Pacific Antitrust Review 2021
provides an in-depth and exclusive look at the region. Pre-eminent practitioners have
written about antitrust issues in five key jurisdictions, with this edition including new
chapters on merger control in China, leniency proceedings in India and a broad take
on the intersection of data privacy and antitrust throughout the region. In addition,
we have expanded the scope of the country overviews to encompass cartels and abuse,
and pharmaceuticals.
This annual review expands its remit each year, especially as the Asia-Pacific
region gains even more significance in the global antitrust landscape. It has some of
the world’s most developed enforcers – in Australia and Japan, for example – as well as
some of the world’s newest competition regimes.
The authors are, unquestionably, among the experts in their field within both
their own jurisdictions and the region as a whole. Their knowledge and experience,
and, in particular, their ability to contextualise both law and policy, give this report
special value.
Although every effort has been made to ensure that all the matters of concern to
readers are covered, competition law is a complex and fast-changing field of practice,
and therefore specific legal advice should always be sought. Subscribers to Global
Competition Review will receive regular updates on any changes to relevant laws
during the coming year.
vii
© Law Business Research 2022Preface
If you have a suggestion for a topic to cover or would like to find out how to
contribute, please contact insight@globalcompetitionreview.com.
GCR thanks all of the contributors for their time and efforts.
Global Competition Review
London
March 2022
viii
© Law Business Research 2022China: Overview
Yong Bai, Dayu Man and Nan Lan
Clifford Chance LLP
IN SUMMARY
This chapter provides an overview of China’s major antitrust developments in 2021,
covering new legislation, conduct enforcement, merger review, private actions, abuse of
administrative power, institutional changes and an outlook for 2022.
DISCUSSION POINTS
• Draft amendments to the Anti-Monopoly Law and new antitrust guidelines
• Enhanced scrutiny over digital platforms and key statistics for conduct enforcement
• Developments in merger review (particularly the significantly increased case volume
and the first failure-to-file penalty decision with restorative remedies)
• Establishment of the National Anti-Monopoly Bureau
REFERENCED IN THIS ARTICLE
• Draft amended Anti-Monopoly Law
• Antitrust Guidelines on the Platform Economy
• Antitrust Guidelines on Active Pharmaceutical Ingredients
• SAMR’s penalty decisions for abusive conduct of Alibaba, Sherpa’s and Meituan
• SAMR’s prohibition decision on the merger between Huya and DouYu
• SAMR’s penalty decisions for Tencent’s acquisition of China Music Corporation
Introduction
Many have considered 2021 as the ‘year zero’ for China’s antitrust – and this is no exag-
geration. China has repeatedly signalled its intention to intensify antitrust scrutiny in
scores of leadership meetings – from the Central Economic Working Conference, the
foremost meeting on China’s economic planning, to the Sixth Plenary Session of the
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19th Central Committee of the Chinese Communist Party, a top forum for Chinese
policy directions. Antitrust was invariably part of the agenda of these meetings and is
doubtless a key priority for China’s social governance.
Against this background, new rules were promulgated, including the widely
anticipated Antitrust Guidelines on the Platform Economy (Platform Economy
Guidelines) and the Antitrust Guidelines on Active Pharmaceutical Ingredients
(API Guidelines), providing antitrust guidance in these two sectors where China’s
antitrust watchdog, the State Administration for Market Regulation (SAMR), has
been particularly active. On the merger side, the number of merger notifications
has increased dramatically, with legacy issues (such as on VIE notifiability) having
been conclusively dealt with. The SAMR also spared no effort in investigating past
failure-to-notify transactions – in 2021 alone, the number of the released penalties for
failure-to-file exceeded all previous years combined, totalling 95. Among such cases,
the SAMR, for the first time ever, imposed restorative remedies. On conduct enforce-
ment, the SAMR imposed its biggest fine ever on Alibaba (18.2 billion yuan), which
also marks one of the highest antitrust fines ever imposed globally and shows the
SAMR’s determination to effectively regulate digital platforms. Compared with 2020,
when the SAMR did not publish any resale price maintenance (RPM) infringements,
2021 saw two RPM penalties, including a record fine in the pharmaceutical sector
of 760 million yuan imposed on Yangtze River Pharma, demonstrating continuous
enforcement on vertical problems. If these developments still have not alerted compa-
nies to comprehensive antitrust compliance, towards year-end, the National People’s
Congress published a consultation draft of the amended Anti-Monopoly Law (AML),
according to which antitrust violations in China could theoretically lead to a fine of up
to 50 per cent of the contravening party’s turnover. In line with escalated enforcement,
the Anti-Monopoly Bureau now ascends to a higher level in the administrative hier-
archy, becoming a National Bureau. Taking all these into consideration, one should
not be surprised if more antitrust developments make headlines in 2022.
