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On 10 November 2020, the State Administration for Market Regulation (SAMR) published the draft Anti-Monopoly Compliance Guidelines for the Platform Economy for public consultation.

The draft guidelines clearly signal that stronger antitrust enforcement in China¡¯s tech sector is likely. This appears to be driven by a desire on the part of the central government to rein in the growing strength of internet platforms, and to encourage a more diverse market structure.

The draft guidelines are expected to be finalised by the end of this year, or early next year, and cover an extensive range of issues related both to merger control as well as antitrust enforcement.

Merger control

(1) Variable interest entity (VIE) structures are expressly stated to be subject to merger control in China in the normal way. Parties to concentrations involving such structures now need to assess whether their transactions meet the relevant thresholds.

(2) The SAMR may investigate tech deals ex officio, even where they fall outside of the normal thresholds for notification, particularly where transactions involve emerging players or startups, where the parties fall below the turnover threshold due to free pricing models, and where the markets are concentrated.

Anticompetitive agreements

The draft guidelines flag various potential infringements, including:

• Interactions between competitors, including the use of platforms by competitors to exchange competitively sensitive information, algorithmic collusion, and hub-and-spoke agreements;
• The use of technology to implement resale price maintenance; and
• Price parity and most-favoured nation clauses (stated to be subject to effects-based analysis).

Abuse of dominance

In addition to restating conventional forms of abuse, the draft guidelines flag potentially novel conduct that may be considered abusive, including:

(1) exclusivity obligations, or restrictions precluding counterparties from dealing with rival platforms (¡°either or¡±, or ¡°one from two¡± type arrangements);

(2) personalised pricing (discrimination) on the part of dominant platforms without justification;

(3) data as an essential facility, and refusal to supply;

(4) tying or bundling conducted through technical means; and

(5) penalising certain operators ¨C via search downgrades, traffic restrictions, technical barriers, etc. ¨C to force business operators to accept the platform’s services or terms.