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Comprehensive regulations reveal how mainland China, Japan and Taiwan are developing laws to strengthen enforcement against anti-competitive behaviour

Unpacking China’s antitrust law regime

As one of the world’s largest economies, China has been dedicated to improving its antitrust system in recent years to strengthen enforcement against monopolistic practices and provide clearer guidance to undertakings.

This article aims to provide an introduction and insight into China’s antitrust law regime based on the authors’ practical experience.

Legislation

The Anti-Monopoly Law (AML) is fundamental to China’s antitrust regime, providing a general framework for regulation that outlines key rules on the applicable scope, prohibited monopolistic behaviour and penalties. First enacted in 2008, the revised AML was promulgated on 22 June 2022.

These amendments respond to calls for clearer guidance for both authorities and undertakings, as well as stricter enforcement against monopolistic practices. The main amendments to the AML reflect an alignment with evolving economic trends, including:

1. 1. Increased focus on monopolistic behaviour by using data and algorithms, technology, capital advantages, platform rules, etc.;
   2. Establishment of prohibitions and identification rules on hub-and-spoke agreements;
   3. Introduction of “safe harbours” for vertical monopoly agreements; and
   4. Significant increases in penalties.

Following the AML amendments, five implementing provisions were issued in 2023. The provisions respectively focus on prohibiting monopoly agreements, preventing abuse of market dominance, refining the merger control system, combating the abuse of administrative power (administrative monopoly) and addressing IP rights monopoly.

On 3 June 2025, the State Administration for Market Regulation (SAMR) issued the Provisions on the Prohibition of Monopoly Agreements (Revised Draft for Public Comment). On completion of the revision, the specific thresholds and conditions to apply the safe harbour rule for monopoly agreements would be further clarified.

In recent years, the SAMR has also refined its merger control review system through specialised guidelines. The Guidelines for the Review of Horizontal Concentration, promulgated on 10 December 2024, clarified the analytical framework for reviewing horizontal concentrations and provided key factors and detailed benchmarks for competitive assessment.

The Pilot Guidelines for Establishing Administrative Penalties Against Illegal Concentration of Undertakings further specified penalty criteria and scenarios for non-compliant concentrations, enhancing regulatory transparency.

In addition, Chinese authorities have provided detailed rules and guidelines to sectors, such as automobiles, the platform economy, pharmaceuticals and active pharmaceutical ingredients (APIs).

Enforcement authorities

Public enforcement. Prior to the institutional reform in 2018, the AML enforcement was led by the State Council Anti-Monopoly Commission through three separate authorities. After the reform, the public enforcement right was consolidated under the SAMR.

To enhance antitrust enforcement, the SAMR authorised provincial administrations for market regulation (local AMRs) to investigate monopoly agreements, abuse of market dominance and administrative monopoly within their administrative regions. With regard to merger filings, the local AMRs of Beijing, Shanghai, Guangdong, Chongqing and Shaanxi were commissioned to assist in the merger control review of selected simplified cases on a pilot basis.

Private Enforcement. Recently, enterprises harmed by monopolistic practices have become more aware of using litigation for self-protection. According to the judicial interpretation issued on 24 June 2024, first-instance civil monopoly cases are brought before the IP courts and intermediate people’s courts designated by the Supreme People’s Court.

As for territorial jurisdiction, antitrust disputes follow the general rules applicable to tort disputes, contract disputes, etc. These mainly involve the courts in the locations where the tortious acts were committed, or where the result occurred, where the contract was concluded or performed, and where the defendant is domiciled.

Monopolistic behaviour

The Anti-Monopoly Law mainly regulates monopolistic behaviour including monopoly agreements, abuse of market dominance and concentrations that have or might have the effect of excluding or limiting competition.

It also covers administrative monopoly and establishes a fair competition review system for policies issued by administrative agencies or authorised organisations. Undertakings can also use the AML to address anti-competitive behaviour by the government.

Monopoly agreements. In principle, the AML prohibits horizontal monopoly agreements between competitors, including those to:

1. 1. Fix or change the price;
   2. Limit production or sales volume;
   3. Divide markets;
   4. Restrict new technology or new products; and
   5. Boycott other undertakings.

The AML also identified two typical vertical monopoly agreements: Fixing the resale price and setting the minimum resale price, which is also known as resale price maintenance (RPM). Undertakings can defend against RPM claims by demonstrating the absence of anti-competitive effects.

