antitrust in china and across the region - clifford chance...special report: dramatic antitrust...

QUARTERLY UPDATE

ANTITRUST IN CHINA AND ACROSS THE REGION

January to March 2021

CLIFFORD CHANCE

CONTENTS

Introduction

Special Report: Dramatic Antitrust Developments regarding the

Chinese Tech Sector

Merger Control

Antitrust Investigations

Other Asia Pacific News in Brief

Regional Contacts

3

4

9

12

16

25

ANTITRUST IN CHINA AND ACROSS THE REGION 2

CLIFFORD CHANCE 3


QUARTERLY UPDATE: JANUARY TO MARCH 2021

China news this quarter is dominated by enforcement in the technology sector. This culminated

in April's RMB 18 billion (USD 2.8 billion) fine on Alibaba for abuse of dominance, but also

includes a string of much smaller fines for failure to file against China's largest tech firms

including Alibaba, Tencent, JD.com, Baidu, Meituan Dianping, Suning, Didi Mobility and

Bytedance. Other initiatives included the adoption of guidelines for the platform economy and a

draft regulation enabling the central bank to alert SAMR when non-bank payment providers

(such as Alipay or Wechat payment) achieve market power.

In other China news, last quarter saw a significant jump in merger cases compared to the

previous year (up by over a third) but only one of these cases included remedies – Cisco's

acquisition of Acacia which was cleared subject to a behavioural remedy to address a vertical

overlap, requiring Acacia to continue to supply certain products on FRAND terms. Other notable

enforcement cases included a RMB 100 million (USD 15 million) fine for refusal to supply in the

pharmaceutical sector and a series of cases against various provincial trade associations.

Outside mainland China, in Hong Kong, the Competition Tribunal imposed fines of HKD 3.26

million (USD 419,236) in a decorating cartel and the Commission issued an infringement notice

against six hotel groups for facilitating a cartel arrangement; in Singapore, the Competition

Appeal Board dismissed Uber's appeal against its challenge to the CCCS's decision to

intervene in the sale of Uber's Southeast Asian business to Grab; in Japan a series of new

rules, guidelines and reports into various aspects of the digital economy were released (relating

to digital platforms, online advertising, cooperation with start-ups and the impact of algorithms);

another investigation into online travel MFNs was settled in Korea; and in Australia the interim

report into ad tech proposed a requirement to separate large incumbents' datasets to lower

entry barriers.


Contacts

YONG BAI

Partner, Head of Antitrust,

Greater China

T +86 10 6535 2286

M +86 13910850420

E yong.bai

@cliffordchance.com

DAVE PODDAR

Partner, Head of Antitrust,

Asia Pacific

T +61 28922 8033

M +61 422800415

E dave.poddar

@cliffordchance.com

CLIFFORD CHANCE

Longest

China Focus

4ANTITRUST IN CHINA AND ACROSS THE REGION

Shortest

It would not be exaggerating to note that antitrust was in the limelight in China in the 1st quarter of 2021.

On 15 March 2021, over the meeting of China's Central Financial and Economic Affairs Commission,

President Xi Jinping called for empowerment of regulatory authorities in order to intensify the regulation

for platform companies. Earlier in March, over the National People's Congress, Premier Li Keqiang

delivered the annual government work report which set out work priorities for 2021 and the role of

antitrust regulation was again emphasized.

In response to the call for increased antitrust scrutiny by the highest leadership, State Administration for

Market Regulation ("SAMR") has taken dramatic enforcement actions in this quarter. On the front of

investigating failure-to-file transactions, to maximize deterrent effects, SAMR has strategically cast a

wide net and by far almost each of the big names active in the tech sector in China have received a fine

ticket. More details on these failure-to-file cases are included in Annex 1 (Failure-to-file fines on tech

giants) below. Moreover, on 10 April 2021, SAMR imposed a record fine of RMB 18.228 billion (USD

2.8 billion) on Alibaba Group ("Alibaba") for its exclusive conduct, catching worldwide attention. More

details of this landmark decision with our commentary are covered separately in Annex 2 (Alibaba

record fine).

