On June 24, 2022, the "Anti monopoly Law of the People's Republic of China" (hereinafter referred to as "Anti monopoly Law") was amended for the first time 14 years after its promulgation. This modification is not an average effort, but rather a relaxation. So who has the greatest impact on this practice? We believe that this amendment has the greatest impact on six categories of entities. In addition, we will briefly analyze the draft for comments on six supporting department regulations issued by the General Administration of Market Supervision on June 27, 2022.

1. Managers of enterprises, enterprise groups, and private equity funds with consolidated income of over 800 million yuan

Impact degree ★★★

Reason: The penalty amount declared for concentration of business operators has increased by 10 times

Resolution:

Article 58 of the revised Anti monopoly Law increases the fine of 500000 yuan to 5 million yuan. In addition, for transactions suspected of excluding or restricting competition, it is possible to calculate the penalty amount based on the operator's sales volume in the previous year. However, the "Provisions of the State Council on the Reporting Standards for Concentration of Business Operators (Revised Draft for Comments)" issued by the General Administration of Market Supervision on June 27, 2022 raised the threshold for operating revenue of 400 million yuan to 800 million yuan. The combined domestic and global turnover in China increased to 4 billion yuan and 12 billion yuan, respectively. In the future, for various domestic and foreign enterprises, enterprise groups, and private equity fund managers with a turnover of 800 million yuan in China, when conducting merger and acquisition transactions, they should carry out an antitrust declaration and evaluation of concentration of operators as early as possible, and should report fully.

Acquirers of Unicorn Enterprises

Impact degree ★★

Reason: May be required to declare

Resolution:

According to the second paragraph of Article 26 added in this revision, enterprises that do not meet the reporting standards may also be required to report due to the exclusion of centralized transactions and restrictions on competition. In practice, it is often seen in some unicorn mergers and acquisitions, or in some enterprises with new business models. In addition, the "Provisions of the State Council on Reporting Standards for Concentration of Business Operators (Revised Draft for Comments)" issued by the General Administration of Market Supervision on June 27, 2022, newly established a standard to include valuation in the reporting threshold. If the target company's operating revenue is less than 800 million yuan, but the following conditions are met simultaneously: (1) the target company's valuation is not less than 800 million yuan; (2) The target company's operating revenue in China accounts for more than one-third of its total revenue; (3) If the buyer's operating income in China exceeds 100 billion yuan, it still needs to declare.

3. Internet platform enterprises

Impact degree ★★

Reason: Do not use the advantages of data, algorithms, and technology

Resolution:

Article 9 and Article 22 of the Anti monopoly Law amended this time add restrictions on operators using data, algorithms, technology, etc. to engage in monopolistic behavior. As the "Anti monopoly Guide on the Platform Economy" has already provided more detailed regulations for platform enterprises, this revision of the law is expected. However, as a modification of the upper law, upgrading departmental regulations to law still has special significance for the administration of justice. In addition, the General Administration further stipulates in Article 21 of the "Provisions on Prohibiting the Abuse of Market Dominant Position (Draft for Comments)" that it is prohibited to use data, etc. to give priority to the display or ranking of its own products; Or use non-public data from operators on the platform to develop their own products or assist in their own decision-making.

4. Industry associations

Impact degree ★★★

Reason: The penalty amount increased by 6 times

Resolution:

Paragraph 4 of Article 56 of the revised "Anti monopoly Law" increases the upper limit of fines for monopoly agreements reached by industry associations from 500000 yuan to 3 million yuan. Previously, it was not uncommon for industry associations to be punished. After this amendment, the amount of penalties for illegal organizations of industry associations that enter into monopolistic agreements has increased sixfold, and the illegal costs of industry associations have increased significantly. In the future, when organizing member exchange activities, industry associations should strengthen compliance, focus on industry exchanges, and avoid leading members to reach any market segmentation and price coordination agreements.

5. Enterprises with a market share of less than 15% and a dealer system

Impact degree ★★★

Reason: Vertical agreements can utilize the safe haven rules

Resolution:

The revised "Anti monopoly Law" adds a safe haven rule for vertical monopoly agreements in Article 18, Paragraph 3. Although this amendment has increased the overall punishment for monopolistic behavior, it still introduces the rules of safe havens to support the development of small and medium-sized enterprises within the framework of maintaining market competition. It is worth noting that Article 15 of the "Provisions on the Prohibition of Monopoly Agreements" (Draft for Comments) issued by the State Administration of Market Supervision on June 27, 2022 stipulates that if the market share of operators and trading counterparties in the relevant market is less than 15%, they will not be prohibited. Therefore, if this article is not modified, we boldly speculate that for all vertical industries, 15% will likely become the threshold for a safe haven. In addition, the draft also stipulates the application confirmation process, which is also worthy of high attention.

However, for enterprises with a dealer system, according to the second paragraph of Article 56 of the Anti monopoly Law added in this amendment, even if the enterprise itself does not directly reach a monopoly agreement, if it helps other enterprises reach a monopoly agreement, it may also violate the Anti monopoly Law, and thus need to bear corresponding legal responsibilities. Therefore, enterprises with a dealer system need to pay attention to the horizontal risk of helping other dealers reach agreements while reducing vertical risk.

6. Legal representatives and other individuals of monopoly agreement enterprises

Impact degree: ★★★

Reason: Individual is fined for the first time, up to 1 million yuan

Resolution:

The first paragraph of Article 56 of the revised "Anti monopoly Law" newly adds legal responsibilities for specific personnel of monopoly agreement enterprises. Its legal representative, main responsible person, and direct responsible person may face a fine of less than 1 million yuan. The revised Anti monopoly Law assigns responsibility to individuals, forcing enterprises to further strengthen anti monopoly compliance management. Observing the law enforcement practices of other regulatory authorities, it is likely that individual punishment will lead to individual administrative reconsideration and litigation. It is estimated that the number of administrative reconsideration and litigation in this field is expected to increase further.

In general, we believe that this revision of the Anti monopoly Law will loosen restrictions on some concentration of operators with low turnover and vertical agreements, and increase supervision and punishment for platform enterprises and some concentration of operators with high turnover. Therefore, enterprises should adjust their daily anti monopoly compliance rules and plans for mergers and acquisitions in a targeted manner to prevent relevant risks.