Detailed Rules for the Implementation of the Fair Competition Review System

 2018-07-31  49


· Document Number:No. 1849 [2017] of the National Development and Reform Commission

· Area of Law: Anti-Unfair Competition

· Level of Authority: Departmental Regulatory Documents

· Date issued:10-23-2017

· Effective Date:10-23-2017

· Issuing Authority: State Development & Reform Commission (incl. former State Development Planning Commission) Ministry of Finance Ministry of Commerce

· Status: Effective

 

Notice of the National Development and Reform Commission, the Ministry of Finance, the Ministry of Commerce, the State Administration for Industry and Commerce, and the Legislative Affairs Office of the State Council on Issuing the Detailed Rules for the Implementation of the Fair Competition Review System (for Interim Implementation)
(No. 1849 [2017] of the National Development and Reform Commission)
The people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government; and all ministries and commissions of and institutions directly under the State Council:
According to the requirements of the Opinions of the State Council on Establishing a Fair Competition Review System in Building a Market System (No. 34 [2016], State Council), the National Development and Reform Commission, the Ministry of Finance, the Ministry of Commerce, the State Administration for Industry and Commerce, and the Legislative Affairs Office of the State Council developed upon research the Detailed Rules for the Implementation of the Fair Competition Review System (for Interim Implementation) in conjunction with relevant departments, which are hereby issued with the approval of the State Council, for the conscientious compliance and implementation by all administrative agencies and all organizations empowered by laws and regulations to administer public affairs in conducting a fair competition review.
Annex: Detailed Rules for the Implementation of the Fair Competition Review System (for Interim Implementation)
National Development and Reform Commission
Ministry of Finance
Ministry of Commerce
State Administration for Industry and Commerce
Legislative Affairs Office of the State Council
October 23, 2017
Annex
Detailed Rules for the Implementation of the Fair Competition Review System (for Interim Implementation)
Chapter I General Provisions
Article 1 For the purposes of ensuring the smooth progress of a fair competition review and promoting the effective implementation of the fair competition review system, these Detailed Rules are developed in accordance with the Anti-Monopoly Law of the People's Republic of China and the Opinions of the State Council on Establishing a Fair Competition Review System in Building a Market System (No. 34 [2016], State Council) (hereinafter referred to as the "Opinions").
Article 2 In developing rules, regulatory documents, and other policies and measures for market access, industry development, investment promotion, bidding, government procurement, code of operations, and qualification standards, among others, involving the economic activities of market participants (hereinafter collectively referred to as the "policies and measures"), administrative agencies and organizations empowered by laws and regulations to administer public affairs (hereinafter collectively referred to as the "policymakers") shall conduct a fair competition review to assess their impacts on market competition and prevent any preclusion or restriction of market competition.
Policies and measures which, as considered after review, will not produce the effect of preclusion or restriction of market competition may be implemented, while those producing such an effect shall not be issued or may be issued after they are revised to satisfy the relevant requirements; and no policies and measures may be issued without undergoing a fair competition review.
For the joint development and issuance of any policy or measure in the name of two or more departments, the lead department shall take charge of the fair competition review, and the other departments shall participate in the fair competition review to the extent of their respective functions.
Article 3 In the process of drafting an administrative regulation, a policy of the State Council, or a local regulation which a government department takes charge of drafting, the drafting department shall conduct a fair competition review under these Detailed Rules, mutatis mutandis. Without a fair competition review, it may be submitted for deliberation.
Article 4 The National Development and Reform Commission, the Legislative Affairs Office of the State Council, the Ministry of Finance, the Ministry of Commerce, and the State Administration for Industry and Commerce shall, in conjunction with relevant departments, establish an Inter-ministerial Joint Meeting for Fair Competition Review to generally coordinate and advance work on fair competition review and provide general guidance of the implementation of the fair competition review system. The fair competition review joint meetings or corresponding work coordination mechanisms established by local people's governments at various levels (hereinafter collectively referred to as the "joint meetings") shall be responsible for the general coordination of fair competition review work within their respective regions.
The joint meetings at each level shall, every year, report the implementation of the fair competition review system within their respective regions to the joint meetings directly above them.