In the meanwhile, we have also seen notable legislative developments in relation to big techs in this

quarter:

• On 7 February 2021, the finalized version of the Antitrust Guidelines for Platform Economy ("Platform

Guidelines") was released by the Antitrust Commission of the State Council and came into force on

the same day. As reported in the last quarterly briefing, the draft version Platform Guidelines was

published for consultation on 10 November 2020. This is probably one of the quickest legislative

process that is ever seen in China. The final version Platform Guidelines largely follows the draft

version, with notable changes including: (i) Market definition – A novel proposal in the draft version

providing for the flexibility of not defining relevant markets in abusive cases in certain circumstances

was deleted from the final version, which requires the market definition approach in all abusive

cases. (ii) Exclusion of parallel pricing – The final version expressly excludes pure parallel pricing

which is conducted independently as a form of concerted practice. (iii) Price/other trading

conditions parity clause – The final version replaces the term "MFN clause" in the draft version

with a broader term of parity clause across platforms relating to price, quantity and/or other trading

conditions. In addition, the final version adds that apart from vertical anti-competitive agreements, a

parity clause may also constitute abusive conduct.(iv) Predatory pricing – Attracting new customers

and doing promotion within a reasonable period of time are added as justification of predatory pricing

behaviours. (v) Essential facility – The draft version considered the circumstances under which

both platform and data could constitute essential facilities, whereas the final version has only kept

that data might be considered as essential facilities.

SPECIAL REPORT: DRAMATIC ANTITRUST DEVELOPMENTS

IN THE CHINESE TECH SECTOR

CLIFFORD CHANCE

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• On 20 January 2021, the People's Bank of China ("PBOC") released the draft Regulation on Non-

Banking Payment Institutions for public comments. The draft regulation empowers PBOC to send

alerts to the SAMR when one non-banking payment institution has a market share of 1/3 or more, two

institutions with a combined share of 1/2 or more or three with a combined share of 3/5 or more. Note

that such share thresholds are lower than the thresholds on presumption of market dominance under

the Anti-Monopoly Law ("AML"). Also note that Chinese big techs, such as Alipay, Wechat Payment,

and JD.com are among the key players in the non-banking payment sector in China.

• On 31 January 2021, the General Office of the Communist Party of China Central Committee and

General Office of the State Council jointly issued the Action Plan on Building High-standard Market

System. This plan guides local governments to facilitate the promulgation of antitrust rules with

respect to platform companies and their data usage.

• On 15 March 2021, SAMR issued the Supervision and Management Measures for Online

Transactions which is aimed to clarify relevant parties' responsibilities over online transactions. The

"one or the other" practice, which is prohibited by the Platform Guidelines, is also explicitly prohibited

by this set of measures.

SAMR was also active to enforce against tech firms based on wider competition law basis, e.g., Anti-

Unfair Competition Law and Price Law, to rein in platforms that do not have market dominance. Notably,

on 8 February 2021, SAMR fined Vipshop (an online shopping platform) RMB 3 million (USD 463,915)

for imposing restrictions (e.g. traffic limit) on sellers which are also active on other shopping platforms.

On 3 March 2021, SAMR fined five online community-based grocery platforms RMB 6.5 million (USD 1

million) for predatory pricing and adopting false or misleading pricing measures to attract consumers.

The wave of antitrust enforcement also appears to have prompted antitrust civil proceedings – on 2

February 2021, ByteDance filed a suit against Tencent for the latter's alleged abuse of dominance before

the Beijing Intellectual Property Court. ByteDance, the parent of Douyin, alleged that Tencent restricts

users from sharing Douyin's contents on WeChat and QQ platforms. This case is ongoing. Also note that

Douyin previously filed a suit against Tencent on the exact same grounds but under Anti-Unfair

Competition Law in September 2019 before a Fuzhou court, and that suit was withdrawn by Douyin in

March 2021 before seeing final judgement.

