Covid-19 impact not deemed a legitimate factor for SAMR to lower antitrust fines

12 May 2020 8:51 am by Yonnex Li

China's antitrust regulator doesn't consider the economic hardship brought about by the Covid-19 epidemic as a legitimate mitigating factor to reduce fines for confirmed antitrust violations, MLex has learned.

The State Administration for Market Regulation, or SAMR, isn't empowered to factor in the epidemic because it is not among the statutory circumstances stipulated in the Antimonopoy Law where the agency may reduce fines, it is said.

SAMR has maintained the view despite earlier requests from companies under investigation that the regulator consider their financial and operational difficulties during and after the epidemic, even though their conduct was committed before the virus hit.

According to Article 49 of China's antitrust law, when determining the amount of fines for antitrust violations, the authority should consider "such factors as the nature, extent and duration of the violations."

Article 46 stipulates that if a party to an anticompetitive agreement manages to self-report the offence and provides material evidence, the authority may exempt the company from punishment, or mitigate the sanctions.

The epidemic doesn't appear to fit into the categories under which SAMR may reduce an offender's legal liabilities, MLex was told.

Covid-19 has taken a toll on Chinese businesses in the first quarter, as local governments implemented citywide lockdowns to stop the spread of the virus. Life in China, however, has gradually returned to normal following months of social and economic disruptions.

In April, SAMR made it clear that it will exempt cooperation agreements between operators involved in epidemic control and resumption of production, such as those beneficial to technological progress, improvements in efficiency, and the pursuit of public and consumer interests.

The pledges are based on Article 15 of the Antimonopoly Law, which specifies a list of situations where competition rules prohibiting anti competitive agreements will not apply. This brings the Chinese regulator in line with some of its foreign counterparts in giving explicit authorization for companies that should otherwise compete.

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