Guide to the Anti-monopoly Compliance of Undertakings (2024)

Guide to the Anti-monopoly Compliance of Undertakings (2024)

(Issued by the Anti-Monopoly and Anti-Unfair Competition Commission of the State Council on April 25, 2024)

Chapter I General Provisions

Article 1 Purposes and Basis

This Guide is developed in accordance with the provisions of the Anti-monopoly Law of the People's Republic of China (“Anti-monopoly Law”) and other applicable laws for the purposes of guiding and supporting undertakings in establishing and improving anti-monopoly compliance management rules, enhancing their capabilities to prevent, control, and dispose of anti-monopoly compliance risks, cultivating the culture of fair competition, consolidating the bottom line of operations in compliance with laws and regulations, and promoting the sustainable and sound development of undertakings.

Article 2 Scope of Application

This Guide shall apply to undertakings engaged in economic activities within the territory of the People's Republic of China and undertakings engaged in economic activities outside the territory of the People's Republic of China, if the relevant economic activities have an impact on competition in the domestic market.

Article 3 Basic Concepts

For the purposes of this Guide, “anti-monopoly compliance” means that the business management activities of an undertaking and the performance of duties by its employees comply with the requirements of the Anti-monopoly Law and other applicable laws, regulations, rules, and other regulatory documents (hereinafter collectively referred to as the “relevant provisions of the Anti-monopoly Law”).

For the purposes of this Guide, “anti-monopoly compliance risks” means the possibility of being held legally liable and causing economic or reputational losses and other negative impacts arising from any violation of the relevant provisions of Anti-monopoly Law committed by an undertaking or any of its employees.

For the purposes of this Guide, “anti-monopoly compliance management” means the organized, planned, and whole-process management activities, including but not limited to the development of rules, risk identification, risk disposal, compliance review, compliance training, compliance commitment, compliance rewards and punishments, and compliance supervision, carried out for the purposes of preventing and mitigating anti-monopoly compliance risks in the business management activities of undertakings and the performance of duties by their employees.

Article 4 Principles for Anti-monopoly Compliance Management

(1) Adhering to problem orientation. An undertaking may, according to the characteristics of the industry in which it conducts operations, market competition, and other factors, identify the business fields, work processes and positions that may give rise to anti-monopoly compliance risks, and conduct targeted anti-monopoly compliance management.

(2) Adhering to pragmatism and efficiency. An undertaking may develop appropriate anti-monopoly compliance management rules in light of its business size, business model, governance structure, and other circumstances. Large undertakings are generally required to establish relatively complete compliance management rules, while small- and medium-sized undertakings may establish compliance management rules compatible with their development stages and capabilities in light of their actual circumstances.

(3) Adhering to full coverage. Anti-monopoly compliance management shall cover all business fields, departments, and employees, and be carried out throughout decision-making, implementation, supervision, feedback, and other links, and reflected in decision-making mechanism, internal control, business processes, and other aspects, so as to achieve multi-party cooperation and connection between the upper and lower levels.

Article 5 Building a Culture of Fair Competition

An undertaking shall actively strengthen the building of a culture of fair competition, consciously abide by laws, operate in good faith, and shall not commit any acts prohibited by the relevant provisions of the Anti-monopoly Law. Senior executives shall play a leading role and conduct operations in accordance with the applicable laws and regulations.

An undertaking is encouraged to take anti-monopoly compliance as an important part of its business philosophy and social responsibility and pass on the culture of fair competition to its interested parties.

Chapter II Compliance Management Organization

Article 6 General Arrangements

An undertaking may establish an anti-monopoly compliance management organization system consisting of the anti-monopoly compliance management body, business and functional departments, and other departments. Among them, the anti-monopoly compliance management body shall be responsible for coordinating, organizing, and promoting anti-monopoly compliance management; business and functional departments shall be responsible for their daily anti-monopoly compliance management; and auditing, legal, internal control, and other departments shall perform their anti-monopoly compliance supervision duties within the scope of their functions and powers.

An undertaking may streamline the anti-monopoly compliance management organization system according to its size, business characteristics, operating cost, and other actual circumstances under the premise of realizing effective compliance.

Article 7 Compliance Management Body

The anti-monopoly compliance management body generally consists of a compliance governance body, the person in charge of compliance management, and the lead department of compliance management. The anti-monopoly compliance management body may be established exclusively, or the relevant departments may assume corresponding duties.

The compliance governance body, as the supreme body for anti-monopoly compliance management, shall be responsible for the organization, leadership, and coordination of anti-monopoly compliance management, and studying and deciding on major matters concerning anti-monopoly compliance management. The person in charge of compliance management shall be responsible for the overall deployment and organization of anti-monopoly compliance management. The lead department of compliance management shall be responsible for promoting the implementation of anti-monopoly compliance management requirements and providing compliance support to other departments.

