China’s antitrust watchdog, the State Administration for Market Regulation (SAMR), has proposed a revision of the nation’s competition law that targets tech firms.
The revisions are not yet official and remain open for public comment until December 22. Among the changes are a requirement that operators must not use data, algorithms or obstruction of open sharing to unfair advantage.
Businesses also can’t use a person’s data to treat them different or impose restrictions. It also puts the onus on platform operators to “strengthen competition compliance management.”
The revisions also take a stand against bribes, false publicity and malicious trading behaviors. And it bars businesses from forcing exclusive agreement and blocking external links or platforms. The changes also bring the maximum fine to up to 5 percent of a company’s annual revenue.
Beijing bills the Anti-Unfair Competition Law as creating a fair market environment and protects the rights of business operators and consumers. The law came into effect in 1993 and has received two amendments: one in 2017 and a second in 2019. The proposed changes were initiated in January 2021.
Angela Zhang, law professor at Hong Kong University, noticed that the timing of the draft’s release was unusual.
The timing for promulgating this draft is also very peculiar. The SAMR started deliberating on the draft law almost a year ago, suggesting that it might have waited until after the 20th Party Congress to release it.
— Angela Zhang (@AngelaZhangHK) November 22, 2022
Zhang also said that if the revision passes, “the law will have real teeth” and regulators and plaintiffs bear the burden of proof thanks to vague wording on Beijing’s behalf.
“It might signal a resurgence of regulation, after the temporary easing since Vice Premier Liu He’s meeting to calm the market back in March,” warned Zhang.
Beijing spent two years hammering on tech with regulations for all manner of offenses and behaviors, including antitrust. For example, fines were issued to big name mergers for failing to declare deals, “super large” platforms were subject to additional regulations, Alibaba had its browser yanked under accusations of unfair play, and Ant Group had its IPO blocked and was forced to restructure its loans business.
Meanwhile, Beijing sought to “civilize the internet” and did so by cracking down on all types of things from online fanclubs for teenage girls to video games – which it referred to as “spiritual opium.”
But last spring, Beijing did appear to turn the tide of increasingly regulating tech and online activity. In April it approved video game licenses to 45 titles after a nine-month pause and in May reversed a ban on tech companies listing offshore, among other actions. ®