Strengthened regulation of platform economy in China
China’s market regulator issued the Guidelines for Anti-monopoly in the Platform Economy to strengthen enforcement against abuses by key market players
On February 7 2021, China’s State Administration for Market Regulation (SAMR) issued the Guidelines for Anti-monopoly in the Platform Economy (in Chinese 《国务院反垄断委员会关于平台经济领域的反垄断指南》) (hereinafter referred to as the Guidelines) after 3 months of public consultation. Alongside with the RMB 18.2bn (approx. GBP 2bn) antitrust sanction on Alibaba Group recently published and the initiation of investigation against Meituan and very likely other major platform players in different sectors in the Chinese market, the Guidelines showcase the Chinese regulator’s determination to tighten scrutiny of the tech giants, especially in the realm of platform economy.
As an overview, the Guidelines are based on the PRC Anti-Monopoly Law (2008) and consist of 6 chapters and 24 articles. The Guidelines aim to prevent and prohibit monopoly actions in the platform economy covering issues in relation to monopoly agreements, abuse of dominant market position and concentration of operations.
The Guidelines define the basic concepts of “platform”, “platform operator”, “operator within a platform” and “operators in the field of platform economy”, and set out the rules to define a “relevant market”. In light of the complexity of the platform economy, the definition of a “relevant market” needs to follow the general principles determined by the Anti-Monopoly Law, while considering the characteristics of the platform economy for case-by-case analysis.
The Guidelines clarify the form of monopoly agreements and set out specific criteria for other synergistic acts. In response to hot issues such as exclusive dealing and unfavourable pricing for existing customers based on big data analysis, the Guidelines list out key factors in determination of abuse of dominant market position in the platform economy. The regulator will first define the “relevant market”, analyse whether the operator has a dominant position in the relevant market, and then analyse whether it constitutes as an abuse of dominant position on a case-by-case basis.
With regards to the concentration of operators in the platform economy, the Guidelines distinguish the calculation of turnover of different types of platform operators in terms of declaration criteria, and clarify that the concentration of operators with VIE structure is also included in the scope of anti-monopoly review. If the concentration of operators does not meet the declaration criteria but has or may have the effect of competition exclusion or restriction, SAMR will investigate in accordance with the law. At the same time, the Guidelines specify the factors that can be taken into account in assessing the competitive effects of the concentration of operators in the platform economy, and the types of restrictive conditions that the SAMR may decide to attach when approving a filing.
Further, there is a standalone chapter in the Guidelines on stopping the abuse of administrative power to exclude and restrict competition according to law. It specifies the forms of such abuse of administrative power, and requires the formulation of new “sectoral rules” and “regulatory documents”1 by government departments or authorised public affairs administrations regarding the economic activities of platform economy market players shall be subject to fair competition review.
The Guidelines aim to the unify the enforcement standards of anti-monopoly authorities, improve the transparency of enforcement actions and promote deeper understanding and awareness of the Anti-Monopoly Law among various market players. The SAMR expressly states that it will continue to monitor the development of the platform economy, and to strengthen anti-monopoly regulation in order to ensure fair competition in the market.
1 Lower level legislations under the PRC legal regime, which are usually promulgated by the ministries or commissions of the central government.