Reference example 1: Enterprise A is a large enterprise and has established a legal affairs department at the time of its formation, but it has not carried out compliance management. Since undertakings in the same industry have been subject to anti-monopoly investigations and punishments, Enterprise A has realized the importance of anti-monopoly compliance and developed anti-monopoly compliance management rules, established an anti-monopoly compliance committee, appointed a chief compliance officer, and designated the legal affairs department as the lead department of compliance management, strengthened the anti-monopoly compliance responsibilities of persons in charge of business departments in their respective business fields, and established compliance training, internal reporting, compliance accountability, and other mechanisms.

Reference example 2: Enterprise B is a small enterprise and primarily faces monopoly agreement compliance risks due to its strong regional business operations and frequent communication with peers. Therefore, enterprise B decided to take pertinent compliance management measures and appointed the legal representative as the top compliance officer and appointed the legal specialist to concurrently serve as the compliance manager. Meanwhile, it is prescribed in the company's bylaws that all its employees shall prevent monopolistic acts, and it is also specified that the relevant peer activities and cooperation shall be subject to the ex-ante review by the compliance manager and major matters shall be reported to the legal representative for approval.

Article 8 Compliance Governance Body

The compliance governance body shall mainly perform the following duties:

(1) Approving the basic rules for anti-monopoly compliance management and specifying anti-monopoly compliance management objectives.

(2) Establishing and improving the anti-monopoly compliance management organization system.

(3) Deciding on the appointment and dismissal of the person in charge of compliance management and the setup and functions of the lead department of compliance management.

(4) Guiding, supervising, and evaluating anti-monopoly compliance management and implementing compliance assessment, as well as rewards and punishments.

(5) Studying and deciding on major matters concerning anti-monopoly compliance management and approving plans for the disposal of major anti-monopoly compliance risk events.

(6) Strengthening the building of a fair competition culture.

(7) Other duties determined by the undertaking according to its governance structure and management needs.

Article 9 Person in Charge of Compliance Management

The person in charge of compliance management shall mainly perform the following duties:

(1) Carrying out the requirements of the compliance governance body and leading the lead department of compliance management in coordinating and promoting anti-monopoly compliance management.

(2) Drafting basic anti-monopoly compliance management rules, specifying anti-monopoly compliance management objectives, and ensuring proper supervision and implementation.

(3) Participating in major business decision-making and offering compliance opinions, and reporting major risks and major matters in compliance management.

(4) Strengthening the training of anti-monopoly compliance management personnel and team building.

(5) Organizing and promoting information system construction for anti-monopoly compliance management.

(6) Directing branches of the undertaking to carry out anti-monopoly compliance management.

(7) Summarizing the annual work of anti-monopoly compliance management and including it in the annual compliance management report.

(8) Other duties determined by the undertaking in light of its governance structure and management needs.

The person in charge of anti-monopoly compliance management shall be sufficiently independent and authoritative in performing his or her duties. An undertaking is encouraged to appoint a senior executive as the person in charge of anti-monopoly compliance management.

Article 10 Lead Department of Compliance Management

The lead department of compliance management shall mainly perform the following duties:

(1) Developing and updating anti-monopoly compliance management rules and standards, optimizing compliance management mechanisms and processes, specifying compliance management plans, and ensuring their implementation by all departments.

(2) Organizing anti-monopoly compliance risk identification, assessment, reminder, and disposal.

(3) Conducting anti-monopoly compliance review and accepting anti-monopoly compliance inquiries.

(4) Supervising and inspecting the implementation of anti-monopoly compliance management rules and standards, organizing and conducting compliance risk screening and report investigations, and offering recommendations on the punishment of violators.

(5) Organizing and coordinating relevant departments and personnel in cooperating in the investigation and review of the anti-monopoly law enforcement body, and promoting the development of and urging the implementation of rectification measures.

(6) Organizing or assisting business, personnel, and other departments in providing anti-monopoly compliance training.

(7) Reporting the implementation of anti-monopoly compliance management and major risks to the person in charge of compliance management.

(8) Performing other duties determined by the undertaking according to its governance structure and management needs.

An undertaking shall provide necessary resources and guarantees for the independent performance of duties by the lead department of compliance management.

Article 11 Compliance Management Duties of Business and Functional Departments

Business and functional departments shall mainly perform the following duties in anti-monopoly compliance management:

(1) Establishing and improving the business management mechanisms and processes in line with anti-monopoly compliance management requirements, organizing the departments in implementing anti-monopoly compliance management rules and standards, and ensuring that compliance requirements are integrated into business rules, processes, and post duties.

