Provisions on Prohibiting Abuse of Dominant Market Positions

Provisions on Prohibiting Abuse of Dominant Market Positions
(Issued by Order No. 66 of the State Administration for Market Regulation on March 10, 2023 and shall come into force on April 15, 2023)

Article 1 For the purposes of preventing and curbing abuse of dominant market positions, these Provisions are developed according to the Anti-Monopoly Law of the People's Republic of China (hereinafter referred to as “Anti-Monopoly Law”).

Article 2 The State Administration for Market Regulation (“SAMR”) shall be responsible for the unified anti-monopoly law enforcement work against abuse of dominant market positions.

The SAMR shall, according to the provisions of subparagraph 2 of Article 13 of the Anti-Monopoly Law, authorize the market regulation departments of all provinces, autonomous regions, and municipalities directly under the Central Government (hereinafter referred to as the “market regulation departments at the provincial level”) to be responsible for the anti-monopoly law enforcement work against abuse of dominant market positions within their respective administrative regions.

For the purposes of these Provisions, anti-monopoly law enforcement institutions include the SAMR and market regulation departments at the provincial level.

Article 3 The SAMR shall be responsible for the investigation into and handling of the following acts of abusing dominant market positions:

(1) They are across provinces, autonomous regions and municipalities directly under the Central Government.

(2) The case facts are relatively complicated or have major influence across the country.

(3) The SAMR deems that it is necessary to conduct direct investigation and handling.

For abuse of dominant market positions listed in the preceding subparagraph, the SAMR may designate market regulation departments at the provincial level to investigate into and handle them.

In the investigation into and handling of abuse of dominant market positions, the market regulation departments at the provincial level finding that the acts do not fall under their scope of investigation and handling or the acts fall under their scope of investigation and handling, but need to be investigated and handled by the SAMR shall report to the SAMR in a timely manner.

Article 4 An anti-monopoly law enforcement institution shall treat all operators equally when investigating into and handling abuse of dominant market positions.

Article 5 Relevant markets refer to the scope of commodities and territorial scope in which operators compete for specific commodities or services (hereinafter referred to as “commodities”) within a certain period of time, including the relevant commodity markets and relevant regional markets.

Relevant market shall be defined by demand substitution analysis from the perspective of demanders. Supply substitution shall also be considered when the competitive constraints of supply substitution on operators' behaviors are similar to demand substitution.

To define relevant commodity markets, from the perspective of demand substitution, factors such as demanders' response to changes in commodity prices, characteristics and uses of commodities, and sales channels may be considered. From the perspective of supply substitution, factors such as the degree of difficulty for other operators to switch production and the market competitiveness of the commodities provided after the switch may be considered.

To define the relevant commodity markets in the field of platform economy, relevant commodity markets may be defined on the basis of the commodities on one side of the platform, and the platform may be defined as a relevant commodity market as a whole on the basis of the multilateral commodities involved in the platform, or multiple relevant commodity markets may be defined separately, and the mutual relationship and influence among the relevant commodity markets may be considered.

To define the relevant regional markets, from the perspective of demand substitution, factors such as transportation characteristics and costs of commodities, actual regions where most demanders choose commodities and inter-regional trade barriers may be considered. From the perspective of supply substitution, factors such as the timeliness and feasibility of commodities supplied by other regional operators may be considered.

Article 6 “Dominant market position” means a market position that an operator may control the prices, volumes or other transaction conditions of commodities in a relevant market, or can obstruct or affect other operators from entering into the relevant market.

For the purpose of this article, “other transaction conditions” means other factors that may have a substantial impact on transactions on the market, other than the price and quantity of commodities, including varieties and quality of commodities, terms of payment, mode of delivery, after-sales services, transaction selection, technical constraints, and so on.

For the purpose of this article, the term “may obstruct or affect other operators from entering into the relevant markets” includes excluding other operators from entering into the relevant markets, delaying other operators' entering into the relevant markets within a reasonable period of time, or making other operators enter into the relevant markets at substantially increased costs and leading to their inability to effectively compete with existing operators, and other circumstances.

Article 7 According to item (1) of Article 23 of the Anti-Monopoly Law, in the determination of the market share of an operator in a relevant market, the proportion of the sales amount, sales volume or other indicators of the operator's specific commodities in the relevant market within a certain period of time may be considered.

In the analysis on the competition situation in a relevant market, the development status of the relevant market, number and market shares of existing competitors, market concentration, degree of diversity of commodities, innovation and technical changes, sales and procurement models, situation of potential competitors, and other factors may be considered.

Article 8 According to item (2) of Article 23 of the Anti-Monopoly Law, in the determination of an operator's capacity of controlling the sales market or the raw material procurement market, the operator's capacity of controlling the upstream and downstream markets of the industrial chain, controlling the sales or procurement channels, affecting or deciding the price, volume, contract term or other transaction conditions, and obtaining the raw materials, semi-finished products, spare parts, relevant equipment, and other resources that need to be input indispensable to the production and business operation of enterprises in priority may be considered.

Article 9 According to item (3) of Article 23 of the Anti-Monopoly Law, in the determination of an operator's financial strength and technical conditions, the operator's asset size, profitability, financing capability, research and development capability, technical equipment, capacity of technology innovation and application, intellectual property rights owned and so on, as well as the way and degree by which the financial strength and technical conditions may promote the operator's business expansion or consolidation and maintaining of the market status, and other factors may be considered.

Article 10 According to item (4) of Article 23 of the Anti-Monopoly Law, in the determination of the degree of other operators' dependence on an operator in transaction, the transaction relationship, volume of transaction, and duration of transaction between other operators and the operator, the degree of difficulty in turning to other transaction counterparties within a reasonable period of time, and other factors may be considered.

Article 11 According to item (5) of Article 23 of the Anti-Monopoly Law, in the determination of the degree of difficulty for other operators to enter into a relevant market, the difficulty in market access and obtaining necessary resources, situation of control over the procurement and sales channels, scale of capital investment, technical barriers, brand dependence, costs for transformation of users, consumption habits, and other factors may be considered.

Article 12 According to Article 23 of the Anti-Monopoly Law and the provisions of Articles 7 to 11 of these Provisions, in the determination of whether an operator in the field of platform economy has dominant market positions, the competition characteristics, business models, transaction amount, transaction volume, number of users, network effects, lock-in effect, technical features, market innovation, capacity of controlling flow, capacity of mastering and handling relevant data, the operator's market force in affiliated markets, and other factors may be considered.

Article 13 In the determination of whether two or more operators have dominant market positions, besides the factors prescribed from Articles 7 to 12 of these Provisions, the consistency between behaviors of operators, market structure, transparency of the relevant markets, degree of homogenization of the relevant commodities, and other factors shall also be considered.

Article 14 Operators with dominant market positions shall be prohibited from selling commodities at unfairly high price or buying commodities at unfairly low price.

In the determination of “unfairly high price” or “unfairly low price,” the following factors may be considered:

(1) Whether the selling price or purchasing price is significantly higher or lower than the price of the same or comparable commodities sold or purchased by other operators under the same or similar market conditions.

(2) Whether the selling or purchasing price is significantly higher or lower than the price of the same kind of or comparable commodities sold or purchased by the same operator in other regions with the same or similar market conditions.

(3) Whether the selling price is raised or the purchasing price is lowered beyond the normal range when cost is basically stable.

(4) Whether the price of commodities sold is raised significantly faster than the cost growth rate, or the price of commodities purchased is lowered significantly faster than transaction counterparties' cost reduction rate.

(5) Other relevant factors that need to be considered.

When the field of platform economy is involved, the cost correlation among all relev......