What is also noteworthy is that local competition authorities, in particular Zhejiang Administration of

Market Regulation (“Zhejiang AMR“), pioneered to design new regulatory tools for more effective

enforcement against online platforms. Zhejiang province is where many renowned platforms (including

Alibaba) in China are headquartered. In February 2021, Zhejiang AMR launched a program to monitor

platforms' potential anti-competitive conduct. This program relies on big data, cloud computing and

artificial intelligence to monitor major digital platforms, in an attempt to timely discover anti-competitive

behaviours such as "one or the other", "big data discrimination", "vertical monopoly", and "predatory

pricing".



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Annex 1: Failure-to-file fines on tech giants



Fined Transaction

(The fined party is italicized)

Tech Company behind the

Fined PartiesFine Amount

If Competition

Concerns Were

Identified

The acquisition of 100% equity interest in

Kaiyuan Commercial Co., Ltd. by Intime Retail

(Group) Company Limited in 2018

Alibaba RMB 500,000 (USD

76,250)No

The acquisition of a 15.41% stake in Yuan Inc.

by Tencent Holdings Limited in 2018Tencent

RMB 500,000 (USD

76,250)No

The acquisition of an 11.9% stake in

Wangjiahuan Agricultural Products Group Co.,

Ltd. by Chengdu Meigengmei Information

Technology Co., Ltd. in 2020

Meituan DianpingRMB 500,000 (USD

76,250)No

The acquisition of 100% equity interest in

Jiangsu Five Star Appliance Co., Ltd. by

Suqian Hanbang Investment Management in

2020

JD.com RMB 500,000 (USD

76,250)No

The acquisition of a 52.764% stake in Ainemo

Inc. by Baidu Holdings Limited in 2020Baidu

RMB 500,000 (USD

76,250)No

The acquisition of a 14.08% stake in Shanghai

Pateo Electronic Equipment Manufacturing

Co., Ltd. by Suning Rundong Equity

Investment and Management Co., Ltd. in 2017

Suning (an e-commerce

group)

RMB 500,000 (USD

76,250)No

The acquisition of a 70.52% stake in DaDa

Education Group by TAL Education Group in

2020

TAL Education (an education

and technology group)

RMB 500,000 (USD

76,250)No

The establishment of a new joint venture by

Didi Mobility Pte. Ltd. and SoftBank Corp. in

2018

Didi Mobility Pte. Ltd. – Didi

(an online car hailing

platform)

RMB 500,000 (USD

76,250) eachNo

The establishment of a new joint venture by

Shanghai Dongfang Newspaper and Beijing

Liangzi Yuedong Technology in 2019

Liangzi Yuedong –

ByteDance

RMB 500,000 (USD

76,250) eachNo

The acquisition of 100% interest of

Baoduitong.com. Co., Ltd. by Beijing Nucarf

Network Technology Co., Ltd. in 2020

N/ARMB 500,000 (USD

76,250)No

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Annex 2: Alibaba record fine

On 10 April 2021, SAMR slapped a record fine of RMB 18.228 billion (USD 2.8 billion) on Alibaba for abuse

of dominance, marking China's first antitrust enforcement in the digital platform sector. The fine amounts to

4% of Alibaba's sales revenue in China in 2019 (the year preceding initiation of SAMR's investigation which

was launched in December 2020). SAMR found that Alibaba engaged in exclusive practice (also called

“one or the other" in Mandarin), which violated Article 17(4) of the AML by significantly restricting

competition and harming the interests of both merchants on its platform and end consumers.

The relevant product market recognized by SAMR is online retail platform. Notably, SAMR distinguished

the provision of online retail platform services from that of offline retail based on factors, including

geographic coverage, length of business hours, cost structure, abilities to meet consumer needs in light of

changing market trends, diversity of product offerings, delivery efficiency, barrier to entry, etc. China was

considered to be the relevant geographic market.