The law can also cover non-price vertical agreements such as territory and client restrictions, but no precedents have focused solely on these no-price issues so far. To prohibit non-price vertical agreements, the authorities should prove their anti-competitive effects.

In addition, safe harbours have been introduced into the AML. Vertical monopoly agreements are not prohibited if the market shares of undertakings involved are lower than a certain threshold, and if other conditions set by the authorities are met. The precise market share threshold and other conditions to apply the safe harbour rule remain under discussion, with public consultation currently ongoing.

Organising and substantially assisting in monopoly agreements is also prohibited under the AML, which includes hub-and-spoke agreements within its scope.

Hub-and-spoke agreements involve both vertical and horizontal relationships, typically where a supplier sets prices with multiple dealers, leading to uniform pricing. Such behaviour is also subject to penalties similar to those for reaching or implementing monopoly agreements.

Abuse of market dominance. The premise of abuse is the possession of market dominance. The AML outlines factors for determining market dominance, including shares in the relevant markets, ability to control the sales market or inputs market, financial and technological capabilities, other undertakings’ reliance, and market entry. Market share is the most intuitive factor and the AML provides rules to presume dominance based on shares.

Typical abusive behaviours include:

1. 1. Selling at unfairly high prices or buying at unfairly low prices;
   2. Selling at a price lower than costs;
   3. Refusal to deal;
   4. Exclusive dealing;
   5. Conducting tie-in sales or imposing unreasonable conditions; and
   6. Discriminatory treatment.

Merger filing. According to the AML, a pre-merger filing shall be submitted if a concentration meets the turnover thresholds.

Specifically, acquisitions of equity or assets, establishment of new joint ventures, and acquisitions of control by contracts or other means are all subject to merger control regulations. The turnover thresholds mainly consider the consolidated or respective group turnover of the undertakings involved in the concentration in the previous fiscal year, as follows:

1. 1. With the combined global turnover exceeding RMB12 billion (USD1.7 billion) and the turnover of at least two undertakings within mainland China exceeding RMB800 million; or
   2. With the combined turnover within China exceeding RMB4 billion and the turnover of at least two undertakings within mainland China exceeding RMB800 million.

The Chinese authorities may also require the transaction parties to submit a filing if a transaction below the turnover thresholds is considered to have an anti-competitive effect.

Penalties

When a company is found to violate the Anti-Monopoly Law, the authorities would order it to cease the infringement and may confiscate illegal gains. Both the company and the responsible individuals might be subjected to significant fines, including:

1. 1. Fines on monopoly agreements, abuse of market dominance and illegal concentration are up to 10% of the undertaking’s turnover in the last fiscal year;
   2. Individuals are subject to fines of up to RMB1 million. Criminal liability and separate fines of up to RMB500,000 may also apply in the case of obstructing an investigation. There has been a rise in cases that account for individual liability and additional liability for obstructing investigations; and
   3. Where serious circumstances exist, the fines may be up to five times the above-mentioned amounts.

The commitment system applies to part of horizontal monopoly agreements, vertical monopoly agreements and abuse of market dominance. Under the commitment system, undertakings commit to implement specific measures to rectify the consequences of their behaviour, and the authorities may suspend or terminate the investigation if all these commitments are fulfilled.

China’s evolving antitrust regime aligns with its need for fair market competition. Enterprises should leverage the AML to safeguard their interests and foster business growth.

MERITS & TREE LAW OFFICES
5/F, 12/F, Raffles City Beijing Office
Tower 1 Dongzhimen South Street, Dongcheng District
Beijing 100007 P.R.C
Tel: +86 010 5650 0900
Email: meritsandtree@meritsandtree.com

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Japan’s antitrust enforcement from 2024 to 2025

The Japanese competition (antitrust) law is the Act on Prohibition of Private Monopolisation and Maintenance of Fair Trade, which is generally abbreviated as the “anti-monopoly act” (AMA) in English. However, the anti-monopoly aspect has hardly been enforced, and the name of the act does not match its enforcement. The AMA was enacted in 1947, and the Japan Fair Trade Commission (JFTC) has since accumulated enforcement experience, including in relation to foreign affiliated companies.

The JFTC has maintained a relatively low profile due to comparatively modest administrative fines (surcharges) compared to those in the US and Europe, coupled with the lack of active civil litigation, despite being a longstanding competition authority. However, a series of significant cases emerged between 2024 and the first half of 2025, indicating the JFTC’s strong determination to enforce the law.

Regulatory types

The AMA comprises the following main categories of regulatory types.