Legislation
In response to the Chinese leadership’s call for improved antitrust regulation, the
Antitrust Commission of the State Council released two sector-specific guidelines in
2021. In February, it released the Platform Economy Guidelines1 and, in November,
1 https://gkml.samr.gov.cn/nsjg/fldj/202102/t20210207_325967.html.
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the API Guidelines.2 The speed of their implementation is remarkable – the Platform
Economy Guidelines allegedly went through the quickest antitrust legislative process
ever seen in China, as the draft version was released just four months earlier.3 In
contrast, the four antitrust guidelines published in 2020 (on automobile, intellectual
property rights, leniency and commitments) had been shelved for some three years
before their final promulgation.
While the API Guidelines are more of a reflection of the SAMR’s past sectoral
experience pertaining to API, the Platform Economy Guidelines represent China’s
attempts to provide an analytical framework for the novel issues surrounding digital
platforms. The two guidelines are also, respectively, the second and third sector-specific
guidelines in China, following the Antitrust Guidelines on the Automobile Industry
(Automobile Guidelines) released in 2020.4 In addition to the central-level legisla-
tive progress, local Administrations for Market Regulation (AMR) (including those
in Beijing, Jiangsu and Sichuan) joined their counterparts in Shanghai, Shandong,
Henan, Hebei and Hubei (and many others) in publishing their own antitrust guid-
ance books.5
With more antitrust guidance being made available, China is also accelerating
the amendment process of its fundamental antitrust law, the AML.6 On 23 October
2021, the Standing Committee of the National People’s Congress, the highest legis-
lative body in China, released a consultation draft on the proposed amendments to
the current AML (the draft amended AML).7 While there is currently no detailed
timetable for official promulgation, considering the wider sentiment for more effective
antitrust regulation, the new legislation is expected to be adopted as early as in the first
half of 2022.
2 https://gkml.samr.gov.cn/nsjg/fldj/202111/t20211118_336969.html.
3 https://www.samr.gov.cn/hd/zjdc/202011/t20201109_323234.html.
4 https://gkml.samr.gov.cn/nsjg/fldj/202009/t20200918_321860.html.
5 Guidance of Beijing Municipality on Antitrust Compliance in the Field of Platform Economy
(2021), the full text is available at: http://scjgj.beijing.gov.cn/zwxx/scjgdt/202112/
P020211209348968988087.pdf; Guidance of Jiangsu Province on Antitrust Compliance
of Undertakings, the full text is available at: http://scjgj.jiangsu.gov.cn/art/2021/9/22/
art_78968_10023737.html; Guidance of Sichuan Province on Antitrust Compliance of
Undertakings, the full text is available at: http://scjgj.sc.gov.cn/scjgj/c104492/2021/2/26/3caf9c
6e16f4450aa371fb007a492bde.shtml.
6 http://www.npc.gov.cn/wxzl/wxzl/2008-12/15/content_1462087.htm.
7 http://www.npc.gov.cn/npc/c30834/202110/512cd30239f2492e9ef079500ea9f1a0.shtml.
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More substantive details regarding the two guidelines and the draft amended
AML are provided below.
Draft amended AML
The key proposed changes with respect to merger control include the following.
Harsher legal liabilities
Failure-to-notify
The maximum fine would be increased from the current 500,000 yuan to 10 per cent
of the notifying party’s turnover in the past financial year, noting that if the unreported
transaction has no anticompetitive effects, the fine would be up to 5 million yuan;
and if the violation is particularly serious (there is no further explanation on this, and
in practice may include, for example, if the unreported transaction has resulted in
very serious consequences), the fine could be raised to two to five times the original
amount. In theory, therefore, the fine to be imposed can be up to 50 per cent of the
notifying party’s turnover in the past financial year.
Provision of false information
The maximum fine would be increased for companies from the current 1 million yuan
to 1 per cent of the past financial year’s turnover, and for individuals from 100,000
yuan to 500,000 yuan.
Key sectors of focus
The draft amended AML proposes the sectors relating to people’s livelihood, finance,
technology and media to be considered as the focus of merger control in China (these
sectors are consistent with the SAMR’s previous enforcement focus).
‘Stop-the-clock’ mechanism
The draft amended AML formally introduces the ‘stop-the-clock’ mechanism, under
which the review period could be suspended if:
• parties fail to provide the requested information;
• there are new circumstances or facts that would substantially impact the review of
the case; or
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© Law Business Research 2022Clifford Chance LLP | China: Overview
• proposed remedies require further assessment and the parties agree to the
suspension. The ‘stop-the-clock’ mechanism would avoid the existing practice of
‘pull-and-refile’ when statutory review limits expire in complex cases, but a poten-
tial downside is that this may cause uncertainty or delay in the timeline in less
complex cases.
The key proposed changes with respect to anticompetitive conduct include the
following.
‘Hub-and-spoke’ practice prohibited
The draft amended AML introduced that organising or providing substantial help
to reaching monopoly agreements would be prohibited and would be subject to the
same penalties as those of monopoly agreements. Lack of coverage for hub-and-spoke
practice has been considered a loophole in the current AML.