In finding that Alibaba is a dominant online retail platform in China, SAMR undertook comprehensive

assessment by first considering Alibaba's market share – SAMR found that Alibaba had a share of above

50% on the basis of both its revenue arising from providing platform services and transaction volume on the

platform. In addition, SAMR took into account factors, including (i) how competitive the market is, (ii)

Alibaba's strong abilities to control the market; (iii) Alibaba's solid financial and technical strength; (iv)

merchants are highly dependent on Alibaba; (v) entry barriers are high; and (vi) Alibaba's significant

advantages in associated markets such as logistics/delivery, online payment, cloud computing, etc.

SAMR upon investigation came to the view that Alibaba had abused its dominant position by (i) prohibiting

some of its platform merchants from opening stores and participating in promotional activities on competing

platforms, both verbally and explicitly in agreements; and (ii) putting in place incentive and penalty

measures in case of compliance and non-compliance with the exclusivity requirements. SAMR in its

decision highlighted the technical aspects of Alibaba's incentive/penalty measures, which are implemented

through online traffic volume control, manipulation of search ranking, supply/refusal to supply promotion

resources, with a mixed use of platform rules, data and algorithms.

In general, SAMR's decision on Alibaba is thoughtful and impressive, in particular considering that it took

the authority only three months to close the investigation. Apart from the details mentioned above, notable

aspects of this Alibaba fine in China also include:

• RMB 18.228 billion (USD 2.8 billion) hits a record high in China's antitrust enforcement (previously the

largest was the 2015 Qualcomm fine of RMB 6.088 billion (USD 930 million)), which also marks the

second largest antitrust fine worldwide, second to the European Commission's 2018 Google (Android)

fine.

CLIFFORD CHANCE

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REGARDING THE CHINESE TECH SECTOR

• On top of the fine, as part of its decision SAMR also innovatively issued a stand-alone

"Administrative Guide Book" ("Guide Book") to Alibaba. The Guide Book gives 16 instructions to

Alibaba to ensure effectiveness of the company's future antitrust compliance. These instructions

mainly relate to Alibaba's self-review of its antitrust compliance, highlighting its responsibilities as a

platform operator and to promote fair competition and innovation. In addition, SAMR ordered Alibaba

to submit its rectification plan with reference to the Guide Book by 30 April 2021 and submit annual

compliance reports in the following three years.

• As the first antitrust decision on big tech's anti-competitive conduct, it evidences again how

determined China is to curb the power of digital platforms for the benefit of long-term competition and

consumer welfare.

• In contrast with the European Commission which has been mainly targeting US tech firms so far,

China appears to focus on homegrown big techs, which inevitably prompts domestic fears as to who

is going to be the next.

CLIFFORD CHANCE

Merger control trends – Q1 2014 – Q1 2021

Longest

Simplified procedure: How quick is the review period?

China Focus


MERGER CONTROL

Shortest

42

68

48

7562

9179 80 81

9385 92

71 77

106

71

10090

128 124107

84

121131

108 101

126 119

146

0

1

0

0

0

0

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0

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2

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0

0

0 2 00

11

01

1

5

1

0

21

1

0

2

2

13

00

1

0

20

40

60

80

100

120

140

160

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Q42019

Q12020

Q22020

Q32020

Q42020

Q42021

Unconditional approval cases Blocked cases Conditional approval cases

Quarter Average review period Simplified procedure (%) Cases exceeding 30 days

Q1 2017 25 days 81.7% 5

Q2 2017 23 days 66.7% 2

Q3 2017 20 days 82.2% 1

Q4 2017 21 days 76.3% 0

Q1 2018 19 days 92.1% 1

Q2 2018 18 days 81.1% 1

Q3 2018 16 days 76.9% 0

Q4 2018 17 days 80.0% 3

Q1 2019 16 days 77.8% 0

Q2 2019 17 days 85.7% 0

Q3 2019 19 days 78.9% 1

Q4 2019 14 days 81.2% 0

Q1 2020 14 days 87.16% 1

Q2 2020 13.7 days 86.54% 0

Q3 2020 14.4 days 72.22% 3

Q4 2020 13.7 days 83.19% 1

Q1 2021 14.9 days 80.27% 3

Q1 2021: Average

10 days 88 days14.9 days

LongestShortest

How many cases have there been?

