On 5 June 2009, the State Administration for Industry and Commerce (SAIC) issued the Procedural Regulations on the Suppression by the Administrative Authorities for Industry and Commerce of the Acts of Abusing Administrative Powers to Eliminate or Restrict Competition (Regulations). It seems that the Regulations make the regulatory landscape more complicated rather than simpler. Under the Regulations, the SAIC does not have power to enforce the Anti-Monopoly Law (AML) against a governmental agency or an administrative organisation administering public affairs abusing administrative power. The SAIC and its local branches can only make suggestions to government agencies about government conduct that may appear to be abusive practices as defined by the AML, but only the government agency itself has the power to take corrective action. This regulatory landscape means there will be a multitude of de facto AML enforcement authorities that will be interpreting and applying the abuse of administrative power provisions of the AML. It also produces a situation where government agencies are responsible for policing their own conduct, which inevitably gives rise to potential conflicts of interest. It therefore remains to be seen whether this pluralistic regulatory regime will result in an effective application of the AML to curb the abuse of administrative power.
Administrative Organisations Administering Public Affairs
According to the Regulations, where an administrative organisation authorised by laws or regulations to perform the function of administering public affairs abuses its administrative power to eliminate or restrict competition, the authority at a higher level shall order a correction. The person-in-charge and other directly responsible personnel shall be subject to corresponding penalties according to law. The SAIC and the administrations for industry and commerce of the provinces, autonomous regions, and municipalities directly under the Central Government (PAIC) may make suggestions to the authority at a higher level on how to deal with the case according to law.
Governmental Agencies
Where any department under the State Council or any provincial people’s government abuses its administrative power to eliminate or restrict competition, the SAIC may make suggestions to the State Council on how to deal with the case according to law.
Organisations Administering National Public Affairs
Where an organisation authorised by laws or regulations to perform the function of administering national public affairs abuses its administrative power to eliminate or restrict competition, the SAIC may make suggestions to the authority at a higher level of the said organisation on how to deal with the case according to law.
Local Governmental Agencies
Where any department under a provincial people’s government or a local people’s government below the provincial level or any of its departments abuses its administrative power to eliminate or restrict competition, the PAIC may make suggestions to the relevant authority at a higher level on how to deal with the case according to law.
Local Organisations Administering Public Affairs
Where an organisation authorised by laws or regulations to perform the function of administering local public affairs abuses its administrative power to eliminate or restrict competition, the PAIC may make suggestions to the authority administering the said organisation on how to deal with the case according to law.
Business Operators
No business operator may engage in any monopolistic act on the ground of compulsion, designation or authorisation by an administrative authority or an organisation authorised by laws or regulations to perform the function of administering public affairs.
Where any business operator enters into any monopolistic agreement or abuses its dominant market position, the Regulations on Procedures of Administrative Authorities for Industry and Commerce for Investigating Cases Involving Monopoly Agreements and Abuses of Dominant Market Positions shall apply.
Where other laws or administrative regulations have different provisions with this regulation on dealing with the abuse of administrative power by an administrative authority or an organisation authorised by laws or regulations to perform the function of administering public affairs to eliminate or restrict competition, such provisions in the other laws or administrative regulations shall prevail.
These Regulations shall be effective as of 1 July 2009. Click here for an unofficial translation of the Regulations.
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