In addition to MOFCOM, SAIC and NDRC, the three major enforcement authorities for the anti-unfair competition and anti-monopoly laws, it seems the MIIT might also become a regulator of competition in the telecommunications sector. In addition to a Draft Regulation on Internet Information Services, published for consultation in January 2012, MIIT released an “Opinion on Regulating the Business Activities of Basic Telecommunications Carriers on Campuses” (the Opinion) on 30 June 2011.
According to the Opinion, any activities that exclude or restrict competition among telecommunications carriers on college campuses are strictly prohibited, including the following:
(i) Entering into exclusive agreements to provide basic telecommunication services in college campuses
(ii) Instituting promotions that would “smear” competitors; mailing SIM and/or UIM cards together with enrollment notices to freshmen without authorization
(iii) Compelling campuses to use designated telecommunications services or equipment
Very shortly after the Opinion came into effect, China Mobile was criticized for violating the Opinion by excluding other competitors from providing telecommunication services on college campuses via exclusive agreement. Towards the end of August 2011, staff from China Mobile’s Nanjing Branch went to destroy most of the telecommunications equipment provided by another supplier at Nanjing Industry and Technology College (the College). This resulted in a serious disruption of internet services at the College. Subsequently, China Mobile explained that it had entered into a service agreement with the College at the end of June 2011, in which it was agreed that China Mobile would be exclusively responsible for providing telecommunications services at the College. Thus, China Mobile considered itself entitled to restrict other suppliers from providing services at the College and enforced the restriction by destroying competitors’ telecommunications equipment.
Such action by China Mobile caused consternation at the College and was widely denounced by commentators in the media, with many, based on the MIIT Opinion, challenging China Mobile’s “exclusive agreement”. However, it is not clear whether any follow up action has been taken by MIIT, such as conducting an investigation of the matter, either individually or in collaboration with an AML enforcement authority.
In any event, MIIT’s Opinion targeting telecommunication services on campuses, has shown that it may use its powers as the responsible telecommunications regulator to also take action from the perspective of the AML and other anti-unfair competition laws.
The AML enforcement authorities (NDRC, SAIC and MOFCOM) and sector-specific authorities such as MIIT all seem be addressing competition, but not necessarily in the same manner. In other countries, certain competition law tasks must be performed by sectoral regulators, and it would be no surprise if a sectoral regulator such as MIIT did not start to do the same in China. Examples of tasks undertaken by sectoral authorities in other countries include the following:
(i) Protection of competition: control of anti-competitive conduct
(ii) Access regulation: securing non-discriminatory access to infrastructural networks
(iii) Economic regulation: adopting cost-based measures to control monopoly pricing
(iv) Technical regulation: setting and monitoring standards so as to assure compatibility and to address privacy, safety and environmental protection concerns, etc.
An example in the EU of a sectoral regulator and the competition regulator both having a role in enforcing the competition rules, is the Telecommunications Framework Directive, which provides that the general competition authority must be involved in legal enforcement and that for this purpose information must be exchanged between the competition authorities and the telecommunication authorities if that sector is concerned.
With the development of the competition law regime in China, it remains to be seen how MIIT will enforce and work with the three antitrust authorities in China in relation to enforcing the antitrust provisions outlined in the Opinion and other regulations or rules which can be enforced by both MIIT and the three competition law enforcement authorities.© 2013 McDermott Will & Emery