Exclusive: China’s antitrust regulator expands as repression against giants expands

BEIJING / HONG KONG (Reuters) – China’s competition watchdog is adding staff and other resources as it intensifies efforts to crack down on anti-competitive behavior, especially among the country’s powerful companies, insiders told Reuters of the question.

Beijing’s plan to expand the State Administration for Market Regulation (SAMR) comes as China reforms its competition law with proposed amendments that include a sharp increase in fines and expanded criteria for judging control of a market of a company.

On Saturday, the watchdog crashed into a record $ 2.75 billion fine on Alibaba after an antitrust investigation found the e-commerce giant had abused its dominant market position for several years.

The fine underscores the challenges ahead of companies, including global companies with operations in China, primarily in a technology sector that thrived over years of relatively laissez-faire market regulation.

It also reflects the growing activism of US and European antitrust authorities in recent years.

The Beijing-based agency plans to expand its antitrust staff by about 20-30 workers, up from the current 40, according to two people with direct knowledge of the issue.

The watchdog also plans to delegate case review power to its local offices and obtain additional manpower from other government agencies and agencies to handle cases that require extensive investigation, four other people said.

Budgets for antitrust research, day-to-day operations and research projects will also be increased, according to three of the people mentioned above and one more person with knowledge of the issue.

People rejected the name because they did not have permission to speak to the media.

The SAMR did not immediately respond to Reuters’ request for comment.

“Increasing the staffing and quality of office policing capabilities is essential to boosting antitrust competition,” said Liu Xu, a researcher at the National Strategy Institute of Tsinghua University.

“Otherwise, regulators will not be able to handle several cases at once and the public will question the transparency of the investigation process,” said Liu, a longtime anti-monopoly advocate.

INCREASING SCRUTINY

The SAMR antitrust office was set up in early 2018 after two other government departments merged to form a single authority to control monopolistic activities.

The firm has also been armed with new and stricter laws in recent months.

SAMR’s enhanced powers come when Chinese President Xi Jinping weighed in last month on the need to “strengthen antitrust powers” ​​to curb the monsters that play a dominant role in the country’s consumer sector.

“They did not feel they had a mandate to do so, but they did. And they are happy about that “, said a legal source close to SAMR, referring to the need to regulate Internet companies, which, according to him, were considered” a little above the law “.

With increasing scrutiny, executives at major Internet companies are now required to make routine reports to the antitrust office about merger agreements or practices that could jeopardize antitrust rules, one source said.

Withdrawing from the workload, the MRSA has begun to expand its presence to more cities such as Hangzhou and Shenzhen on an experimental basis, rather than managing cases in Beijing, to delegate case review power to offices. locals, according to two of the sources. It has also begun outsourcing more research work, covering areas such as economic and industrial analysis, to academics and its own advisory committee to expedite ongoing cases, one source said.

For now, however, investors are focusing on who, among the champions of home-grown technology, will be the next target of the Chinese antitrust surveillance dog.

“It would be prudent to assume that other technology companies would receive the same level of control and penalty,” Fred Hu, president of private equity firm Primavera Group, said, referring to the fine imposed on Alibaba.

“The heavy fine on one of the country’s dominant technology leaders also sends a strong message to the broader technology sector that Chinese regulators, like their European counterparts, are seriously concerned about cracking down on Big Tech.”