The Implementing Rules for the Fair Competition Review System (for Provisional Implementation) (the Implementing Rules) “has been implemented on October 23, 2017

In recent years, Chinese government has gradually strengthened the management of market competition. From the perspective of the legislation，after 3 times discussion, the 2nd draft of the amendment to the “Anti-unfair Competition Law” has been approved finally; “Opinions of the State Council on Establishing a Fair Competition Review System During the Development of Market-oriented Systems” was promulgated in 2016, all these series of legislation action are the signals. From the perspective of enforcement, the punishments on many giant companies are the signals too. In order to weaken the improper intervention of the authorities, NDRC and other 5 departments have joint released the “Implementing Rules”, there are several issues worthy of the attention of those enterprises with high market shares.
1. To collect public comments
The “Implementing Rules” prescribes that the review on fair competition shall collect the opinions of interested parties or solicit comments from the public. Normally, those enterprises with high market shares are the interested parties in the relevant important policies, it is recommended to express opinions timely.
2. To conduct regular review
The “Implementing Rules” prescribes that normally the relevant policies shall be reviewed at least once every three years, and for those individual policies, the review period could be determined by the promulgating institution. Because the market competition would be influenced by different factors, especially the force majeure factors, or new competition forms and so on, the updated regular review could help the promulgating institutions to adjust (such as to amend or abolish) the relevant policies timely, which reflects the meaning of fair competition.
3. To set the review criteria
The “Implementing Rules” prescribes the review criteria from 4 aspects, which are, (a) market entry and exit; (b) free movement of goods and inputs for production; (c) influence
on production and operating costs; and (d) influence on activities of production and business operations. In addition, it has listed a number of common irregularities. For example, in order to attract investment by presenting the advantage on the low HR expenses, some 3rd or 4th tier cities promised to exempt enterprises from pay enough social security expenses.
4. To set the exception criteria
For those circumstances which might restrict competition for a certain degree, but related to the public interests, such as national defense construction, social security, environmental protection and etc., or provided by laws and regulations, if 3 conditions are met, then it could be deemed as exceptions. Those conditions which are, (a) it is necessary for the implementation of the relevant policies; (b) it would not significantly eliminate or restrict market competition; and (c) it shall have a duration.