There were in total 147 merger decisions released in the first quarter of 2021, an increase of

34.86% compared to the first quarter of 2020, with 146 reviewed cases in this quarter

unconditionally cleared and 1 case conditionally approved. Around 118 cases were notified under the

simplified procedure in this quarter, which represents 80.27% of the total reviewed cases (the rate increases

to 84.89% if a series of cases between Fujian Port Group Co., Ltd. and local port and logistics companies

are counted as one – all such cases were filed under normal procedure).

CLIFFORD CHANCE

118

76

375

278

361

283

366

302

270

278

274

245

240

222

66

207

0

166

28

21

83

73

89

79

78

91

61

75

77

83

72

76

167

75

211

88

0

0

0

0

0

3

0

0

0

2

0

1

0

0

1

0

0

2

1

5

4

16

5

16

4

23

7

20

2

25

2

20

4

17

4

13

0 50 100 150 200 250 300 350 400 450 500

CHINA

EU

CHINA

EU

CHINA

EU

CHINA

EU

CHINA

EU

CHINA

EU

CHINA

EU

CHINA

EU

CHINA

EU

Simplified procedure

Normal procedure

Blocked

Conditional approval

10

China Focus

How does China compare internationally?

Comparison with EU – 2013 – 2021

MERGER CONTROL


2015

2014

2013

2016

2017

2018

2019

2020

SAMR conditionally approves Cisco's acquisition of Acacia

On 19 January 2021, SAMR approved Cisco Systems Inc ("Cisco")'s proposed acquisition of Acacia

Communications Inc ("Acacia"), subject to behavioural conditions.

SAMR found that significant competition concerns would arise from the following vertical relationship between

the parties, i.e., (upstream) the global market for coherent digital signal processors ("DSP") where Acacia is

active, and (downstream) the Chinese market for optical transmission system where Cisco is active.

SAMR upon its review came to the view that the combined entity would have both the ability and incentive to

implement anti-competitive input foreclosure as a result of this transaction. Regarding the abilities, it is noted

that (i) Acacia is the no.1 supplier of coherent DSPs with a global market share of 45-50% and share of 40-45%

in China; (ii) coherent DSPs serve as core components in an optical transmission system and to a large extent

determine how competitive such a system can be; (iii) customers’ (i.e., suppliers of optical transmission

systems) switching costs of coherent DSPs are particularly high; (iv) entry barriers of coherent DSPs are

prohibitively high and thus it would take time for new market entrants to emerge. Relating to the motives, due to

the development of data centre and 5G technology, demands of optical transmission system have been

increasing. This would incentivize the combined entity to reduce sales of coherent DSPs to Cisco's competitors

and/or raise prices of coherent DSPs to gain more profits.

To address these concerns, the following commitments, among others, have been offered by the parties and

agreed by SAMR - (i) continue to perform each party's the existing contracts without termination unless

otherwise requested by customers; (ii) continue to supply coherent DSPs to Chinese customers on FRAND

terms; (iii) not to impose tying/bundling or other unreasonable trading terms when supplying coherent DSPs;

and (iv) hold training sessions for management and employees to ensure compliance with the commitments.

Outside China, as of 1st quarter of 2021, this transaction has been unconditionally approved by competition

authorities in the US, Germany and Austria.

Up

un

til

2021 Q

1

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Other failure-to-file fines in this quarter

In addition to the failure-to-file fines reported in the tech development section, SAMR also published

the following gun-jumping decisions in the first quarter of 2021. None of the transactions were found to

give rise to any anti-competitive effects:

• Xinjiang Xuefeng Investment Holding Co., Ltd. was fined RMB 300,000 (USD 46,385) for the failure

to notify its acquisition of 39.5% interest in Xinjiang Yuxiang Huyang Chemical Co., Ltd. in 2018.