Chapter II Review Mechanisms and Procedures
Article 5 Policymakers shall establish and improve their self-review mechanisms, and specify the responsible bodies and review procedures. The self-review may be under the charge of a specific operating division of the policymaker or a particular body designated solely for such purpose by the policymaker, or be otherwise implemented.
Article 6 In conducting a fair competition review, a policymaker shall follow the basic process of review (See Annex 1 for reference), and arrive at a definite review conclusion in writing (See Annex 2 for reference). The policymaker shall archive the written review conclusion.
If policies and measures are issued without the aforesaid written review conclusions, the fair competition review shall be deemed absent.
Article 7 In conducting a fair competition review, a policymaker shall request the opinions of interested persons or the public comments, and include information on the request for opinions in the written review conclusion. Policymakers shall, according to the applicable laws and regulations, handle policies and measures requiring confidentiality before their issuance.
"Interested person" means a business participating in the relevant market competition, an upstream or downstream business, a consumer, or any other market participant whose fair participation in market competition may be impacted by a policy or measure.
Article 8 In conducting a fair competition review, a policymaker may request the opinions of experts, scholars, legal advisers, and professional bodies. Information on the aforesaid requests for opinions if any shall be included in the written review conclusion.
Article 9 Over the specific problems encountered in a fair competition review, a policymaker may consult anti-monopoly law enforcement bodies performing the corresponding duties. The anti-monopoly law enforcement bodies shall offer advice based on the materials provided by the policymaker.
Article 10 In conducting a fair competition review, a policymaker may request the joint meeting at the same level for coordination with respect to an issue over which there is substantial dispute or it is difficult to reach a consensus among departments. The joint meeting may, as it deems necessary, convene under the relevant working rules to conduct coordination. If such coordination still fails, the policymaker may submit it to its superior for decision.
Article 11 A policymaker shall, each year, summarize the fair competition reviews conducted, and file a written summary report with the office of the joint meeting at the same level before January 31 of the following year.
Article 12 Policymakers shall, on a regular basis, assess the impacts of policies and measures issued after a fair competition review on the unified national market and fair competition. Where the unified national market and fair competition are considered impaired upon assessment, they shall be repealed or amended and improved in a timely manner.
Policymakers may conduct the regular assessment once every three years or at their discretion according to the actual circumstances. In the latter case, policymakers shall specify the frequency of assessment at the time of issuance of policies and measures.
Policymakers may establish specialized assessment mechanisms or conduct the assessment concurrently when they regularly review the rules and regulatory documents of their respective regions or departments.
Article 13 All regions and all departments are encouraged to engage third-party professional bodies to assist in their fair competition review and regular assessment of policies and measures.
Chapter III Review Standards
Article 14 Market access and exit standards:
(1) No irrational or discriminatory access and exit conditions may be set, including but not limited to:
(a) setting access and exit conditions that are markedly unnecessary or beyond the actual need, which preclude or restrict a business's participation in market competition;
(b) setting unequal market access and exit conditions by discriminatory treatment of businesses of different ownerships, from different regions or in different forms of organization, without any basis in laws and regulations or in the absence of applicable provisions issued by the State Council;
(c) setting, whether explicitly or in disguise, obstacles to market access, in the forms such as recordation, registration, filing, directory, annual inspection, production under supervision, recognition, certification, determination, designation, allotment, replacement of license, and requirement of formation of branch offices, without any basis in laws and regulations or in the absence of applicable provisions issued by the State Council; and
(d) setting market access and exit conditions that eliminate or diminish competition between businesses, without any basis in laws and regulations or in the absence of applicable provisions issued by the State Council.
(2) No concession may be granted to a business without fair competition, including but not limited to:
(a) applying concession to a field of general competition or adding administrative licensing in the name of concession;
(b) failing to specify the term of concession or extending the term of concession without undergoing the statutory procedures;
(c) granting a concession to a particular business directly, instead of doing so in a competitive manner such as bidding or competitive negotiation; and
