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Anti-monopoly Law of the People's Republic of China

Order of the President of the People's Republic of China (No.68)

The Anti-monopoly Law of the People's Republic of China, which was adopted at the 29th meeting of the Standing Committee of the Tenth National People's Congress of the People's Republic of China on August 30, 2007, is hereby promulgated, and shall be effective as of August 1, 2008.

President of the People's Republic of China: Hu Jintao

August 30, 2007

Table of Contents

Chapter I - General Provisions
Chapter II - Monopoly Agreement
Chapter III - Abuse of Dominant Market Position
Chapter IV - Concentration of Business Operators
Chapter V - Abuse of Administrative Power to Eliminate or Restrict Competition
Chapter VI - Investigation into Suspected Monopolistic Conduct
Chapter VII - Legal Liabilities
Chapter VIII - Supplementary Provisions


Chapter I - General Provisions

Article 1 This Law is enacted for the purpose of guarding against and curbing monopolistic conduct, protecting fair market competition, enhancing economic efficiency, maintaining consumer interests and public interests, and promoting the sound development of the socialist market economy.

Article 2 This Law is applicable to monopolistic conduct in economic activities within the territory of the People's Republic of China. This Law is applicable to monopolistic conduct outside the territory of the People's Republic of China that has the effect of eliminating or restricting competition on the domestic market of China.

Article 3 The term "monopolistic conduct" as prescribed in this Law includes:
1. Monopoly agreements reached between business operators;
2. Abuse of dominant market position by business operators; and
3. Concentration of business operators that may have the effect of eliminating or restricting competition.

Article 4 The State shall formulate and implement competition rules suitable for the socialist market economy, perfect macro control, and improve on a united, open, competitive and orderly market system.

Article 5 Business operators may, through fair competition and voluntary association, concentrate themselves according to law, expand the scale of business operations and enhance market competitiveness.

Article 6 No business operator with dominant market position may abuse that dominant status to eliminate or restrict competition.

Article 7 With respect to sectors controlled by the State-owned economy and which have a bearing on the lifeline of the national economy and national security or the sectors conducting exclusive operation and sales according to law, the State shall protect the lawful business operations conducted by the business operators therein, and shall supervise and control the business operations of and the prices of commodities and services provided by these business operators, so as to protect consumer interests and facilitate technological progress.

The business operators referred to in the previous paragraph shall operate according to law, be honest, faithful and strictly self-disciplined, and accept public supervision, and shall not harm consumer interests by taking advantage of their controlling or exclusive dealing position. cartier replica watches rolex replica watches replica watches rolex replica watches

Article 8 No administrative organ or organisation empowered by a law or administrative regulation to administer public affairs may abuse its administrative powers to eliminate or restrict competition.

Article 9 The State Council shall establish an Anti-monopoly Committee, which is responsible for organising, coordinating and guiding the anti-monopoly work and performs the following functions:
1. Studying and drafting relevant competition policies;
2. Organising the investigation and assessment of overall competition situations, and releasing assessment reports;
3. Formulating and releasing anti-monopoly guidelines;
4. Coordinating anti-monopoly administrative law enforcement; and
5. Other functions assigned by the State Council.

The composition and working rules of the Anti-monopoly Committee shall be prescribed by the State Council.

Article 10 The anti-monopoly law enforcement agency designated by the State Council (hereinafter referred to as the "Anti-monopoly Law Enforcement Agency under the State Council") shall be responsible for the anti-monopoly law enforcement work.

The Anti-monopoly Law Enforcement Agency under the State Council may, as required by the work, empower corresponding agencies in the people's governments of the provinces, autonomous regions and municipalities directly under the Central Government to be responsible for the anti-monopoly law enforcement work in accordance with this Law.

Article 11 A trade association shall strengthen self-discipline within the trade, lead the business operators in the trade towards lawful competition, and maintain the market competition order.