• Zhuhai Huafa Property Management Services Co., Ltd. and Beijing Jones Lang LaSalle Property

Management Services Co., Ltd. were each fined RMB 350,000 (USD 54,287) for the failure to notify

their establishment of a joint venture in 2019.

• Baoneng Motor Group Co., Ltd. was fined RMB 350,000 (USD 54,287) for the failure to notify its

acquisition of 51% interest in Qoros Automotive Co., Ltd. in 2017.

• Zhongshan Lexing Enterprise Management Consulting Co., Ltd. was fined RMB 300,000 (USD

46,385) for the failure to notify its acquisition of control over Shenzhen Soling Industrial Co., Ltd. in

2019.

• Wuhan Jinyu Free Trade Development Co., Ltd. and Fenghao Logistics (Beijing) Co., Ltd. were

each fined RMB 150,000 (USD 23,040) for the failure to notify their establishment of a joint venture

in 2016.

MERGER CONTROL

CLIFFORD CHANCE

6088.6

372.92149.1

408.549.22 21.1 19.48

994.24

5.22 28.16

538.31

671.34 10.7813.8689.8952.19

10.04195.1114.9589.45 7.46

2184.59 6.27

306.062

8

5

9

2

77

13

14

3

5

1

5

3

6

4

1

4 4

5

2

4 4

6

9

0

2

4

6

8

10

12

14

16

0

1000

2000

3000

400 0

500 0

6000

7000

Q1

201 5

Q2

201 5

Q3

201 5

Q4

201 5

Q1

201 6

Q2

201 6

Q3

201 6

Q4

201 6

Q1

201 7

Q2

201 7

Q3

201 7

Q4

201 7

Q1

201 8

Q2

201 8

Q3

201 8

Q4

201 8

Q1

201 9

Q2

201 9

Q3

201 9

Q4

201 9

Q1

202 0

Q2

202 0

Q3

202 0

Q4

202 0

Q1

202 1

Fines Amount (RMB Million) Case Number

12

ANTITRUST INVESTIGATIONS


China Focus

*Note: From Q1 2015 to Q1 2018, figures include both NDRC and SAIC; from Q2 2018, figures are for SAMR.

Enforcement trends* – Q1 2015 to Q1 2021

Case Date

announced Issue

Total fine

(RMB '000)

Minimum

(RMB '000)

Maximum

(RMB '000)

% of

Turnover

Leniency/

Co-

operation

Batroxobin API supply

SAMR

29 January

2021

Abuse of

dominance100,700 N/A N/A 2% N/A

Driving training service

Jiangsu AMR

29 January

2021Market dividing 1,347 83 330 2% N/A

Cement supply

Shandong AMR

9 February

2021

Price fixing,

output

restriction,

market dividing

141,723 2,412 25,618 2% N/A

Tap water supply

Yunnan AMR

18 February

2021

Abuse of

dominance2,495 N/A N/A 6% N/A

The following cases all concern price fixing led by industry association

Case Date

announced

Total fine

(RMB '000)

Fine on

association

(RMB '000)

Minimum

(RMB '000)

Maximum

(RMB '000)

% of

Turnover

Leniency/

Co-

operation

Cruise service

Shanghai AMR

29 January

20211,813 200 49 417 1% N/A

Insurance service

Anhui AMR

29 January

2021200 200 N/A N/A N/A N/A

Fire safety technology

inspection service

Hainan AMR

29 January

20219,479 400 7 1,664 1% N/A

Used car trade

Zhejiang AMR

29 January

20214,400 300 117 1,316 2%-3% Yes

Bulk cement supply

Sichuan AMR

18 March

202143,904 500 296 19,727 1%-2% Yes

CLIFFORD CHANCE 13



China Focus

SAMR fines Simcere for refusing to supply batroxobin API

On 29 January 2021, SAMR published its penalty decision on Simcere for abuse of dominance in the

Chinese market for batroxobin active pharmaceutical ingredient ("API") through refusal to supply.