Effects-based approach to RPM
The draft amended AML for the first time proposed to clarify under the law that
RPM, in the absence of anticompetitive effects, would not be prohibited (although the
undertakings concerned shall bear the burden of proof that the RPM concerned does
not have anticompetitive effects). This would settle the long-standing inconsistency in
the approach to RPM in civil proceedings and administrative enforcement.
‘Safe harbour’ available.
The draft amended AML seeks to provide a safe harbour for horizontal and vertical
agreements without substantial harm to the competition. However, it remains unclear
whether market share thresholds would follow those in the existing Automobile
Guidelines and the Antitrust Guidelines in the Field of Intellectual Property Rights
(where market share thresholds are 20 per cent for certain horizontal agreements and
30 per cent for certain vertical agreements).8 It also calls for clarification as to which
agreements would be incapable of benefiting from the safe harbour (such as ‘hardcore
restrictions’).
8 https://gkml.samr.gov.cn/nsjg/fldj/202009/t20200918_321857.html.
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© Law Business Research 2022China: Overview | Clifford Chance LLP
The key changes with respect to legal liabilities are shown below:
Violations Current AML Draft amended AML
Monopoly agreement
concluded but not Up to 500,000 yuan Up to 3 million yuan
implemented
Infringing party has no
turnover in the past No rules Up to 5 million yuan
year
Trade associations Up to 500,000 yuan Up to 3 million yuan
Legal representative, principal responsible person, and any
Individuals’ liabilities No rules directly responsible person who shall be held personally
liable: up to 1 million yuan
Individual: up to
Obstruction of 100,000 yuan Individual: up to 500,000 yuan
investigations Company: up to 1 Company: up to 1% of the turnover in the past financial year
million yuan
Platform Economy Guidelines
The draft version of the Platform Economy Guidelines was published in November
2020, which addressed many current issues involving the platform economy, including
platform market definition, antitrust significance of data and algorithms, criteria for
determining platforms’ dominance, and typical conduct by platforms that could be
anticompetitive. The 2021 final version largely follows the draft version, with notable
changes, including:
• market definition – a novel proposal in the draft version providing for the flex-
ibility of not defining relevant markets in certain abusive cases was deleted from
the final version;
• exclusion of parallel pricing – the final version expressly excludes pure parallel
pricing, which is conducted independently from concerted practices;
• price or other trading conditions parity clause – the final version replaces the term
‘MFN (Most Favoured Nation) Clause’ in the draft version with a broader term
of ‘parity clause’. Additionally, the final version adds that apart from vertical anti-
competitive agreements, a parity clause may also constitute abusive conduct; and
• essential facility – the draft version considered the circumstances under which both
platform and data could constitute essential facilities, whereas the final version has
retained only platforms as possibly being considered as essential facilities.
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© Law Business Research 2022Clifford Chance LLP | China: Overview
API guidelines
The draft version of the API guidelines was published in October 2020,9 which
attempted to provide API-specific antitrust guidance, including market definition,
high-risk agreements and determination of abuse. The 2021 final version also largely
follows the draft edition but includes the following notable changes:
• market definition: while the consultation draft stated that a single type of API
is generally considered a separate product market, the final version clarifies that
different types of APIs may also belong to the same market, if they are substitutable;
• monopoly agreements: the final version includes more types of agreements that
are potentially anticompetitive, including agreements between competitors to
not produce or sell APIs in exchange for compensation, territorial and customer
restrictions, hub-and-spoke agreements; and
• determination of collective dominance: the final version includes factors for deter-
mining collective dominance undertakings, including market structure, degree of
homogeneity of the concerned products, and degree of coordination between the
concerned undertakings.
Enforcement
What distinguished 2021 from preceding years is probably the clear focus on enforce-
ment against platform companies. The passing of the Platform Economy Guidelines
heralds the beginning of an unprecedented level of antitrust scrutiny on digital plat-
forms. The two PRM fines also received widespread attention.
Platform economy
In 2021, the SAMR published a total of three abuse decisions against platform compa-
nies, which are also the first conduct penalties against digital platforms:
• on 10 April 2021, Alibaba was fined 18.228 billion yuan (4 per cent of its 2019
sales) for abuse of dominance in the China online retail platform market.10 The
SAMR found that Alibaba engaged in an exclusory practice (called ‘choose one
from two’ in Mandarin) by prohibiting some of its platform merchants from
opening stores and participating in promotional activities on competing plat-
forms. This fine was a record high in China’s antitrust enforcement (previously,
9 https://www.samr.gov.cn/hd/zjdc/202010/t20201013_322278.html.
10 The full decision is available at: https://www.samr.gov.cn/fldj/tzgg/xzcf/202104/
t20210409_327698.html.