(d) setting discriminatory conditions to make it impossible for a business to fairly participating in the competition for a concession.
(3) No distribution, purchase, or use shall be limited to the goods or services from a particular business, including but not limited to:
(a) limiting distribution, purchase, or use to the goods or services provided by a particular business, whether explicitly or in disguise, by means such as an express requirement, hint, or refusal, delaying administrative approval, repeated inspections, or denying access to a platform or network;
(b) limiting the location, ownership or form of organization of a bidder in bidding to preclude or restrict potential bidders' participation in bidding; and
(c) precluding or restricting potential businesses' supply of goods or services by means such as creating project banks or directories, without any basis in laws and regulations.
(4) No approval procedures or procedures for prior recordation of an administrative approval nature may be set without any basis in laws and regulations, including but not limited to:
(a) adding any administrative approval items or adding any processes of administrative approval or administrative approval conditions or procedures without any basis in laws and regulations; and
(b) setting any procedures for prior recordation of an administrative approval nature without any basis in laws and regulations.
(5) No approval procedures may be set for industries, fields, and business, among others, outside of a market access negative list, mainly meaning the restriction of market access, whether direct or in disguise, by means such as prohibiting access or setting limitations on the qualifications of market participants, proportion of shares, scope of business, or business models, without any basis in laws and regulations or in the absence of a decision of the State Council.
Article 15 Standards for the free flow of goods and elements:
(1) No discriminatory prices or discriminatory subsidy policies may be applied to non-local and imported goods and services, including but not limited to:
(a) setting discriminatory prices for non-local or imported goods or services of the same kind when setting government-fixed prices or government-guided prices; and
(b) not or less subsidizing non-local goods or services of the same kind or imported goods of the same kind when subsidizing relevant goods and services.
(2) Neither non-local or imported goods or services may be restricted from entering the local markets, nor may local goods or services be prevented from being transported or supplied to other places, including but not limited to:
(a) prescribing any technical requirements or inspection standards for non-local goods or services different from those for local goods or services of the same kind or taking discriminatory technical measures such as repeat inspection and repeat certification;
(b) prescribing any technical requirements or inspection standards for imported goods different from those for local goods of the same kind or taking discriminatory technical measures such as repeat inspection and repeat certification;
(c) prescribing any technical requirements or inspection standards for imported services different from those for local services of the same kind or taking discriminatory technical measures such as repeat inspection and repeat certification, without any basis in laws and regulations or in the absence of applicable provisions issued by the State Council;
(d) setting any trade or sales monopoly, approval, or licensing that targets non-local and imported goods and services, without any basis in laws and regulations;
(e) preventing non-local and imported goods and services from entering the local markets or preventing local goods or services from being transported or supplied to other places by establishing checkpoints on local roads or at local stations, ports, airports, or borders, without any basis in laws and regulations; and
(f) preventing non-local and imported goods and services from entering the local markets or preventing local goods or services from being transported or supplied to other places by means such as blocking through software or Internet settings, without any basis in laws and regulations.
(3) No non-local businesses may be excluded or restricted from participation in local bidding activities, including but not limited to:
(a) failing to publish bid invitation information in a timely and effective manner as legally required;
(b) directly and expressly disqualifying non-local businesses from participating in particular local bidding activities;
(c) setting any qualification requirements or assessment standards for non-local businesses which are markedly more demanding than those for local businesses; and
(d) restricting in disguise non-local businesses from participation in local bidding activities by setting any qualification, technical or commercial conditions unsuitable for the specific characteristics and actual needs of bidding projects or irrelevant to the performance of contracts.
(4) No non-local businesses may be excluded or restricted from making investment or forming branch offices in the local area or be compelled to do so, including but not limited to:
(a) directly refusing non-local businesses to invest or form branch offices in the local area;