Article 12 The term "business operator" as stated in this Law refers to a natural person, legal person, or any other organisation that engages in the production or business of commodities or provides services.

The term "relevant market" as mentioned in this Law refers to the commodity scope or territorial scope within which the business operators compete against each other over a certain period of time for specific commodities or services (hereinafter referred to as "commodities").


Chapter II - Monopoly Agreement

Article 13 Competing business operators are prohibited from reaching any of the following monopoly agreements with each other or among themselves:
1. Fixing or changing the price of commodities;
2. Restricting the production quantity or sales volume of commodities;
3. Dividing the sales market or the raw material procurement market;
4. Restricting the purchase of new technology or new facilities or the development of new technology or new products;
5. Conducting boycott transactions; or
6. Other monopoly agreements as determined by the Anti-monopoly Law Enforcement Agency under the State Council.

The term "monopoly agreements" as stated in this Law refers to agreements, decisions or other concerted behaviour that eliminates or restricts competition.

Article 14 Business operators are prohibited from reaching any of the following monopoly agreements with their trading parties:
1. Fixing the price of commodities for resale to a third party;
2. Restricting the minimum price of commodities for resale to a third party; or
3. Other monopoly agreements as determined by the Anti-monopoly Law Enforcement Agency under the State Council.

Article 15 Where the business operators can prove that a monopoly agreement reached by them falls under any of the following circumstances, the monopoly agreement shall be exempt from Articles 13 and 14 of this Law:
1. For the purpose of improving technologies, researching and developing new products;
2. For the purpose of upgrading product quality, reducing costs, improving efficiency, unifying product specifications or standards, or carrying out professional labour division;
3. For the purpose of enhancing operational efficiency and reinforcing the competitiveness of small and medium-sized business operators;
4. For the purpose of realizing public interests such as conserving energy, protecting the environment and providing disaster relief;
5. For the purpose of mitigating the severe decrease of sales volume or obviously excessive production during economic recessions;
6. For the purpose of protecting the justifiable interests in foreign trade or foreign economic cooperation; or
7. Other circumstances prescribed by the law or the State Council.

Where a monopoly agreement falls under any of the circumstances prescribed in Items 1-5 and is exempt from Articles 13 and 14 of this Law, the business operators shall also prove that the agreement reached shall not substantially restrict competition in the relevant market and can enable the consumers to share the benefits from the agreement.

Article 16 No trade association may organise the business operators in its own trade to implement the monopolistic conduct as prohibited by this Chapter.


Chapter III - Abuse of Dominant Market Position

Article 17 Business operators with a dominant market position are prohibited from committing any of the following acts of abusing such dominant market position:
1. Selling products at unfairly high prices or buying products at unfairly low prices;
2. Selling products at prices below cost without any justifiable cause;
3. Refusing to trade with a trading party without any justifiable cause;
4. Restricting their trading party so that it may conduct deals exclusively with themselves or with the designated business operators without any justifiable cause;
5. Implementing tying in sales or imposing other unreasonable trading conditions at the time of trading without any justifiable cause;
6. Applying discriminatory treatments on trading prices or other trading conditions to their trading parties with equal standing without any justifiable cause; or
7. Other forms of abusing the dominant market position as determined by the Anti-monopoly Law Enforcement Agency under the State Council.

The term "dominant market position" as mentioned in this Law refers to a market position held by business operators that can control the price or quantity of commodities or other trading conditions in the relevant market or can block or affect the entry of other business operators into the relevant market.

Article 18 The dominant market position shall be determined according to the following factors:
1. The market share of a business operator and its competitive situation in the relevant market;
2. The ability of the business operator to control the sales market or the raw material procurement market;
3. The financial and technical conditions of the business operator;
4. The extent of reliance on the business operator by other business operators in the transactions;
5. The degree of difficulty for other business operators to enter the relevant market; and
6. Other factors relevant to the determination of the dominant market position of the said business operator.