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© Law Business Research 2022China: Overview | Clifford Chance LLP
the largest was the Qualcomm fine of 6.088 billion yuan in 2015) and was also
one of the highest antitrust fines that has been imposed on a single firm around
the globe;
• on 12 April 2021, Sherpa’s (an English language-based online food delivery plat-
form) was fined 1.17 million yuan (3 per cent of its 2018 sales) for abuse of its
dominance in the Shanghai English language-based online food delivery platform
market.11 Similar to the Alibaba case, Shanghai AMR found that Sherpa’s imple-
mented the ‘choose one from two’ conduct and restricted restaurants from selling
on platforms competing with Sherpa’s; and
• on 15 October 2021, Meituan (the largest online food delivery platform in China)
was fined 3.442 billion yuan (3 per cent of its 2020 sales) for abuse of its domi-
nance in the China online food delivery platform service market.12 Similar to the
Alibaba and Sherpa cases, the SAMR found that Meituan engaged in exclusory
practice and prohibited restaurants from operating simultaneously on competing
platforms.
What is also notable is that in both the Alibaba and Meituan cases, the SAMR inno-
vatively issued a stand-alone Administrative Guide Book, giving instructions on the
respective company’s future antitrust compliance. Both companies were ordered to
submit a rectification plan in accordance with their Administrative Guide Book and
submit annual compliance reports in the following three years.
In addition to enforcement on abuse, the authority has also engaged in retrospec-
tive merger reviews and issued a large number of fines to tech companies. See the
‘Merger review’ section below for more details.
Cartels
There were 13 infringement decisions on cartels published in China in 2021. See
Table 1 below for a list of these cases. The enforcement agencies were all regional
AMRs, which focused on sectors concerning livelihoods, such as construction mate-
rials, pharmaceuticals and automobiles.
11 The full decision is available at: https://www.samr.gov.cn/fldj/tzgg/xzcf/202104/
t20210412_327737.html.
12 The full decision is available at: https://www.samr.gov.cn/fldj/tzgg/xzcf/202110/
t20211008_335367.html.
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Table 1: Cartel cases in China published in 2021
Date of
Confiscation
release of Enforcement
Undertakings Conduct Fine of illicit
penalty agency
gains
decision
The trade association was
Shanghai
fined 200,000 yuan; its
Tourism Trade Price fixing
29 January members were each fined 1%
Association and output Shanghai AMR No
2021 of their respective turnover
and its nine restriction
in 2015 (1.61 million yuan in
members
total)
Hainan The trade association was
Province Fire fined 400,000 yuan; its
29 January Protection members were each fined 1%
Price fixing Hainan AMR No
2021 Association of their respective turnover
and its 21 in 2018 (9.08 million yuan in
members total)
The schools were each fined
Nine driver
29 January Market 2% of their respective turnover
training Jiangsu AMR No
2021 sharing in 2016 (1.35 million yuan in
schools
total)
Insurance
29 January Industry The trade association was
Price fixing Anhui AMR No
2021 Association in fined 200,000 yuan
Bozhou City
Jiaxing The trade association was
Second- fined 300,000 yuan; its
hand Vehicle members were fined 2%–3%
29 January
Industry Price fixing Zhejiang AMR of their respective turnover Yes
2021
Association in 2019 (0.68 million yuan in
and its nine total); one undertaking was
members exempted from penalty
Price fixing,
The producers were each
output
9 February Eight cement fined 2% of their respective
restriction Shandong AMR Yes
2021 producers turnover in 2018 (0.14 billion
and market
yuan in total)
sharing
The trade association was
Sichuan
fined 500,000 yuan; its
Provincial
members were fined 1%–2%
18 March Cement Price fixing
Sichuan AMR of their respective turnover Yes
2021 Association or change
in 2016 (43.7 million yuan in
and its six
total); one undertaking was
members
exempted from penalty
Price fixing The suppliers were each fined
Five liquefied
18 March or changes, Chongqing 3% of their respective turnover
petroleum gas No
2021 and market AMR in 2019 (0.07 million yuan in
suppliers
sharing total)
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© Law Business Research 2022China: Overview | Clifford Chance LLP
Date of
Confiscation
release of Enforcement
Undertakings Conduct Fine of illicit
penalty agency
gains
decision
Price fixing The companies were fined
Three
30 April or changes, 2%–4% of their respective
pharmaceutical Tianjin AMR Yes
2021 and market turnover in 2019 (38.99 million
companies
sharing yuan in total)
Price fixing The manufacturers were each
15 July Two concrete or changes, Chongqing fined 5% of their respective
No
2021 manufacturers and market AMR turnover in 2018 (23.13 million
sharing yuan in total)
Three active Price fixing The producers were fined
16 July pharmaceutical or changes, 1%–5% of their respective
Jiangsu AMR Yes
2021 ingredient and market turnover in 2018 (9.76 million
producers sharing yuan in total)
Price fixing
The trade association was
Fengcheng or changes,
fined 500,000 yuan; its
City Premixed output
members were fined 1%–8%
19 August Concrete restriction,
Jiangxi AMR of their respective turnover Yes
2021 Association market
in 2018 (27.59 million yuan in
and its eight sharing
total); one undertaking was
members and joint
exempted from penalty
boycotting
The firms were fined 1%–2%
NYK
of their respective turnover
Automotive
18 Price fixing in 2017 (2.23 million yuan
Logistics
November and market Zhejiang AMR in total); NYK Automotive No
(China) and
2021 sharing Logistics (China) was
two other
exempted from 90% of the
logistics firms
penalty
RPM
The SAMR and its local counterparts were more active in enforcement against RPM
in 2021. There were two published infringement decisions concerning RPM in 2021,
compared with none in 2020. In addition to being the highest fine in the pharma-
ceutical sector, the RPM fine for Yangtze River Pharma also marked a record high in
penalty amount of all RPM cases, being over four times the previous highest RPM
fine (imposed on Changan Ford Automobile (162.8 million yuan)).
