Antitrust Compliance Incentive Mechanism in China

By: Hao Zhan, Ying Song, Wesley & Libo Zhu (AnjieBroad)

The State Administration for Market Regulation (SAMR) initially released the Guidelines on Antitrust Compliance for Undertakings on September 18, 2020. Subsequently, on March 21, 2024, SAMR introduced a draft for public comments concerning the revised Guidelines on Antitrust Compliance for Undertakings, now referred to as the “New Compliance Guidelines.” This revised version offers more comprehensive explanations and recommendations regarding the establishment of antitrust compliance management systems for undertakings. Notably, it includes a significant number of relevant examples. A key feature of the New Compliance Guidelines is the incorporation of an antitrust compliance incentive mechanism. This mechanism allows antitrust enforcement agencies discretion in considering the implementation of such systems when evaluating undertakings’ antitrust behaviors and making decisions regarding enforcement.

This article aims to explore how undertakings can effectively interpret and apply the provisions of the New Compliance Guidelines, specifically focusing on the antitrust compliance incentive mechanisms, in practical scenarios. The objective is to provide undertakings with guidance for establishing and enhancing internal antitrust compliance management systems.

1. Antitrust Compliance Incentive Scenarios Articles 34 to 37 of the New Compliance Guidelines outline four scenarios for antitrust compliance incentives:

1.1 Pre-Investigation Compliance Incentives Article 34 of the New Compliance Guidelines delineates Pre-Investigation Compliance Incentives. It states: “Where undertakings cease suspected monopolistic behaviors before investigation by the antitrust enforcement agency, and these behaviors are minor and non-harmful to competition, the enforcement agencies may consider the establishment and implementation of antitrust compliance management systems when assessing whether corrective actions were taken promptly or whether there was subjective fault. Consequently, they may exercise discretion in not imposing administrative penalties in accordance with Article 33 of the Administrative Penalty Law of the People’s Republic of China.”

Article 33 of the Administrative Penalty Law of the People’s Republic of China outlines three circumstances where administrative penalties may not be imposed, including instances where the illegal behavior is minor and promptly corrected without harmful consequences, first-time minor violations that are promptly corrected, and situations where the party can provide evidence of the absence of subjective fault. Other provisions in laws and administrative regulations may also apply…

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