1. 1. “Unreasonable restraint of trade”, which prohibits horizontal restrictions, including bid-rigging and hardcore cartels. Violations are subject to: (a) criminal penalties for individuals and corporations (imprisonment and criminal fines); (b) a cease-and-desist order; and/or (c) an administrative monetary penalty (surcharges payment order) calculated at 10% of sales proceeds. Violations are also subject to civil litigation by victims.
   2. Business combination regulation (or merger filing), which requires that a written notification be filed with the JFTC in advance of any stock acquisition, merger, corporate split-up or business transfer exceeding a certain size. Closing cannot take place until the maximum 30-day waiting period is completed. If the commission does not complete its examination within 30 days, it may initiate a second 90-day examination.
      However, in complex cases 30 days is not sufficient, so it is common practice to consult with the JFTC in advance before starting the primary examination. In practice, the second 90-day examination is rarely conducted, and detailed discussions with the commission, including proposals for remedy, are mostly conducted within the primary examination.
   3. “Private monopolisation” and “unfair trade practices” (excluding abuse of superior bargaining position), which govern vertical trading restrictions. Note that only private monopolisation is subject to criminal penalties and administrative monetary penalties, but the legal requirements of private monopolisation and unfair trade practices overlap for the most part. They regulate exclusion of others, control of the distribution process and predatory pricing. They are also subject to civil litigation by victims.
   4. “Abuse of superior bargaining position” regulation is a unique type of unfair trade practice. It restricts the exploitation of vertical counterparties and aims to protect the weaker company. This clause does not apply only to companies with a high market share (e.g. dominant position) but also to companies that have a relatively superior position to the other counterparty. The Subcontract Act and the Freelance Protection Act also support the enforcement of abuse of a superior bargaining position.

Characteristics of enforcement

Compared to antitrust theory in the US or the EU, which has developed through the accumulation of court precedents, the precedents in Japan are still not enough to determine the interpretation of the anti-monopoly act. Therefore, the criteria for application of the AMA have not been well discussed.

For example, the “per se illegal” category does not exist in Japan. The act developed as an administrative law enforced by the JFTC, and the various guidelines of the commission are extremely important to understand the enforcement of the AMA. Civil litigation is not active in Japan due to the lack of treble damages, class actions and presumption of damages provisions.

Although there are criminal penalties for individuals and corporations for unreasonable trade restrictions, there were only about 30 cases in the AMA’s history. In recent years, a leniency system similar to amnesty in the US and leniency in the EU was introduced, which exempts from all fines and criminal penalties those who first voluntarily report illegal activities to the JFTC, and seems to work well so far.

One feature of the Japanese leniency system is that even those who voluntarily report to the commission, and who are not the first whistleblower, are also entitled to a certain amount of surcharge reduction, depending on their level of co-operation with the JFTC.

There are no specific gun-jumping regulations in Japan for merger filing, but it could be an unreasonable restraint of trade or a violation of the waiting period. Since a business combination with a high market share cannot be examined in the waiting period of 30 days, it is customary to initiate prior consultation with the JFTC before formal notification. JFTC officials are flexible, and the company should take a proactive approach to merger filing.

Abuse of superior bargaining position is a system that does not exist in the US and has developed differently in Japan, from article 102 of the Treaty on the Functioning of the EU. The JFTC has stopped formally issuing an order on abuse of superior bargaining position since the 2010s.

Instead, it enters into a type of settlement called a “commitment procedure”, in which companies voluntarily resolve the problem and the JFCT does not recognise illegal activities. The commission also recently published the names of companies on the grounds that they may have engaged in illegal activities.

Attorney-client privilege is partially granted, but not fully. The JFTC does not give the right to remain silent and does not allow attorneys to attend during interviews. Although what an attorney can do during a dawn raid is limited, the key point is the effective negotiation through the attorneys with the JFTC about the scope of the investigation.

Key developments

For the crackdown on cartels, a major case came to light in October 2024, involving four leading non-life insurance companies, which were ordered to pay surcharges totalling about JPY2 billion (USD13.8 million). Leniency was also used in this case.

In May 2025, hotel operators received a warning for exchanging information such as average room rates. This underscores the continued need for vigilance regarding information exchanges among competitors in Japan. The hotels were fortunate that the matter was resolved without any lawsuits being filed, or cease-and-desist orders or penalties being issued.

The JFTC had been putting increasing pressure on Big Tech. Previously, it had used settlement procedures and warnings, but in April 2025, it finally issued Google with a formal exclusion order.