Article 19 Under any of the following circumstances, a business operator may be presumed to have a dominant market position:
1. The market share of one business operator accounts for 1/2 or more in the relevant market;
2. The joint market share of two business operators accounts for 2/3 or more in the relevant market; or
3. The joint market share of three business operators accounts for 3/4 or more in the relevant market.

Under the circumstance prescribed in Item 2 or 3 of the previous paragraph, if any of the business operators has a market share of less than 1/10, that business operator shall not be considered to have a dominant market position.

A business operator that has been presumed to have a dominant market position shall not be determined as having a dominant market position, provided that there is counter evidence.


Chapter IV - Concentration of Business Operators

Article 20 The "concentration of business operators" refers to any of the following circumstances:
1. Merger of business operators;
2. A business operator acquires control over other business operators by acquiring their equities or assets; or
3. A business operator acquires control over other business operators or is able to exert a decisive influence on other business operators by contract or any other means.

Article 21 Business operators shall declare in advance the concentration reaching the threshold of declaration prescribed by the State Council to the Anti-monopoly Law Enforcement Agency, and otherwise, they shall not implement the concentration.

Article 22 Under any of the following circumstances, business operators may not file a concentration declaration to the Anti-monopoly Law Enforcement Agency under the State Council:
1. Among all business operators involved in the concentration, one business operator possesses 50% or more of the voting shares or assets of every other business operator; or
2. A business operator not involved in the concentration possesses 50% or more of the voting shares or assets of every business operator that is involved in the concentration.

Article 23 To make a concentration declaration to the Anti-monopoly Law Enforcement Agency under the State Council, business operators shall submit the following documents and materials:
1. A declaration paper;
2. Explanations on the effects of the concentration on the relevant market competition situation;
3. The concentration agreement;
4. The financial and accounting statements for the previous fiscal year of the business operators involved in the concentration, as audited by an accounting firm; and
5. Other documents and materials as required by the Anti-monopoly Law Enforcement Agency under the State Council.

The declaration paper shall contain the names of the business operators involved in the concentration, their domiciles, business scopes, the date on which the concentration is to be implemented, and other matters prescribed by the Anti-monopoly Law Enforcement Agency under the State Council.

Article 24 Where the documents or materials submitted by the business operators are not complete, the business operators concerned shall supplement the relevant documents or materials within the time limit prescribed by the Anti-monopoly Law Enforcement Agency under the State Council. Otherwise, the declaration shall be deemed as not filed.

Article 25 The Anti-monopoly Law Enforcement Agency under the State Council shall, within 30 days upon receipt of the documents and materials submitted by the business operators pursuant to Article 23 of this Law, conduct a preliminary examination of the declared concentration of business operators, make a decision on whether to conduct further examination or not, and notify the business operators of that decision in written form. The business operators shall not implement the concentration until the Anti-monopoly Law Enforcement Agency under the State Council makes such a decision.

Where the Anti-monopoly Law Enforcement Agency under the State Council makes a decision that no further examination shall be conducted or where the Anti-monopoly Law Enforcement Agency fails to make a decision within the time limit, the business operators may implement the concentration.

Article 26 Where the Anti-monopoly Law Enforcement Agency under the State Council decides to conduct further examination, it shall, within 90 days from the date of decision, complete the examination, make a decision on whether to prohibit the concentration, and notify the business operators concerned of the decision in written form. If the Anti-monopoly Law Enforcement Agency under the State Council decides to prohibit the concentration, it shall explain the reasons. The business operators shall refrain from implementing the concentration within the period of examination.

Under any of the following circumstances, the Anti-monopoly Law Enforcement Agency under the State Council may, after notifying the business operators concerned in written form, extend the time limit of examination as prescribed in the preceding paragraph, with the extension being no more than 60 days:

1. The business operators agree to extend the time limit of examination;
2. The documents or materials submitted by the business operators are inaccurate and need further verification; or
3. The relevant circumstances have significantly changed after the declaration by the business operators.

