Similarly, Chapter 5 of the AML prohibits “administrative monopoly”—the anti-competitive misuse of government authority. The AUCL's longstanding rules against tying and exclusive dealing by public utilities and other regulated monopolies, and against abuse of authority by local governments to exclude competitors from other localities were deleted.

The “entity bribery” anomaly

China's antitrust regime may also be reinforced by revisions to the AUCL's basic prohibition of commercial bribery. Article 8 of the original AUCL provided that “business operators shall not sell or purchase goods by offering bribes with money or other means. Where a business operator secretly pays kickbacks to the counterparty, be it an entity or individual, off the books, the business operator shall be punished for offering bribes; where the counterparty, be it an entity or individual, secretly accepts kickbacks off the books, the transaction counterparty shall be punished for taking bribes.” The amendments replace this text with a new Article 7, providing that “business operators shall not use money or other means to bribe the following entities or individuals to seek trade opportunities and competition advantages: (1) employees of trade counterparties; (2) entities or individuals authorized by trade counterparties for matters; (3) units and individuals that exploit authority or influence to create an impact on the transaction.”

This reformulation addresses the anomaly of “entity bribery.” In most jurisdictions, commercial bribery offenses entail the offer, payment, or promise of benefits for the purpose of improperly interfering with or influencing the recipient's performance of legal duties owed to third parties. Most bribe recipients are natural persons—individual employees or civil servants owing duties to employers or governments—or entities acting as fiduciaries. Because the AUCL's original definition contained no “interference with duty” element and expressly included “kickbacks” to “entities” (as opposed to individuals), Chinese regulators and courts have construed Article 8 of the 1993 AUCL to prohibit “bribery of entities.” Past cases have involved the provision of rebates, marketing support, complimentary equipment and accessories, or other incentives to their downstream distributors or customers. For example, in 2016, five foreign tire manufacturers received fines of between Rmb100,000 to Rmb160,000 for conducting downstream retailer incentive programs deemed commercial bribery.

Policing rebates, discounts, and incentive schemes as “entity bribery” under the AUCL undermines the development of Chinese antitrust under the AML. Competition regulators in other jurisdictions have condemned such practices as “abuse of dominance” in certain circumstances, generally based on specific findings of market power and exclusionary effects. Under the original AUCL, many common promotional practices could be condemned as “entity bribery” without any consideration of consumer welfare or efficiencies.

The new Article 7 pares back the concept of “entity bribery” by restricting commercial bribery to improper payments to three categories of bribery recipients. The first two categories—the employees and authorized agents of commercial counterparties—largely parallel foreign bribery rules proscribing interference with legal duties to third parties. Although foreign bribery laws typically would not prohibit payments to a third category of individuals and entities “exploiting authority or influence” over a transaction, such conduct may be actionable as tortious interference or other business torts. Narrowing the scope of “entity bribery” prohibited by the AUCL may allow Chinese law on exclusionary rebates and other incentives under the AML to evolve.