According to Xinhua, China on June 24 approved a change to its antitrust law. The amendments will come into effect on August 1. This is the first change to the antitrust law since it went into effect in 2008.
Chinese tech giants will be put in a more difficult position with newly revised antitrust laws
Under the revised law, “most of the anti-competitive behavior of platform providers can be regulated by law,” said Jiao Haitao, a professor at the China University of Political Science and Law in Beijing. , speak.
Tech giants are expected to face legal consequences if they force suppliers to operate on only one platform, a practice known as “choose one” in the mainland. For serious, widespread violations, fines can range from double up to five times the usual fine. Authorities will also have the option of criminal prosecution. Alibaba has been under legal pressure over its supplier relationships. In April 2021, China’s antitrust authority fined Alibaba 18.2 billion yuan (about $2.7 billion) for abusing its dominant position.
The new amendment also significantly increases fines for companies that fail to report mergers and acquisitions to the regulator. The initial maximum fine of 500,000 yuan has been repealed, as it is too low to deter major tech corporations. In case the non-disclosure harms the competitive environment, the maximum penalty will be equivalent to 10% of the revenue of the previous year. Even if failure to report does not harm competition, the fine is increased tenfold to 5 million yuan. Alibaba, Tencent Holdings, Baidu and Didi were fined last year for not reporting acquisitions early.
Under the new antitrust law, authorities will more closely monitor mergers and acquisitions related to public welfare, finance, science and technology, and media.
While “making it difficult” for Big Tech, Beijing has sought to support small and medium-sized enterprises as part of Chinese President Xi Jinping’s “common prosperity” initiative. Firms whose market share falls below a certain threshold are exempt from antitrust regulations and are allowed to set resale prices if the practice does not harm competition.
According to Chinese media, fines for violating antitrust laws have spiked from 400 million yuan in 2020 to 23.5 billion yuan in 2021. China has begun to lay the groundwork for amendments. antitrust legislation around 2018, and the authorities show no sign of softening their stance on the tech sector.
“To overcome difficult economic circumstances, some restrictions on internet giants could be eased, but only to a limited extent. The overall policy of the Chinese leadership in controlling the internet giants will continue in the old direction,” a senior official said.