(b) restricting the size or mode of investment made or the address or mode of branch offices formed in the local area by non-local businesses, among others, without any basis in laws and regulations or in the absence of applicable provisions issued by the State Council;
(c) directly compelling non-local businesses to make investment or form branch offices in the local area without any basis in laws and regulations; and
(d) compelling in disguise non-local businesses to make investment or form branch offices in the local area by setting investment or formation of branch offices in the local area as a necessary condition for participation in local bidding or enjoyment of subsidies and preferences, among others, without any basis in laws and regulations.
(5) No discriminatory treatment may be applied to the investment made or branch offices formed in the local area by non-local businesses, including but not limited to:
(a) failing to provide the investment made in the local area by non-local businesses with the same policy treatment as provided for that of local businesses;
(b) prescribing any requirements for branch offices formed in the local area by non-local businesses in terms of scale of operations, mode of operation, and payment of tax and fees, among others, which are different from those for local businesses; and
(c) prescribing any discriminatory regulatory standards and requirements for branch offices formed in the local area by non-local businesses in terms of energy conservation and environmental protection, work safety, health and hygiene, engineering quality, and market regulation, among others.
Article 16 Standards for impacts on the costs of production and distribution:
(1) No preferences may be illegally granted to particular businesses, including but not limited to:
(a) granting fiscal rewards and subsidies to particular businesses without any basis in laws and regulations or in the absence of applicable provisions issued by the State Council;
(b) reducing any tax payable by particular businesses or exempting particular businesses from any tax payable without any basis in laws and regulations or without the approval of the State Council;
(c) transferring any land to particular businesses at a preferential price or at a zero price or supplying land to particular businesses by means of allocation or capital contribution through valuation of land, without any basis in laws and regulations or in the absence of applicable provisions issued by the State Council;
(d) granting any special treatment to particular businesses in terms of environmental protection standards and pollution discharge privileges, among others, without any basis in laws and regulations or in the absence of applicable provisions issued by the State Council; and
(e) granting reduction or exemption to or delaying or ceasing the collection of any administrative charges, contributions to government funds, or housing provident funds, among others, payable by particular businesses, without any basis in laws and regulations or in the absence of applicable provisions issued by the State Council.
(2) Generally, no fiscal expenditure arrangements may be linked to taxes paid by enterprises or non-tax revenues, mainly meaning that refunds are provided to enterprises by recording an amount in both revenue and expenditure or in a form such as refund after collection or concurrent collection and refund that violates laws and regulations or preferences are provided to enterprises in the form of fiscal rewards or subsidies or reduction of or exemption from land transfer payments, based on the taxes paid by enterprises or non-tax revenue.
(3) No reduction of, exemption from, or delay in collection of social insurance costs payable may be applied to particular businesses in violation of laws and regulations, mainly meaning the reduction of, exemption from, or delay in collection of premiums of basic pension insurance, basic medical insurance, unemployment insurance, work-related injury insurance, and maternity insurance, among others, payable by particular businesses, based on the sizes, forms of ownership, forms of organization, regions, and other factors of businesses, without any basis in laws and regulations or in the absence of applicable provisions issued by the State Council.
(4) No business may be required to provide security deposits or no security deposit provided by a business may be withheld beyond the provisions of laws, including but not limited to:
(a) requiring businesses to pay security deposits in the absence of any applicable law, regulation, or provisions issued by the State Council; and
(b) failing to return in a timely manner the security deposits paid by businesses after they have undergone relevant procedures or completed relevant matters.
Article 17 Standards for acts impacting production and distribution:
(1) No business may be compelled to engage in any monopolistic act as specified in the Anti-Monopoly Law of the People's Republic of China, mainly meaning compelling, arranging for, or direct businesses to reach or implement monopoly agreements or abuse their dominant market positions by administrative orders, administrative authorizations, or administrative guidance, through industry associations, or by any other means.