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© Law Business Research 2022Clifford Chance LLP | China: Overview
Table 2: RPM cases in China published in 2021
Date of
Relevant Confiscation
release of Relevant Enforcement
Undertakings geographical Conduct Fine of illicit
penalty products agency
market gains
decision
The company
was fined 3%
Price
Yangtze River of its turnover
15 April Key types fixing
Pharmaceutical China SAMR in 2018, No
2021 of drugs and price
Group Co Ltd amounting to
restriction
0.76 billion
yuan
Converter,
The company
wall
was fined 3%
switch Price
27 of its turnover
Bull Group Co sockets fixing Zhejiang
September China in 2020, No
Ltd and other and price AMR
2021 amounting to
civil restriction
0.29 billion
electrical
yuan
products
Abuse of dominance
There were 11 published infringement decisions concerning abuse of dominance in
2021. Apart from digital platforms, the utilities and pharmaceutical sectors remain the
focus of enforcement. Table 3 below lists all the abuse cases in China published in 2021.
Table 3: Cases concerning abuse of dominance in China published in 2021
Confiscation
Release Relevant Abusive Enforcement
Undertakings Fine of illicit
date market conduct agency
gains
Product
The undertaking
market –sales
Simcere was fined 2% of
of batroxobin
22 January Pharmaceutical Refusal to its turnover in
API SAMR No
2021 Group Limited (an deal 2019, amounting
Geographic
API distributor) to 100.7 million
market
yuan
– China
89
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Confiscation
Release Relevant Abusive Enforcement
Undertakings Fine of illicit
date market conduct agency
gains
Product
market –
urban public
tap water The undertaking
Mengzi Sitong Tying and
supply was fined 6% of
Taixing Water imposing
18 February services its turnover in
Supply Co Ltd (a unreasonable Yunnan AMR No
2021 Geographic 2018, amounting
local public tap trading
market – a to 2.5 million
water supplier) conditions
designated yuan
area of Mengzi
City, Yunnan
province
Product
market –
pipeline The undertaking
Tying and
Fushun County gas supply was fined 1% of
imposing
Natural Gas (a services its turnover in
1 April 2021 unreasonable Sichuan AMR No
local piped natural Geographic 2019, amounting
trading
gas supplier) market – to 1.66 million
conditions
seven towns yuan
in Sichuan
province
Product
market – The undertaking
Alibaba Group online retail was fined 4% of
10 April Holding Limited platform Exclusive its turnover in
SAMR No
2021 (an online retail services dealing 2019, amounting
platform) Geographic to 18.2 billion
market yuan
– China
Product
market –
Shanghai
English
Sherpa’s The undertaking
language-
Commerce was fined 3% of
based online
12 April Development Co Exclusive its turnover in
food delivery Shanghai AMR No
2021 Ltd (an English dealing 2018, amounting
platform
language-based to 1.17 million
services
online food yuan
Geographic
delivery platform)
market –
Shanghai City
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© Law Business Research 2022Clifford Chance LLP | China: Overview
Confiscation
Release Relevant Abusive Enforcement
Undertakings Fine of illicit
date market conduct agency
gains
Product
market –
urban public
tap water
Shaanxi Water The undertaking
supply Tying and
Group Jingyang was fined 2% of
services imposing
30 August Water Supply its turnover in
Geographic unreasonable Shaanxi AMR Yes
2021 Co Ltd (a local 2017, amounting
market – the trading
public tap water to 0.16 million
urban area conditions
supplier) yuan
of Jingyang
County,
Shannxi
province
Product
market –
China National
aviation The undertaking
Aviation Fuel Tying and
kerosene was fined 1% of
Group Limited imposing
31 August supply and its turnover in
Yunnan Branch unreasonable Yunnan AMR Yes
2021 filing services 2018, amounting
(an aviation trading
Geographic to 2.34 million
kerosene conditions
market – yuan
supplier)
Yunnan
province
Product
market –
The undertaking
online food
was fined 3% of
Meituan (an online delivery
8 October Exclusive its turnover in
food delivery platform SAMR No
2021 dealing 2020, amounting
platform) services
to 3.44 billion
Geographic
yuan
market
– China
Product The undertaking
Shangqiu
market – was fined 1% of
Xinxianfeng
29 October phenol API Excessive its turnover in
Pharmaceutical Henan AMR Yes
2021 Geographic pricing 2016, amounting
(an API
market to 9.40 million
distributor)
– China yuan
Product
market – piped
natural gas Excessive
(PNG) supply pricing, The undertaking
Yixing Towngas and pipeline exclusive was fined 2% of
18
Co Ltd (a local installation dealing and its turnover in
