China’s antitrust watchdog rises as crackdown on giants widens By Reuters

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© Reuters. FILE PHOTO: Alibaba Group’s logo is seen in its Beijing office

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, people with knowledge of the affair. Beijing’s plan to strengthen the State Administration for Market Regulation (SAMR) comes as China renews its competition law with proposed amendments that include a sharp increase in fines and expanded criteria for judging a market’s control of a market. business. On Saturday, the watchdog imposed a record $ 2.75 billion fine on Alibaba (NYSE 🙂 after an antitrust investigation found that the e-commerce giant had abused its dominant position in the market for several years. The fine underscores future challenges for companies, including global companies with operations in China, primarily in a technology sector that thrived during years of relatively laissez-faire market regulation. It also reflects the growing activism of the US and European antitrust authorities in recent years. The Beijing-based agency plans to expand its antitrust workforce by around 20 to 30 employees, compared with 40 today, said two people with direct knowledge of the matter. The watchdog also plans to delegate case review power to its local offices and obtain additional manpower from other government agencies and bodies to handle cases that require a thorough investigation, four other people said. Budgets for antitrust investigations, day-to-day operations and research projects will also be increased, said three of the people cited above and one more person with knowledge of the matter. The people declined to be identified because they were not authorized to speak to the media. SAMR did not immediately respond to Reuters’ request for comment. “An increase in the staffing as well as the quality of the bureau’s law enforcement capabilities is a necessity for an antitrust push,” said Liu Xu, a researcher at the National Institute of Strategy at Tsinghua University. “Otherwise, regulators will not be able to handle multiple cases at once, and the public will question how transparent the investigation process would be,” said Liu, a longtime advocate for antitrust enforcement. GROWING SCRUTINY SAMR’s antitrust office was established in early 2018 after two other government departments merged to form a single authority to control monopoly activities. The office has also armed itself with new and stricter laws in recent months. SAMR’s enhanced powers come as Chinese President Xi Jinping last month weighed in on the need to “strengthen antitrust powers” to control the giants that play a dominant role in the country’s consumer sector. “They didn’t feel they had the mandate to do it but now they do. And they are happy with that,” said a legal source close to SAMR, referring to the need to regulate internet companies, which, he said, were seen as “a little above the law. ” With increasing scrutiny, executives at major internet firms must now make routine reports to the antitrust office about merger deals or practices that could violate antitrust rules, one of the sources said. Recovering from the workload, SAMR has started to expand its presence in more cities such as Hangzhou and Shenzhen on a trial basis, rather than handling all cases in Beijing, to delegate the power of case review to local offices, they said. two of the sources. It has also begun outsourcing more investigative work, covering areas including economic and industry analysis, to academics and its own consulting committee to expedite ongoing cases, one of the sources said. For now, though, investors’ focus is on who, among the local tech champions, will be the next target for the Chinese antitrust watchdog. “Other tech companies would do well to assume they may be receiving the same level of scrutiny and sanction,” said Fred Hu, president of private equity firm Primavera Group, referring to the fine imposed on Alibaba. “The hefty fine for one of the country’s dominant tech leaders also sends a strong message to the broader tech industry that Chinese regulators, like their European counterparts, are serious about cracking down on big tech.”