(2) Regularly reviewing anti-monopoly compliance risks of key posts and key processes, carrying out compliance risk identification, and establishing compliance risk warning and response mechanisms.

(3) Being responsible for the preliminary review of the compliance of the departments' business management activities, and promptly consulting with the lead department of compliance management regarding potential anti-monopoly compliance risks.

(4) Cooperating with the lead department of compliance management in carrying out risk screening, reporting investigations, supervision and inspection, and rectification of problems, truthfully providing the materials and information required for anti-monopoly compliance management, and promptly reporting compliance risk matters.

(5) Cooperating in anti-monopoly investigation and review, promptly making rectification plans, and implementing rectification measures.

(6) Regularly reporting the implementation of anti-monopoly compliance management duties and associated risks.

(7) Other work relating to anti-monopoly compliance management.

An undertaking is encouraged to appoint full-time or part-time compliance managers in its business and functional departments to continuously improve the professional level of compliance management.

Article 12 Building a Compliance Team

An undertaking is encouraged to establish a professional and high-quality anti-monopoly compliance management team, and it shall appoint appropriate anti-monopoly compliance management personnel according to its business size and compliance risk level, among others, to effectively enhance its compliance management capabilities.

Chapter III Compliance Risk Management

Article 13 Risk Identification and Assessment

Anti-monopoly compliance risk identification and assessment are professional and complex to some extent. An undertaking may, according to the characteristics of the industry in which it conducts operations and market competition and in light of its size, business model, and other factors, highlight key fields, key links, and key personnel, and strengthen the identification of anti-monopoly compliance risks.

An undertaking may, based on risk identification, assess the possibility of the occurrence of anti-monopoly compliance risks, their impact and consequences, among others, and carry out the hierarchical management of compliance risks. If industrial conditions and laws and regulations change, undertakings shall update risk identification and assessment in a timely manner.

Undertakings in specific fields may conduct pertinent anti-monopoly compliance risk identification and assessment by reference to the Guide to Anti-monopoly in the Automobile Industry, the Guide to Anti-monopoly in the Platform Economy Field, the Guide to Anti-monopoly in the Active Pharmaceutical Ingredients Field, and the Guide to Anti-monopoly in the Intellectual Property Field, and other applicable provisions.

Reference example 3: Enterprise A is a whole automobile manufacturer that sells automobiles through the mode of authorized dealers and has long-term cooperation relationships with downstream dealers. Through identifying the compliance risks of all posts of the business department, Enterprise A found that the marketing department was responsible for signing authorized operation contracts and authorizing automobile dealers to sell and provide after-sale services for automobiles of Enterprise A's related brands in certain regions under prescribed standards, and there was a risk of implementing vertical monopoly agreements restricting resale prices. Therefore, Enterprise A decided to establish a whole-process anti-monopoly risk assessment system covering ex-ante, interim, and ex-post processes. For business cooperation with downstream dealers, the business department shall assess in advance the level of anti-monopoly risks of the business to be launched, and then the lead department of compliance management shall review the corresponding anti-monopoly risks to realize ex-ante assessment; in the process, the lead department of compliance management shall pay attention to compliance risks at all times and give risk alerts in a timely manner; and the lead department of compliance management shall assess the implementation of compliance rules to ensure the implementation of compliance management requirements.

Article 14 Risk Reminder

An undertaking may, according to the differences in compliance risks of different posts, regularly carry out risk assessment and strengthen risk reminders to high-risk staff to prevent and control risks in a more pertinent and effective manner.

High-risk personnel mainly include the legal representative, senior executives, and personnel in the main business departments who know competitively sensitive information and may have contact with competing undertakings or upstream and downstream undertakings. Major business departments generally include departments in charge of the development of sales, procurement, price, and business policies, merger and acquisition management, sales network management, liaison with industry associations, and other matters.

For the purposes of this Article, “competitively sensitive information” means the information closely related to market competition, such as the cost, price, discount, quantity, quality, turnover, profit, or profit margin of commodities, as well as an undertaking's research and development, investment, production, marketing plans, customer list, and future business strategies, except the information that has been disclosed to the public or can be obtained through public channels.

Reference example 4: Enterprise A is an enterprise engaging in sandstone production and operation in a place and has established a risk reminder mechanism. As competition in the sandstone industry intensifies and the prices drop, the local sandstone industry association has organized several self-regulatory meetings, requiring sandstone enterprises to avoid low-price competition. Based on the feedback from the participants at the meeting, Enterprise A has studied and judged the possible compliance risks of its conduct constituting a monopoly agreement and assessed the risk level as high. Therefore, Enterprise A promptly forwarded through the email system assessment results to its general manager, deputy general manager, sales manager, and other high-risk personnel who have frequent contact with competitors, reminding them not to exchange competitively sensitive information such as sales prices and discount plans in meetings, communications, and other activities with the employees of other sandstone enterprises, so as to effectively prevent the compliance risk of reaching monopoly agreements with competitors.

