On 7 February 2021, the Anti-Monopoly Commission of the State Council of China issued the Anti-Monopoly Guidelines for the Platform Economy (国务院反垄断委员会关于平台经济领域的反垄断指南, "Guidelines") with immediate effect, with an intent to regulate China's fast-growing digital economy to: (i) prevent and stop monopolistic behaviours; and (ii) promote the sustainable and healthy development of online commerce.
The Guidelines consist of six chapters with 24 articles. Compared to its earlier draft Guidelines which were released for public comments on 10 November 2020, the final Guidelines generally adopt a similar scope and structure as the draft version, but appear to adopt a more balanced approach with respect to some controversial issues, such as the role of market definition and effects analysis. The final Guidelines emphasise that defining the "relevant market" is usually required when investigating monopoly agreements, abuse of dominance and merger control in the Internet platform sector, as opposed to the draft Guidelines which provided that the authorities may not need to clearly define the relevant market when, amongst others, investigating (i) horizontal monopoly agreements which fix prices or divide markets, or (ii) vertical monopoly agreements which fix resale prices or limit minimum resale prices.
For the Variable Interest Entities ("VIEs") related mergers and acquisitions ("M&As"), the Guidelines expressly state that transactions involving VIEs are subject to merger control in China in the normal way, which remains unchanged since the draft Guidelines. It is worth noting that before the final Guidelines were released, the PRC State Administration for Market Regulation had already taken enforcement actions against three VIE-related M&As by Alibaba Investment Co., Ltd., Tencent-backed China Literature Group, and Shenzhen Fengchao Network Technology Co., Ltd., respectively, imposing the statutory maximum fine (RMB 500,000) on each entity for their failure to notify of their respective transactions for merger control.
The Guidelines clearly signal that a radical overhaul in antitrust enforcement approach to Internet platforms is underway, but there is still a long way to go as the State Administration for Market Regulation must first ensure that the Guidelines are properly implemented.
