Karl Zhang
On September 11, 2020, the Anti-Monopoly Commission of the State Council issued the Anti-Monopoly Compliance Guidelines for Business Operators (the “Guidelines”), which will go into effect on the day of their promulgation. The Guidelines are highlighted as follows:
I. Basic concepts
Compliance as mentioned in the Guidelines refers to the requirement for business operators and their employees to comply with the Anti-Monopoly Law and other laws, regulations, rules and other normative documents (the “Relevant Anti-Monopoly Provisions”), while compliance risk refers to probability of triggering liability, economic or reputational losses or other negative impact due to failure of compliance with anti-monopoly rules by a business operator and its employees. Compliance management refers to the development of management activities such as system establishment, risk identification, risk responses, compliance training, etc. which seek to prevent and reduce anti-monopoly compliance risks by targeting the operational and management conduct of the business operator and its employees. Operators should be honest and trustworthy, compete fairly, advocate and cultivate a compliance culture, strictly abide by the law in their business activities, and avoid monopolistic conduct that is prohibited by the Relevant Anti-Monopoly Provisions.
II. Compliance management system
A business operator may establish an anti-monopoly compliance management system or carry out anti-monopoly compliance work within its existing compliance management system based on the state of its business operations, its size and the characteristics of the industry it is in. The operator’s senior management is encouraged to set down and fulfill clear and open commitments to anti-monopoly compliance, while other employees are encouraged to set down and fulfill corresponding commitments to anti-monopoly compliance. All operators are encouraged to engage in comprehensive and effective anti-monopoly compliance management work to prevent compliance risks. Operators may submit written reports to the anti-monopoly enforcement agency on its anti-monopoly compliance management system and the effectiveness of its implementation. Qualified operators are encouraged to establish an anti-monopoly compliance management department.
III. Key points regarding compliance risks
An operator shall not enter into, or organize with other operators to enter into, monopoly agreements that are prohibited by Articles 13 and 14 of the Anti-Monopoly Law. An operator in a dominant market position shall not engage in any act that abuses its dominant market position as prohibited by the Relevant Anti-Monopoly Provisions. If an operator engages in a merger of operators as defined under the Anti-Monopoly Law and meets the reporting thresholds set out in Article 3 of the Provisions of the State Council on the Criteria for Reporting Mergers, the operator shall report to the anti-monopoly enforcement agency in advance in accordance with law; no merger shall be implemented without such a report. Operators who violate the Anti-Monopoly Law shall assume corresponding legal liabilities as prescribed under law.
If an operator under investigation by the anti-monopoly enforcement agency for suspected monopoly conduct undertakes to take specific measures to eliminate the consequences of such conduct within a period of time recognized by the anti-monopoly enforcement agency, the anti-monopoly enforcement agency may decide to stop the investigation. If the operator actively reports to the anti-monopoly enforcement agency about the establishment of a monopoly agreement and provide important evidence, the anti-monopoly enforcement agency may, at its discretion, reduce or waive the penalty on the operator.
An operator and its employees shall cooperate with the anti-monopoly enforcement agency in the investigation of suspected monopoly conduct. When conducting overseas business, an operator shall understand and abide by the anti-monopoly laws and regulations of the country or region where the business is conducted and may consult an anti-monopoly attorney. In case of overseas anti-monopoly investigation or litigation, the operator may report the relevant situation to the anti-monopoly enforcement agency.
IV. Compliance risk management
Operators can identify the major anti-monopoly risks they may face based on its size, the characteristics of the industry it is in, the market conditions, the Relevant Anti-Monopoly Provisions and the enforcement environment. The operator can analyze and assess the sources of risk, their probabilities and severity of consequences and rank them according to the Relevant Anti-Monopoly Provisions. Operators may carry out risk assessment of and issue risk reminders to their employees based on their positions and corresponding compliance risk, thereby improving the pertinence and effectiveness of risk prevention, and control and reduce the risk of legal violations by the employees. Operators are encouraged to establish and improve risk handling mechanisms and take appropriate control and response measures to the various risks that have been identified, prompted and evaluated.
V. Compliance management safeguards
Operators can improve the incentive for their employees to comply with the Relevant Anti-Monopoly Provisions by establishing a compliance rewards and an internal reporting system, as well as enhancing the development of informatization and compliance training, strengthen the monitoring and analysis of compliance in operations and management, bring greater awareness of anti-monopoly compliance to employees, and improve the team competence level.
VI. Supplemental provisions
The Guidelines only provide a general guidance on an operator’s anti-monopoly compliance and are not mandatory; specific provisions on anti-monopoly compliance in laws and regulations shall still govern. Industry associations may refer to the Guidelines in formulating compliance management system for their industries. An online platform operator may refer to the Guidelines in formulating a compliance management system for operators on the platform.