November Jiangsu AMR Yes
piped natural gas services imposing 2018, amounting
2021
supplier) Geographic unreasonable to 34.86 million
market – trading yuan
Yixing city, conditions
Jiangsu
province
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© Law Business Research 2022China: Overview | Clifford Chance LLP
Confiscation
Release Relevant Abusive Enforcement
Undertakings Fine of illicit
date market conduct agency
gains
Product
market – Excessive The undertaking
Nanjing NingWei injection-use pricing and was fined 4% of
18
Medicine Co calcium imposing its turnover in
November Shanghai AMR Yes
Ltd (an API gluconate APIs unreasonable 2019, amounting
2021
distributor) Geographic trading to 4.04 million
market conditions yuan
– China
Merger review
In 2021, the SAMR conditionally cleared four transactions and prohibited one
transaction. While the numbers for conditional and prohibition cases do not deviate
materially from those of prior years, this does not mean that the SAMR has no capacity
strain. Notably, there was a significantly increased volume of simple cases (615 in
2021 compared with 373 in 2020, representing a 65 per cent increase). In addition
to routine cases, the SAMR also had to handle a large ramp-up in past failure-to-file
transactions (largely due to the confirmed notifiability for VIE transactions and an
enduring focus on technology companies).
Remarkably, 2021 also saw China’s first case with restorative remedies. While
restorative remedies are always at the regulator’s disposal (see, eg, article 48 of the
AML and article 57 of the Interim Provisions on the Review of the Concentration of
Undertakings),13 they had never previously been utilised.
Prohibition
The only transaction prohibited in 2021 was Huya/DouYu.14 This was the third
proposed merger blocked by the Chinese antitrust authority since the AML came
into force in 2008, and the first concerning the platform economy. It was also the first
prohibition decision imposed on concentrations between purely domestic Chinese
companies.
Huya and DouYu are the two largest players in the China videogame livestreaming
market. Huya is solely controlled by Tencent, while DouYu is jointly controlled by
Tencent and its founder. Tencent is active in the upstream market for online game
13 https://gkml.samr.gov.cn/nsjg/fgs/202010/t20201027_322664.html.
14 The proposed merger between HUYA Inc. (Huya) and DouYu International Holdings Limited
(DouYu). The full decision is available at: https://www.samr.gov.cn/fldj/tzgg/ftjpz/202107/
t20210708_332421.html.
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operations. The SAMR noted that the merger would significantly strengthen
Tencent’s market power in the downstream videogame livestreaming market, and that
the merged entity would have abilities and incentives to implement a two-way vertical
foreclosure in both the upstream online game market and the downstream videogame
livestreaming market. Given the lack of effective commitments, the SAMR decided
to block the merger.
Conditional clearance
The conditional cases in 2021 were:
• Acacia/Cisco;15
• Eaton Hydraulics/Danfoss;16
• MTS/Illinois Tool Works;17 and
• Intel Storage/SK Hynix.18
In three of these four conditional clearance cases (other than Acacia/Cisco), it was hori-
zontal overlap rather than vertical issues that prompted the SAMR’s concerns.
With respect to remedies, the SAMR continued its preference for behav-
ioural remedies and imposed purely behavioural remedies in all cases except Eaton
Hydraulics/Danfoss.
Regarding the SAMR’s inclination of ‘wait and see’, in two of the four conditional
cases (ie, Acacia/Cisco and Intel Storage/SK Hynix), China was the last jurisdiction to
clear the transactions.
15 The proposed acquisition of Acacia Communications Inc (Acacia) by Cisco Systems, Inc.
(Cisco). The full decision is available at: https://www.samr.gov.cn/fldj/tzgg/ftjpz/202101/
t20210119_325338.html.
16 The proposed acquisition of part of Eaton Corporation’s business (Eaton Hydraulics) by Danfoss
A/S (Danfoss). The full decision is available at: https://www.samr.gov.cn/fldj/tzgg/ftjpz/202106/
t20210607_330289.html.
17 The proposed acquisition of MTS Systems Corporation (MTS) by Illinois Tool Works Inc (Illinois
Tool Works). The full decision is available at: https://www.samr.gov.cn/fldj/tzgg/ftjpz/202111/
t20211118_336984.html.
18 The proposed acquisition of part of Intel Corporation’s business (Intel Storage) by SK Hynix Inc
(SK Hynix). The full decision is available at: https://www.samr.gov.cn/fldj/tzgg/ftjpz/202112/
t20211222_338317.html.