In the area of bundled sales, a formal legal order was issued in July 2024, the first formal legal order in bundled sales in a quarter of a century. The case involved medical devices, and in February 2025 the commitment procedure between the JFTC and another medical device manufacturer concerning bundled sales was concluded.

With respect to resale price maintenance, the JFTC issued warnings in August 2024, followed by a cease-and-desist order in December, and another warning in March 2025, demonstrating its strong concern over such practices.

The merger between two drugstore chains has sparked significant discussion in merger reviews due to the inclusion of a remedy requiring the sale of 10 stores. Such remedies for retail stores have not been imposed for more than a decade, and they were previously considered unnecessary in highly competitive industries like drugstores.

However, multiple lawyers and economists have testified that the JFTC’s review process has clearly become stricter since 2025, requiring detailed counterarguments based on economic analysis.

Of the major merger cases announced by the JFTC in June 2025, three out of 10 included remedial measures. Of these, the acquisition of Nippon Cargo by ANA involved a detailed analysis. For the remedy proposed by ANA, a certain amount of cargo space would be provided to a third party. To ensure proper implementation, a law firm and a prominent economist were appointed as independent monitors, marking the first case of its kind.

Through recent legislative and guideline developments, the JFTC is strengthening its stance on protecting the vulnerable by using competition law. One example of this is the revision of the Subcontract Act, which expands the scope to include companies with substantial operations but small capital, as well as transportation contracts between shippers and transportation companies that were previously excluded.

CITY-YUWA PARTNERS
Marunouchi Mitsui Bldg., 2-2-2 Marunouchi,
Chiyoda-ku, 100-0005 Tokyo, Japan
Tel: +81 3 6212 5500
Email: takuro.awazu@city-yuwa.com

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Focus on Taiwan’s anitrust and competition rules

Multilevel marketing (MLM) is a model that originated in the US and evolved from the direct selling industry as it expanded in scale. In Taiwan, MLM has become a widely adopted business strategy, commonly utilised by enterprises as a channel for product promotion and consumer outreach.

Prior to 2014, MLM activities in Taiwan were governed by the Taiwan Fair Trade Act and its subordinate legislation, the Supervisory Regulations Governing Multi-Level Sales.

In response to the growing number of fraudulent schemes disguised as legitimate MLM operations, many of which gave rise to significant social concerns, Taiwanese regulators repealed the Supervisory Regulations Governing Multi-Level Sales in 2014, and a dedicated statute, the Multi-Level Marketing Supervision Act (MLMSA), was enacted to enhance the legal framework and strengthen regulatory oversight of MLM enterprises in Taiwan.

Definitions and structure

MLM, MLM enterprise and distributor. Pursuant to the MLMSA, multi-level marketing refers to a business model in which participants, referred to as distributors, promote or sell products or services through a tiered network composed of individuals they have recruited. This structure results in a multi-level organisation designed to expand sales and market reach by leveraging interpersonal relationships.

An MLM enterprise is defined as any company, business entity, organisation or individual that plans or carries out the abovementioned MLM model. The MLMSA further provides that foreign businesses, their distributors or third parties that introduce or implement multilevel marketing schemes or structures in Taiwan are also deemed to constitute MLM enterprises and are thus subject to the same regulatory requirements.

In addition, a distributor under the MLMSA is defined as any person who joins an MLM enterprise to promote or sell products or services and receives commissions, bonuses or other forms of economic benefit. Distributors may also recruit others into the organisation, thereby earning additional financial incentives based on the sales performance or recruitment activities of their downline participants. Even persons who join under certain conditions, such as acquiring the right to sell products or recruit others only after specific criteria are met, are regarded as distributors from the moment the agreement is executed.

Scope of products. In the context of multilevel marketing, the term products refers to tangible goods. However, services, including internet access and other intangible offerings, are also commonly distributed through MLM structures. Since the enactment of the MLMSA, the MLM sector in Taiwan has experienced rapid growth and has become an important channel for the distribution of both goods and services.

Operational characteristics of MLM models. At its core, MLM is built on a business plan or operational framework that relies on the replication of personal networks to drive sales. Participants not only purchase and consume the products themselves but also engage in retail sales to external consumers and recruit new members into the organisation. As individual networks expand, they collectively form the broader MLM structure. The ability to integrate consumption, retail and recruitment into a single model is a key feature distinguishing the model from other distribution methods.

