June 2021 Competition Currents | Greater China and Japan
On April 26, 2021, the State Administration for Market Regulation (SAMR), China’s antitrust regulator, announced that it had launched an antitrust investigation into tech giant Meituan, China’s largest online food delivery service platform. In a statement announcing the investigation, the SAMR indicated that it is focused on a widespread practice known as “choose one from two (er xuan yi)” whereby a company requires merchants to choose only one platform as their exclusive distribution channel.
Despite the widespread nature of the “choose one from two” practice, the issue is nuanced as certain types of monopolistic practices, such as exclusivity arrangements and refusals to deal, may be permitted under the PRC Anti-monopoly Law (AML) for entities lacking dominant market positions. Article 19 of the AML defines a dominant market position as the ability to control the price or output of products or other trading conditions in the relevant market or to black or affect the entry of other entities into the relevant market. Further, a rebuttable presumption of dominance is assumed under Article 19 if: (1) one of the entities has ≥ 50% market share; (2) two entities have ≥ 66⅔% joint market share; or (3) three entities have ≥ 75% joint market share, although it excepts entities with under 10% share.
A. The JFTC Will Conduct a Survey in the Cloud Services Fields
On April 14, 2021, the Japan Fair Trade Committee (JFTC) revealed its plan to conduct a survey in the Cloud Services field. It has been pointed out that an oligopoly by a few digital platform operators may be progressing. From the perspective of improving the competitive environment, the JFTC wants to understand the market situation and actual transactions, as well as to sort out issues under the Antimonopoly Act and competition policy.
At the first phase of this survey, interviews and questionnaires will be conducted with both service providers and users, and if problems can be identified, the JFTC may narrow down the topics and conduct further investigation. This investigation will be conducted as the third one in a series of efforts to understand the actual situation in the digital field, following the previous surveys on online malls and app stores, and on digital advertising.
B. Japanese Government Considering Establishing a Specialized Team
The Japanese government is considering establishing a specialized team within JFTC by 2022 to investigate the competitive environment in the digital, healthcare, and energy sectors, where the market share is growing. In case that M&A becomes more frequent due to the deterioration of business conditions caused by the COVID-19, there is a risk that a small number of large companies will come to dominate the market. Therefore, the new specialized team will investigate whether any trading practices could lead to a particular minority of companies dominating the market.
JFTC plans to strengthen its personnel structure and secure experts familiar with the business fields to be investigated and who can communicate with overseas authorities. Over the next few years, Japan aims to have a team on the same scale as the United States and other countries.
Edoardo Gambardo, Pamela J. Marple, Yuji Ogiwara, Stephen M. Pepper, Gillian Sproul, Filip Drgas, Marta Kownacka, Pietro Missanelli, Massimiliano Pizzonia, Anna Rajcert, Jose Abel Rivera-Pedroza, Ippei Suzuki and Rebecca Tracy Rotem also contributed to this update.