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Failure to file, and gun-jumping
There were 95 failure-to-file penalty decisions published by the SAMR in 2021, a
large hike compared with 2020 (14 cases). The SAMR imposed a fine of 500,000 yuan
in most of the cases, being the highest possible fine under the current AML.
In line with the enforcement focus on the digital sector, companies subject to
the pecuniary penalties include most major digital platforms such as Alibaba, Baidu,
JD.com, Suning, Tencent, Didi, Meituan, etc. Some of these companies proactively
reported their antitrust violations to the SAMR after they conducted internal checks
and became aware of the illegal practice.
Also, 2021 saw the first failure-to-file decision in China where anticompetitive
effects were identified and restorative remedies were imposed. On 24 July 2021, the
SAMR fined Tencent for failing to notify its acquisition of a 61.64 per cent equity
interest in China Music Corporation (CMC).19 The SAMR held that the relevant
market was the China market for online music streaming, in which both Tencent
and CMC are active. The SAMR identified several concerns with the transaction,
including increased market share, decrease of the number of major competitors and
heightened barriers to market entry. Eventually, the SAMR imposed a 500,000 yuan
fine as well as certain remedies to restore competition, including restricting Tencent
from: reaching exclusive agreements with upstream music copyright owners; asking
for more favourable terms from upstream copyright owners; and raising rivals’ costs by
excessive advance payments to upstream copyright owners. Furthermore, Tencent was
ordered to notify the SAMR of any future transactions that meet the Chinese filing
thresholds or that may eliminate or restrict competition, and to report other transac-
tions as part of its annual reports to the SAMR.
Litigations
With antitrust enforcement gaining force, China also saw more antitrust litigations
with ground-breaking features.
19 The full decision is available at: https://www.samr.gov.cn/fldj/tzgg/xzcf/202107/
t20210724_333020.html.
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SAMR’s abuse decision challenged before the Beijing High Court
On 22 November 2021, the Beijing High Court heard the administrative lawsuit
brought by Weifang Puyunhui Pharmaceutical (Puyunhui) and Shandong Kanghui
Medicine (Kanghui) (collectively, the Plaintiffs) against the SAMR.20 The case
concerns an appeal against the SAMR’s abuse decision released in April 2020, which
imposed a then record-breaking fine of 204.5 million yuan on three distributors of
calcium gluconate APIs, including the Plaintiffs, for selling at an unfairly high price
and imposing unfair trading conditions. The Plaintiffs first filed their administrative
appeals individually to Beijing No. 1 Intermediate Court, where the cases were heard
in December 2020. In 2021, the cases were transferred to the Beijing High Court and
combined as a joint action. This is reportedly the first case where the SAMR has been
sued for an antitrust penalty decision.
First monopoly suit involving refusal to data access accepted
In November 2021, Hunan Eefung Software (Eefung), a data analysis company,
brought a lawsuit before the Changsha Intermediate People’s Court against Weibo,
which runs China’s largest microblogging platform.21 Eefung collects data obtained
from platforms including Weibo and provides monitoring and analysis services for
government authorities. Eefung alleged that Weibo had refused to grant Eefung
access to Weibo’s data and therefore had abused its dominant position in the Chinese
microblogging market. The lawsuit showcased that the stance on antitrust brought
about by administrative enforcement appears to have raised public awareness of the
availability of antitrust-based private remedies.
Essential facilities doctrine debated in patent monopoly lawsuit
On 23 April 2021, Ningbo Intermediate People’s Court (Ningbo Court) issued its
ruling against Hitachi Metals Ltd (Hitachi Metals) in a civil lawsuit initiated by Ningbo
Ketian Magnet Co Ltd (Ketian) concerning Hitachi Metals’ abuse of dominance
by refusal to deal.22 Hitachi Metals is one of the largest sintered neodymium-iron-
boron (NdFeB) magnets manufacturers in the world and holds all the relevant patents
20 Weifang Puyunhui Pharmaceutical Co Ltd and Shandong Kanghui Medicine Co Ltd v the State
Administration of Market Regulation, Beijing High People’s Court.
21 Hunan Eefung Software Co Ltd and Hunan Eefung Software Co Ltd Beijing Branch v Beijing
Weimeng Chuangke Network Technology Co Ltd, Changsha Intermediate People’s Court.
22 Ningbo Ketian Magnet Co Ltd v Hitachi Metals Ltd, Ningbo Intermediate People’s Court.
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© Law Business Research 2022China: Overview | Clifford Chance LLP
required to manufacture NdFeB magnets. Ketian claimed that Hitachi Metals abused
its dominance by refusing to license to Chinese manufacturers the relevant patent
portfolio that is essential to manufacture NdFeB magnets.