Regulation and governance

Pre-commencement filing requirements. Before initiating any multi-level marketing activities, an MLM enterprise is required to file a report with the Taiwan Fair Trade Commission (TFTC). The filing should include certain statutory information, such as the enterprise’s basic corporate details and principal place of business, and the structure of the MLM system and the conditions for distributor participation. It must also include the terms of the proposed participation agreement to be executed with distributors, as well as the details regarding the products or services to be marketed (including their types, prices and sources).

Failure to comply with this requirement may result in a fine ranging from NTD100,000 (USD3,457) to NTD10 million. Depending on the severity of the violation, the TFTC may also order the dissolution of the enterprise, mandate the cessation of business or suspend its operations for a period of up to six months.

Disclosure obligations prior to distributor participation. Before a distributor joins an MLM plan or organisation, the enterprise is required to disclose the following information. All disclosures should be accurate, complete and free from any misrepresentation, concealment or misleading statements:

1. 1. The capital amount and business turnover of the MLM enterprise;
   2. The MLM compensation structure and conditions for distributor participation;
   3. Applicable laws and regulations governing MLM activities;
   4. The rights, obligations and liabilities of distributors, including conditions for withdrawal and the resulting legal consequences;
   5. Detailed product or service information; and
   6. If applicable, the method, criteria and rationale for deducting depreciation or value loss when repurchasing goods or services.

Violation of this requirement may result in a fine ranging from NTD50,000 to NTD2 million, depending on the severity of the violation.

Written participation agreement requirement. An MLM enterprise shall, on a distributor’s enrolment in its MLM plan or organisation, enter into a written participation agreement with the distributor and provide the original copy, which may be executed in electronic form. Violation of this requirement may result in a fine ranging from NTD50,000 to NTD2 million, depending on the severity of the violation.

Financial and operational recordkeeping. An MLM enterprise should prepare and maintain, at its principal place of business, the balance sheet and income statement for its MLM operations from the preceding fiscal year no later than the end of May each year. The enterprise is required to retain monthly records for a period of five years, covering organisational development, sales of products or services, bonus distributions and return handling within Taiwan. Failure to comply with these requirements may result in a fine ranging from NTD50,000 to NTD2 million, depending on the severity of the violation.

Prohibited conduct by MLM enterprises. To ensure fairness in MLM practices, the MLMSA requires that distributors’ income be primarily derived from the promotion and sale of products or services at reasonable market prices, rather than from the recruitment of new participants. Any violation of this restriction may result in imprisonment for a term of up to seven years and a fine of up to NTD100 million. The MLM enterprise may be ordered to dissolve, cease business operations or suspend its operations for a period of up to six months.

The enterprises are prohibited from engaging in the following conduct:

1. 1. Requiring distributors to pay fees that are clearly disproportionate to actual costs under the pretext of training, seminars, networking events, meetings, advancement programmes or similar activities;
   2. Demanding excessive or unreasonable payments in the form of security deposits, penalties or other charges;
   3. Inducing distributors to purchase quantities of products that clearly exceed what an ordinary person could reasonably sell within a short period, unless payment is deferred until resale;
   4. Granting preferential treatment to specific individuals in violation of the MLM plan or structure, thereby impairing the interests of other distributors;
   5. Improperly inducing a distributor to purchase or possess more than two rights to promote the MLM organisation; or
   6. Imposing any other obligations on distributors that are manifestly unfair or unconscionable.

Violation of these prohibitions may result in a fine ranging from NTD50,000 to NTD2 million, depending on the severity of the violation.

Recent TFTC actions

Recent enforcement actions taken by the TFTC for violations of the MLMSA have primarily involved the following types of non-compliance:

1. 1. Failure to enter into a participation agreement with the distributor at the time of enrolment in the MLM plan or organisation;
   2. Failure to file a report with the commission prior to the commencement of MLM activities; and
   3. The promotion of the activities through exaggerated or false claims about distributor income.

For example, since January 2023, Vegen Asia Taiwan Branch (Singapore) introduced the “Vyvo SocialFi Reward Programme” of Vyvo SocialFi in Taiwan and began recruiting members to participate in Vyvo’s MLM operations. However, Vegen Asia failed to file the required report with the TFTC prior to commencing such activities. As a result, the commission imposed an administrative fine of NTD500,000 on Vegen Asia.

DENTONS
3F, No.77, Sec.2, Dunhua S. Rd., Daan District,
Taipei City, Taiwan
Tel: +886 2 2702 0208
Email: james.hsiao@dentons.com.tw

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