Where the Anti-monopoly Law Enforcement Agency under the State Council fails to make a decision within the time limit, business operators may implement the concentration.

Article 27 The following factors shall be taken into account in the examination of the concentration of business operators:
1. The involved business operators' market share in the relevant market and their controlling power over that market;
2. The degree of market concentration in the relevant market;
3. The impact of the concentration of business operators on market access and technological progress;
4. The impact of the concentration of business operators on consumers and other business operators;
5. The impact of the concentration of business operators on the national economic development; and
6. Other factors that may affect the market competition and shall be considered as deemed by the Anti-monopoly Law Enforcement Agency under the State Council.

Article 28 Where the concentration of business operators will or may eliminate or restrict competition, the Anti-monopoly Law Enforcement Agency under the State Council shall make a decision to prohibit the concentration. However, if the business operators concerned can prove either that the favourable impact of the concentration on competition obviously exceeds the adverse impact, or that the concentration is in harmony with the public interests, the Anti-monopoly Law Enforcement Agency under the State Council may decide not to prohibit the concentration.

Article 29 Where the concentration of business operators is not prohibited, the Anti-monopoly Law Enforcement Agency under the State Council may decide to attach restrictive conditions for reducing the adverse impact of such concentration on competition.

Article 30 The Anti-monopoly Law Enforcement Agency under the State Council shall timely publicise a decision on prohibiting the concentration of business operators or a decision on attaching restrictive conditions to the concentration of business operators.

Article 31 Where a foreign investor participates in the concentration of business operators by merging or acquiring a domestic enterprise or by any other means, and national security is involved, besides the examination on the concentration of business operators in accordance with this Law, the examination on national security shall also be conducted according to the relevant provisions of the State.


Chapter V - Abuse of Administrative Power to Eliminate or Restrict Competition

Article 32 No administrative organ or organisation empowered by a law or administrative regulation to administer public affairs may abuse its administrative power to limit, or limit in a disguised form, entities or individuals to the business operation, purchase or use of commodities provided , by business operators designated by it.

Article 33 No administrative organ or organisation empowered by a law or administrative regulation to administer public affairs may abuse its administrative power to block the free circulation of commodities among different regions by:
1. Setting discriminatory charges, implementing discriminatory charge rates, or fixing discriminatory prices for non-local commodities;
2. Imposing technical requirements or inspection standards on non-local commodities that are different from those on their local counterpart, or taking discriminatory technical measures, such as repeated inspections or repeated certifications on non-local commodities, so as to restrict the entry of non-local commodities into the local market;
3. Adopting administrative licensing regimes aimed at non-local commodities, so as to restrict the entry of non-local commodities into the local market;
4. Setting up barriers or adopting any other means to block either the entry of non-local commodities or the exit of local commodities; or
5. Other acts that hamper the free circulation of commodities among different regions.

Article 34 No administrative organ or organisation empowered by a law or administrative regulation to administer public affairs may abuse its administrative power to reject or restrict the participation of non-local business operators in local tendering and bidding activities by imposing discriminatory qualification requirements or assessment standards or by failing to publicise information according to law.

Article 35 No administrative organ or organisation empowered by a law or administrative regulation to administer public affairs may abuse its administrative power to reject or restrict either investment in its jurisdiction or the establishment of local branches by non-local business operators by imposing unequal treatments on them that are different from those on the local business operators.

Article 36 No administrative organ or organisation empowered by a law or administrative regulation to administer public affairs may abuse its administrative power to compel business operators to engage in monopolistic activities that are prohibited by this Law.

Article 37 No administrative organ may abuse its administrative power to formulate provisions on eliminating or restricting competition.


Chapter VI - Investigation into Suspected Monopolistic Conduct
Article 38 The Anti-monopoly Law Enforcement Agency shall investigate any suspected monopolistic conduct according to law.

