China is making major revisions to its antitrust law for the first time in more than 11 years to give it more teeth while reining in the dominance of the country’s internet goliaths, reported Caixin.
A draft revision of China’s Anti-Monopoly Law, released last week by the State Administration for Market Regulation, expands on criteria used to judge a company’s control of a market. For the first time, the proposed law mentions internet companies. The draft mandates considering the effect businesses have on the web as a whole, their economies of scale, the “lock-in” effects of their products or services, and their ability to handle and process data, among other things.
The proposal marks a dramatic shift from the current version of the law, implemented in 2008. China has seven of the top 30 companies by global internet market capitalization including Alibaba Group, Tencent and Meituan Dianping, according to the Internet Trends 2019 report by investment fund Bond Capital.
The draft revision increases the potential financial punishments for lawbreakers by as much as a hundred-fold. As before, those engaging in monopolistic behavior will have their proceeds confiscated and will be fined between 1% and 10% of revenue for the previous fiscal year. However, for those that have yet to implement their plans or had zero revenue in the previous fiscal year, the draft law raises maximum penalties from RMB 500,000 to RMB 50 million (from $71,713 to $7.1 million). Industry associations caught violating the law can be fined RMB 5 million, up from RMB 500,000.