In its assessment of abuse, Ningbo Court applied the essential facilities doctrine
to the patent licensing context, finding that Hitachi Metals’ patents constituted essen-
tial facilities and refusal to license such patents would constitute abuse of dominant
position. In particular, the relevant patents were indispensable and therefore the
third-party manufacturers of NdFeB magnets relied heavily on such patents. This
is probably the first time that the essential facilities doctrine has been applied in a
Chinese antitrust ligation. Hitachi Metals appealed the judgment of Ningbo Court to
the Supreme People’s Court, which heard the case on 23 November 2021. The final
judgment is yet to be released.
Abuse of administrative power
There were 38 published cases related to the abuse of administrative power in 2021
(compared with eight in 2020). The relevant sectors included gas supply, construction,
farm machinery, education, finance and transportation. Following the joint announce-
ment by the SAMR and other ministries to enhance the fair competition review on
9 May 2020,23 and the enactment of Detailed Rules for the Implementation of the
Fair Competition Review System on 29 June 2021,24 enforcement against the abuse
of administrative power was strengthened in 2021.
Institutional changes: establishment of the National Anti-Monopoly Bureau
On 18 November 2021, the Anti-Monopoly Bureau under the SAMR was escalated to
an upper level in the country’s administrative hierarchy to become the National Anti-
Monopoly Bureau.25 The new bureau consists of three newly established divisions:
• the Competition Policy Co-ordination Division, which is tasked with promoting
the implementation of competition policies and the coordination of antitrust-
related work;
23 Notice from Four Departments Including the State Administration for Market Regulation
regarding Further Promoting Fair Competition Review. The full text is available at: http://www.
gov.cn/zhengce/zhengceku/2020-05/15/content_5511833.htm.
24 https://gkml.samr.gov.cn/nsjg/fldj/202107/t20210708_332422.html.
25 https://www.samr.gov.cn/xw/zj/202111/t20211118_336974.html.
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• Anti-Monopoly Enforcement Division I, which is in charge of monopoly agree-
ments, abuse of market dominance, and abuse of intelligence property rights to
eliminate and restrict competition; and
• Anti-Monopoly Enforcement Division II, which takes responsibility for merger
control filings.
This organisational revamp highlights China’s determination to expand antitrust
enforcement manpower in order to further strengthen the antitrust clampdown.
Outlook for 2022
It is expected that China will continue its antitrust momentum in 2022; in particular,
the passing of the AML amendment will be a milestone. If the amended AML is
adopted in its draft form, more companies would file their transactions to err on the
side of caution and cease conducting suspicious antitrust violations. This also means
that more guidance, certainty and transparency will be required from the authorities.
It remains to be seen how the Chinese regulator will strike a balance between the
competing interests of a robust antitrust check over the economy, and the corporate
side seeking more legal certainty and lower compliance costs.
YONG BAI
Clifford Chance LLP
Yong Bai is a partner in Clifford Chance’s antitrust practice and the head of its anti-
trust practice in Greater China. Before joining the firm, he worked for the Ministry
of Commerce of the People’s Republic of China (MOFCOM). He has more than 10
years’ experience advising domestic Chinese and multinational corporations on anti-
trust, business investment and regulatory matters, at local and national levels across
a range of industries. From June to December 2013, he worked in the firm’s London
Office. From November 2014 to April 2015, he worked in the firm’s Brussels Office.
He is a member of the firm’s healthcare and life sciences group, consumer goods and
retail group and telecommunications, media and technology group.
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© Law Business Research 2022China: Overview | Clifford Chance LLP
DAYU MAN
Clifford Chance LLP
Dayu Man is a counsel in Clifford Chance’s antitrust practice. He has advised multi-
national and Chinese domestic corporations, investment banks and private equity
firms on antitrust matters in relation to both merger filings and conduct rules. Before
joining the firm, Dayu worked with a top Chinese law firm in its Beijing office and a
leading US law firm in its Washington, DC office. Dayu has been recognised by The
Legal 500 Asia Pacific as one of the ‘Rising Stars’ in the practice of ‘China Antitrust &
Competition’ (2020, 2021 and 2022).
NAN LAN
Clifford Chance LLP
Nan Lan is an associate in Clifford Chance’s antitrust practice. He advises on multi-
jurisdictional merger control, behavioural antitrust matters, compliance work and the
application of foreign investment regimes.
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© Law Business Research 2022Clifford Chance LLP | China: Overview
Clifford Chance is one of the world’s pre-eminent law firms with significant depth and
range of resources across Europe, Asia Pacific, the Americas, the Middle East and Africa.
Established in 1802 in London, Clifford Chance now has 32 offices in 22 countries and
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Understanding what our clients value and aligning with their needs underpins
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33/F China World Office Building 1 Yong Bai
Beijing 100004 yong.bai@cliffordchance.com
China
Tel: +86 10 6535 2288 Dayu Man
dayu.man@cliffordchance.com
www.cliffordchance.com
Nan Lan
nan.lan@cliffordchance.com
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© Law Business Research 2022The Asia-Pacific Antitrust Review 2022 edition of Global Competition Review
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