An entity or individual shall be entitled to report any suspected monopolistic conduct to the Anti-monopoly Law Enforcement Agency. The Anti-monopoly Law Enforcement Agency shall keep the informer confidential.

The Anti-monopoly Law Enforcement Agency shall conduct necessary investigations, where the tip-off is made in written form and supported by relevant facts and evidence.

Article 39 When investigating a suspected monopolistic conduct, the Anti-monopoly Law Enforcement Agency may take the following measures:
1. Conducting the inspection by entering into the business premises of business operators under investigation or by entering into any other relevant place;
2. Inquiring of the business operators under investigation, interested parties, or other relevant entities or individuals, and requiring them to explain the relevant conditions;
3. Consulting and duplicating the relevant documents, agreements, account books, business correspondences and electronic data, etc. of the business operators under investigation, interested parties and other relevant entities or individuals;
4. Seizing and detaining relevant evidence; and
5. Inquiring about the bank accounts of business operators under investigation.

Before any of the measures prescribed in the previous paragraph is adopted, a written report shall be submitted to the principal of the Anti-monopoly Law Enforcement Agency for approval.

Article 40 When investigating a suspected monopolistic conduct, there shall be at least two law enforcers, and they shall present their law enforcement credentials.

The law enforcers shall make notes on the inquiry and investigation, which shall bear the signatures of the persons under inquiry or investigation.

Article 41 The Anti-monopoly Law Enforcement Agency and its functionaries shall keep confidential the business secrets they have access to during the process of law enforcement.

Article 42 The business operators, interested parties and other relevant entities or individuals under investigation shall assist the Anti-monopoly Law Enforcement Agency in performing its functions; and shall not refuse or obstruct the investigation conducted by the Anti-monopoly Law Enforcement Agency.

Article 43 The business operators and interested parties under investigation shall be entitled to make statements. The Anti-monopoly Law Enforcement Agency shall verify the facts, reasons and evidence presented by the business operators and interested parties under investigation.

Article 44 Where the Anti-monopoly Law Enforcement Agency deems that monopolistic conduct is constituted after investigating and verifying the suspected monopolistic conduct, it shall make a decision on how to deal with such monopolistic conduct, and may publicize its decision.

Article 45 As for the suspected monopolistic conduct that the Anti-monopoly Law Enforcement Agency is investigating, if the business operators under investigation promise to eliminate the effects of the conduct through the use of concrete measures within the time limit prescribed by the Anti-monopoly Law Enforcement Agency, the Anti-monopoly Law Enforcement Agency may decide to suspend the investigation. The decision on suspending the investigation shall state the concrete measures as promised by the business operators under investigation.

Where the Anti-monopoly Law Enforcement Agency decides to suspend the investigation, it shall supervise the implementation of the pledges made by the relevant business operators. If the business operators are found to have honoured their commitments, the Anti-monopoly Law Enforcement Agency may decide to terminate the investigation.

However, under any of the following circumstances, the Anti-monopoly Law Enforcement Agency shall resume the investigation:
1. The business operators fail to honour their pledges;
2. Significant changes have taken place to the facts, on the basis of which the decision on suspending the investigation was made; or
3. The decision on suspending the investigation was made on the basis of incomplete or inaccurate information submitted by the business operators.


Chapter VII - Legal Liabilities

Article 46 Where the business operators reach and fulfill a monopoly agreement in violation of this Law, the Anti-monopoly Law Enforcement Agency shall order them to stop the violations, confiscate the illegal gains and impose a fine of 1% up to 10% of the sales revenue in the previous year. Where the monopoly agreement reached has not been fulfilled, a fine of less than RMB500,000 may be imposed.

Where the business operators concerned voluntarily report the conditions on reaching the monopoly agreement and provide important evidence to the Anti-monopoly Law Enforcement Agency, they may be given a mitigated punishment or be exempt from punishment at the discretion of the Anti-monopoly Law Enforcement Agency.