Article 15 Identification of Compliance Risk of Monopoly Agreement

Compliance risk of monopoly agreement means the risk of reaching or organizing other undertakings to reach a monopoly agreement prohibited by Articles 17, 18, and 19 of the Anti-monopoly Law. An undertaking shall not commit any of the following conduct in its operations:

(1) Reaching a horizontal monopoly agreement with other competing undertakings, such as fixing or modifying the prices of commodities, restricting the production quantity or sales volumes of commodities, dividing the sales or raw material procurement market, restricting the purchase of new technology or new equipment or restricting the development of new technology or new products, and jointly boycotting transactions. Since the exchange of competitively sensitive information may lead to the risk of horizontal monopoly agreement, an undertaking shall not exchange competitively sensitive information with competing undertakings in any explicit or implicit form, such as letters, e-mails, phone calls, text messages, meetings, instant messaging software, data, algorithms, technologies, and platform rules.

(2) Reaching a vertical monopoly agreement with the other parties to transactions, such as setting a specific price of commodities for resale to a third party or restricting the minimum price of commodities for resale to a third party. An undertaking shall not directly or indirectly restrict the resale price of the other parties to transactions by such means as restricting the range of price changes, profit levels, discounts, and service charges or by taking relevant punitive or incentive measures.

(3) Organizing other undertakings to reach a monopoly agreement or providing substantive assistance for other undertakings to reach a monopoly agreement. An undertaking shall not organize other undertakings such as peer competitors, upstream suppliers, and downstream distributors to reach a monopoly agreement, or provide substantive assistance for reaching a monopoly agreement, including providing necessary support, creating key convenient conditions, and other substantive assistance.

(4) Participating in monopoly agreements organized by industry associations, other undertakings, or relevant institutions. Before joining an industry association, an undertaking shall pay attention to assessing whether the relevant materials such as the bylaws, activity rules, and self-regulatory conventions of the industry association pose anti-monopoly compliance risks. Before attending the meeting initiated by the industry association, competing undertaking, an upstream or downstream undertaking, or any relevant institution and during the process of information exchange, an undertaking shall pay attention to examining the meeting minutes and other relevant materials to ensure that no inappropriate issues trigger anti-monopoly compliance risks. The undertaking shall prepare meeting minutes properly during the meeting, check meeting minutes after the meeting to avoid discussions on competitively sensitive information, make a clear statement to leave the meeting if necessary, and keep the relevant evidence of objections at the same time.

For the purposes of this Article, “monopoly agreements” include agreements reached or decisions made in written or oral forms or by other methods, as well as essentially coordinated and concerted actions committed by undertakings through other means without explicitly entering into any agreement or decision, excluding price following and other parallel conduct made by relevant undertakings based on their independent expression of intention. The Provisions on Prohibition of Monopoly Agreements, among others, may apply, mutatis mutandis, to relevant provisions.

Reference example 5: During the bidding process, competing enterprises A, B, and C made frequent communication, exchanged sensitive information, negotiated prices, and discussed bidding intentions by telephone, meeting, dinner, email, special visits, and other methods, reached agreements on bidding at high prices or not to bid and allocated customers many times, and implemented the agreements. The aforesaid acts constitute a monopoly agreement of fixing prices and dividing the sales market to exclude or restrict market competition, therefore, the undertaking violated Article 17 of the Anti-monopoly Law, which prescribes that “Undertakings in a competing relationship shall be prohibited from reaching the following monopoly agreements between them: (1) An agreement to fix or modify the prices of commodities. (3) An agreement to divide the sales or raw material procurement market.”

Reference example 6: The Manufacturer A of a medical device product reached an agreement with the other party to the transaction by such methods as distribution agreements, email notifications, and oral negotiations, limiting the minimum price of relevant medical device products resold to hospitals, and ensured the implementation of the agreed price by such measures as formulating and issuing product price lists for various distribution stages, conducting internal assessment, and revoking the distributor's bid-winning low-price products. The aforesaid acts constitute a monopoly agreement of limiting the minimum resale price of commodities for resale to a third party, which restricted market competition and pushed up the price of relevant commodities, therefore, the undertaking violated Article 18 of the Anti-Monopoly Law, which prescribes that “An undertaking shall be prohibited from reaching the following monopoly agreements with the other parties to transactions: (2) An agreement to set a minimum price of commodities for resale to a third party.”

Article 16 Identification of the Compliance Risk of A......