Refining the Rules against Monopoly Agreements

Summary

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• The Amended AML and proposed revisions to implementing rules would establish a "safe harbor" through which vertical "monopoly agreements" among parties with market shares under 15% are rebuttably presumed to be permissible.
• Penalties for egregious violations of the rules against monopoly agreements may now be reach 50% of annual turnover.
• Individuals directly responsible for monopoly agreement offenses now be fined up to RMB 1 million.

China is refining the disciplines on anti-competitive agreements and concerted practices among multiple firms as "monopoly agreements" under the Anti-Monopoly Law (AML) (反垄断法). On June 24, 2022, the National People's Congress (NPC) amended the AML ("Amended AML") for the first time, which became effective on August 1, 2022. Three days later, the State Administration for Market Regulation (SAMR) released for public comment draft revisions to key implementing regulations, including the State Administration for Market Regulation, Provisions for the Prohibition of Monopoly Agreements (Draft for Comments)  (Draft Monopoly Agreement Rules) (国家市场监督管理总局禁止垄断协议规定 (征求意见稿)) and the State Administration for Market Regulation, Provisions for the Prohibition of the Abuse of Intellectual Property to Eliminate or Restrict Competition (Draft for Comments) (Draft IP Rules) (国家市场监督管理总局禁止滥用知识产权排除、限制竞争行为规定 (征求意见稿)).  While these changes, in certain circumstances, confirm the viability of defending resale price maintenance (RPM) and establish safe harbors for some vertical restrictions among non-competing firms, they also explicitly confirm new theories of harm under AML's monopoly agreement rules and dramatically increase the potential penalties for violations.

Monopoly agreements are defined as "agreements, decisions, or concerted actions that eliminate or restrict competition"