The Amended PRC Anti-Monopoly Law: Prioritizing Abuse of Dominance in Digital Markets and IP Licensing

Summary

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• China's amended Anti-Monopoly Law preserves the basic rules against abuse of dominance, but authorizes punitive fines of up to 50% of annual revenues for egregious violations.
• The Draft Abuse of Dominance Rules, if implemented, would revise existing measures to prioritize abuse of dominance by online platform operators, including detailed rules against "self-preferencing" tactics.
• Abuse of dominance in digital markets is a new focus under the revised law.
• In addition, the Draft Anti-Monopoly Law IP Rules, if implemented, would revise existing guidelines to target abuses in the licensing of Standard Essential Patents, including "improper" litigation to enjoin the implementation of technical standards without a license to the underlying SEP.

Disciplining anticompetitive unilateral conduct by firms with substantial market power remains one of the most controversial aspects of competition policy. Rules against abuse of dominance, monopolization (and attempted monopolization), and the misuse of substantial market power vary between jurisdictions, with diverging tests for gauging dominance and distinguishing reasonable competition on the merits from unlawful exclusionary or predatory practices. Moreover, the competition authorities within many jurisdictions have often shifted their approach to unilateral conduct with evolving economic theory, changes in public policy and political leadership, and the commercial dynamics of global markets. In China, the Anti-Monopoly Law (AML) (反垄断法) rules against abuse of dominance have yielded blockbuster penalties against both foreign and domestic firms, and provoked debate over the role of antitrust in industrial policy, innovation, and state sector reform.

The Amended AML defines dominance as "the ability to control the price or quantity of goods or other trade conditions in the relevant market or to impede or affect the entry of other business operators into the relevant market."