(2) No sensitive information on production or distribution may be illegally disclosed or no business may be illegally required to disclose sensitive information on production or distribution to facilitate the monopolistic acts of businesses. "Sensitive information on production or distribution" means production or distribution data which are neither voluntarily publicly disclosed by businesses nor accessible in the public domain, except for data required to be publicly disclosed by laws and regulations or the provisions issued by the State Council, mainly including the proposed prices, cost, output, sales volume, production and sales plans, information on dealers, and end client information.
(3) No government may fix prices beyond the limits of its pricing power, including but not limited to:
(a) fixing prices for goods or services subject to government-guided prices;
(b) fixing prices or guiding prices for goods or services not within the catalogue of goods or services subject to price fixing by the government; and
(c) taking price intervening measures in violation of the Price Law of the People's Republic of China and other laws and regulations.
(4) No illegal intervention may be made in the price levels of goods or services subject to market-regulated prices, including but not limited to:
(a) fixing and issuing uniformly enforced prices or reference prices for goods or services;
(b) setting upper or lower price limits for goods or services; and
(c) intervening in the service fees, discounts, and other expenses that influence the price levels of goods or services.
Chapter IV Exception Provisions
Article 18 Where, in conducting a fair competition review of a policy or measure, a policymaker considers that the policy or measure has a certain effect of restricting competition but is for maintaining the economic or cultural security of the country, involves national defense construction, is for achieving social security objectives such as poverty alleviation and disaster relief, or is for public interest such as energy and resource conservation or environmental protection as specified in the Opinions or is an exception as specified in a law or administrative regulation, the policy or measure may be implemented if all of the following conditions are met:
(1) It is indispensible for achieving the objectives of a policy, that is, the policy or measure must be implemented in order to achieve relevant objectives.
(2) It will not gravely preclude or restrict market competition.
(3) It includes a specific period of implementation.
Article 19 A policymaker shall explain in the written review conclusion whether the exception provisions apply to the policy or measure. If yes, it shall explain in detail the circumstances and conditions to which the exception provisions are applicable.
Article 20 A policymaker shall, by year, assess the effects of implementation of policies and measures to which the exception provisions apply, and produce written assessment reports. Policies and measures whose periods of implementation expire or which fail to produce the expected effects shall cease to be implemented or be adjusted in a timely manner.
Chapter V Public Scrutiny and Accountability
Article 21 Where a policymaker is suspected of failing to conduct a fair competition review or issuing a policy or measure in violation of review standards, any entity or individual may inform the policymaker of the suspicion, and the policymaker shall verify the relevant information.
Article 22 A policymaker issuing a policy or measure without conducting a fair competition review shall conduct the fair competition review in a timely manner afterwards. If any violation of review standards is found, the policy or measure shall cease to be implemented or be adjusted under the relevant procedures. The cessation of implementation or the adjustment of the policy or measure shall be publicly disclosed in accordance with the Regulation on the Public Disclosure of Government Information of the People's Republic of China.
Article 23 Where a policymaker is suspected of failing to conduct a fair competition review or issuing a policy or measure in violation of review standards, any entity or individual may report to the superior of the policymaker or the anti-monopoly law enforcement body. If the report is in writing and accompanied with relevant facts and evidence, the superior shall verify the relevant information; and if it is suspected of violating the Anti-Monopoly Law of the People's Republic of China, the anti-monopoly law enforcement body shall conduct necessary investigation.
Article 24 Where a policymaker fails to conduct a fair competition review or issues a policy or measure in violation of review standards, the superior of the policymaker shall order it take corrective action; and if it refuses to do so or delays in doing so, disciplinary action shall be taken against the directly liable official in charge and other directly liable persons in accordance with the Civil Servant Law of the People's Republic of China, the Regulation on the Disciplinary Action against Civil Servants of Administrative Agencies, and other laws and regulations. Where the Anti-Monopoly Law of the People's Republic of China is violated, the anti-monopoly law enforcement body may advise the policymaker or its superior to cease the implementation of or adjust the policy or measure. The relevant disposition decisions and advice shall be publicly disclosed according to laws and regulations.
Chapter VI Supplemental Provisions
Article 25 The joint meetings at all levels may, as actually needed by their work, establish a fair competition review expert support system.
Article 26 These Detailed Rules shall come into force on the date of issuance.