Asia Competition Currents | September 2020
In August 2020, the Anti-Monopoly Bureau of the State Administration for Market Regulation (SAMR), China’s primary antitrust enforcement agency, published the 2019 Collection of Antitrust Regulations and Guidelines (the Guidelines). This contains several previously unreleased guidelines, including the Guidelines to the Application for Leniency in Horizontal Monopoly Agreements (the Leniency Guidelines).
As background, Article 46 of China’s Anti-Monopoly Law (AML) allows antitrust regulators to exercise discretion when imposing penalties where a “party actively reports the circumstances of a monopoly agreement and provides important evidence.” While Article 46 has existed since the promulgation of the AML, its application has been viewed as lacking transparency and certainty. The SAMR’s publication of the Leniency Guidelines implicitly recognizes this sentiment, and is widely viewed as an effort to formalize the framework in which leniency is granted. Important details of the Leniency Guidelines include:
Leniency is only available in the context of horizontal monopoly agreements between competitors.
Procedures regarding the initiation of the leniency process and information which a whistleblower should provide to receive “cooperation credit.” Such information includes, among other things, the identity of the parties to the anti-competitive agreement; facts underlying the anti-competitive agreement such as duration, location, and content; impacted geographic market and market information; whether leniency applications have been made in other jurisdictions; and duration for which the anti-competitive agreement was implemented.
A tiered immunity based on when the whistleblower comes forward. Although full immunity is not available to any party organizing the anti-competitive behavior, the first whistleblower may be granted immunity or a reduction in applicable fines by 80%; the second whistleblower may be granted a reduction of between 30%-50%; the third may be granted a reduction of between 20%-30%; and any subsequent whistleblowers may be granted a reduction of up to 20%.
It is important to note that the Leniency Guidelines require SAMR to publish its decisions where leniency has been granted. This presents the possibility that information contained in a leniency application may subsequently be made public and used by third parties in private litigation. Such a requirement may have the unintended consequence of discouraging whistleblowers.
A. Group asks JFTC to issue cease and desist order.
On Aug. 18, 2020, a voluntary group of storekeepers asked the Japan Fair Trade Commission (JFTC) to issue a cease and desist order on the grounds that the penalty system imposed by the group’s retailer sponsor violates the Antimonopoly Act (abuse of a superior position). The group alleges the penalty system includes financial penalties or suspension of business. On Jan. 22, 2020, the group also asked the JFTC to investigate the group’s retailer sponsor regarding its free shipping policy from the point of the Antimonopoly Act (abuse of a superior position). In that case, the JFTC started an investigation and the group’s retailer sponsor voluntarily changed its free shipping policy in March 2020.
B. JFTC approves merger of Z Holdings and LINE, regarding industrial area of QR code payment.
On Aug. 4, 2020, the JFTC announced that it had approved and concluded its review of the merger of Z Holdings Corporation (the parent company of Yahoo Japan Corporation and member of the SoftBank Group Corp., a Japanese IT giant) and LINE Corporation (“the subsidiary of Naver Corporation, the Korean IT giant). The JFTC found that the merger would not substantially restrict competition in certain trading industrial areas on the assumption that the measures proposed by the parties would be taken. JFTC, according to its release, conducted its review on the industrial area of QR code payment, news distribution and advertisement, and found the merger could potentially restrict competition in the industrial area of QR code payment, since the combined share of the industrial area of QR code payment of the Z Holdings and LINE would be more than 60% of the Japanese market. To prevent restriction of competition, Z Holdings and LINE proposed measures that for three years they would (i) regularly report the fee from member companies that intend to use their QR code payment to JFTC and (ii) eliminate all exclusive terms and condition and keep elimination.
Yuji Ogiwara, Stephen M. Pepper, Gillian Sproul, Hans Urlus, Dawn (Dan) Zhang, Jacomijn Christ, Filip Drgas, Simon Harms, Marta Kownacka, Shuhei Mikiya, Pietro Missanelli, Jose Abel Rivera-Pedroza, Ippei Suzuki, Rebecca Tracy Rotem and Alan W. Hersh contributed to this series.