Nikkei Asia reported on June 25, 2022 that Chinese tech firms would face tougher penalties for crossing the red line or China’s strict rules in competition. After lawmakers on Friday approved changes to the country’s antitrust law, it took years to implement.
The amendment, adopted by the Standing Committee of the National People’s Congress, will come into effect on Aug. 1. The changes are the first law since it came into force in 2008, Xinhua news agency reported.
The announced changes have not been released in full. But from the draft proposal announced in October The changes are designed to allow the Chinese tech giant to use shorter regulators. Although there were signs in April that China’s leaders were open to mitigating a crackdown on top e-commerce firm Alibaba Group Holding.
The draft amendment added the words “Promoting innovation” is included in the first article of the general provisions of the new Antitrust Act, Article 10. “Entrepreneurs must not exclude or limit competition by using data, algorithms, technology, capital advantages, and platform rules.” The wording appears to be aimed at big tech companies that squeeze smaller players and new competitors.
Jiao Haitao, a professor at the University of Political Science and Law of China in Beijing told the Chinese media that Under the amended law “Anti-competitive practices by most platform providers can be regulated by law.”
In a probable situation The tech giants are expected to face legal repercussions if they force merchants to operate on a single platform. This is a practice known in Chinese as “choose one from two”.
Alibaba faces regulatory pressure on its relationship with its sellers. in April last year China’s antitrust agency has fined Alibaba 182 billion yuan, or about $2.7 billion.
By amending the antitrust law, it will increase such penalties for serious violations and have broad implications. The fine may be doubled out of 5 times the normal amount. And the amendments would add substantial penalties for companies failing to report mergers to regulators. The original maximum fine of 500,000 yuan has been adjusted too low to thwart large tech groups.
Where non-disclosure affects the competitive environment The maximum penalty will be 10% of last year’s earnings. It was even found that failure to report did not jeopardize the competition. But the penalty limit is still increased by 10 times to 5 million yuan.
Under the amended antitrust law Authorities will use greater scrutiny on mergers related to public welfare, finance, science and technology and the media, Alibaba and other tech giants. has moved into finance and media which caused concern among officials.
China is trying to support small and medium enterprises. as part of the initiative President Xi Jinping’s “common wealth” business with a market share below a certain threshold will be exempt from antitrust regulations and will be allowed to re-sell prices if doing so does not jeopardize competition.
Sun Jin, a law professor at Wuhan University, told Chinese media that “The stronger powers given to antitrust laws limit the anti-competitive profits tech executives want and create a framework for achieving shared wealth.”
Chinese media said The fine for violating antitrust laws in 2021 to 23.5 billion yuan in 2021, from 400 million yuan in 2020, and China began to lay the groundwork to amend the antitrust law in 2018, and the authorities did not show a stance. Weakened to their stance in the technology sector
Reference: https://asia.nikkei.com/Business/China-tech/China-completes-overhaul-of-antitrust-law-to-corral-Big-Tech