Where a trade association organises the business operators in its own industry to reach a monopoly agreement in violation of this Law, the Anti-monopoly Law Enforcement Agency may impose a fine of less than RMB500,000; where the circumstances are serious, the social group registration authority may deregister the trade association.

Article 47 Where the business operators abuse their dominant market position in violation of this Law, the Anti-monopoly Law Enforcement Agency shall order them to stop such violations, confiscate their illegal gains, and impose a fine of 1% up to 10% of the total sales in the previous year on them.

Article 48 Where the business operators implement the concentration in violation of this Law, the Anti-monopoly Law Enforcement Agency under the State Council shall order them to stop the concentration, to dispose of shares or assets, transfer the business or adopt other necessary measures to restore the market situation before the concentration within a time limit, and may impose a fine of less than RMB500,000.

Article 49 To determine the specific amount of fines prescribed in Articles 46-48, the Anti-monopoly Law Enforcement Agency shall consider such factors as the nature, extent and duration of the violations.

Article 50 The business operators that commit the monopolistic conduct and cause damages to others shall bear the civil liability according to law.

Article 51 Where an administrative organ or organisation empowered by a law or administrative regulation to administer public affairs abuses its administrative power to eliminate or restrict competition, the superior authority thereof shall order it to make correction and impose punishments on the directly responsible persons in charge and other directly liable persons. The Anti-monopoly Law Enforcement Agency may offer suggestions to the relevant superior authority on the handling according to law.

Where a law or administrative regulation provides otherwise for the handling of an administrative organ or organisation empowered by a law or administrative regulation to administer public affairs that abuses its administrative power to eliminate or restrict competition, such provisions shall prevail.

Article 52 As for the examination and investigation implemented by the Anti-monopoly Law Enforcement Agency, if business operators refuse to submit related materials and information, submit fraudulent materials or information, conceal, destroy or remove evidence, or refuse or obstruct investigation in other ways, the Anti-monopoly Law Enforcement Agency shall order them to make rectification, impose a fine of less than RBM20,000 on individuals, and a fine of less than RMB200,000 on entities; and where the circumstances are serious, the Anti-monopoly Law Enforcement Agency may impose a fine of RMB20,000 up to RMB100,000 on individuals, and a fine of RMB200,000 up to RMB1 million on entities; where a crime is constituted, the relevant business operators shall be subject to criminal liabilities.

Article 53 Where any party concerned is dissatisfied with the decision made by the Anti-monopoly Law Enforcement Agency pursuant&nbs, p;to Articles 28 and 29 of this Law, it may first apply for an administrative reconsideration; if it is dissatisfied with the reconsideration decision, it may lodge an administrative lawsuit according to law.

Where any party concerned is dissatisfied with any decision made by the Anti-monopoly Law Enforcement Agency other than the decisions prescribed in the previous paragraph, it may apply for an administrative reconsideration or lodge an administrative lawsuit according to law.

Article 54 Where any functionary in the Anti-monopoly Law Enforcement Agency abuses his authority, neglects his duty, makes falsehood for personal gains, or discloses trade secrets known in the process of law enforcement, and a crime is constituted, he or she shall be subject to criminal liabilities; and if no crime is constituted, he or she shall face disciplinary sanction according to law.


Chapter VIII - Supplementary Provisions

Article 55 This law shall not apply to the conduct of business operators to exercise their intellectual property rights in accordance with the laws and relevant administrative regulations on intellectual property rights; however, this Law shall apply to the conduct of business operators to eliminate or restrict market competition by abusing their intellectual property rights.

Article 56 This law shall not apply to the alliance or concerted actions of agricultural producers and rural economic organisations in the economic activities such as production, processing, sales, transportation and storage of agricultural products.

Article 57 This law shall come into effect as of August 1, 2008

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