Simcere by far is the leading supplier of batroxobin API in China, and it has intended to enter the

downstream market for batroxobin injection. From November 2019, the sole producer of batroxobin

injection in China reached out to Simcere to purchase batroxobin API. Simcere refused to respond to such

purchase offers, and tried to condition its supply of batroxobin API on acquisition of equity stake in this

injection producer. SAMR found that as a result of Simcere's refusal to supply, the batroxobin injection

producer's business was forced to suspend production and thus the supply of batroxobin injections in the

Chinese market was severely disturbed. In consequence, the downstream batroxobin injection business

would be either sold to Simcere or driven out of the market. SAMR concluded that Simcere's conduct

infringed Article 17(3) of the AML and imposed a fine of RMB 100.7 million (USD 15.62 million) on Simcere,

amounting to 2% of its revenue in 2019.

Jiangsu AMR fines nine driving schools for market division

On 29 January 2021, Jiangsu Administration for Market Regulation ("Jiangsu AMR") fined nine driving

schools in Jiangsu Province for dividing markets. Jiangsu AMR found that in July 2016, the nine driving

schools entered into an agreement to designate one of the nine schools to manage business operation of

the other schools. The revenue generated following implementation of the agreement from July to

December 2016 was then divided among the nine schools in line with fixed percentages (based on the

number of cars owned by each driving school). Jiangsu AMR concluded that the nine schools have violated

the Article 13(3) of the AML by reaching a monopoly agreement to divide sales market. Jiangsu AMR

imposed a fine on each of the nine companies amounting to 2% of their respective sales in 2016, which in

total is RMB 1.35 million (USD 208,755).

Shandong AMR fines eight cement companies for horizontal monopoly agreements

On 9 February 2021, Shandong Administration for Market Regulation ("Shandong AMR") fined United

Cement and other seven cement companies for implementing horizontal monopoly agreements. United

Cement was established in February 2017 by the other seven companies ("Members") with overlapping

management. Shandong AMR upon investigation found that United Cement and the Members were

engaged in the following anti-competitive conduct: (i) price-fixing: coordinated prices of cement products

through meetings and internal documents, and established a Price Control Committee to monitor

implementation of the agreed prices; (ii) output restriction: without local government's instructions,

implemented staggered production and carried out additional kiln shutdown for thirty days in 2017; (iii)

market division: reached an agreement on 21 March 2018 to divide cement sales areas into six districts,

and each Member could only sell their products in the designated district. Shandong AMR found that the

above conduct violated Articles 13(1), (2) and (3) of the AML. As United Cement and Members have

rectified their infringing behaviour, also taking into account COVID-19's impact, Shandong AMR imposed a

fine on each of United Cement and Members amounting to 2% of their respective sales in 2018, with a total

amount of RMB 141,722,888 (USD 21,782,808). United Cement's illegal gains amounting to RMB

86,572,186 (USD 13,306,145) were also confiscated.

CLIFFORD CHANCE 14



China Focus

Yunnan AMR fines a local water supplier for imposing unreasonable trading conditions

On 18 February 2021, Yunnan Administration for Market Regulation ("Yunnan AMR") fined Sitong Taixing,

a water supplier, for abuse of dominance through imposing unreasonable trading conditions. Sitong Taixing

is the exclusive water supplier in Mengzi city, Yunnan province. From 2014 to 2018, Sitong Taixing

conditioned its supply of tap water on the customer engaging Sitong Taixing to construct the relevant water

supply facilities. This distorted competition in the market for the construction of water supply facilities.

Yunnan AMR concluded that Sitong Taixing violated Article 17(5) of the AML which prohibits tie-in sales

and imposition of unreasonable trading conditions by dominant players. As Sitong Taixing's infringement

lasted for four years irrespective of the local authorities' warnings, Yunnan AMR imposed a relatively heavy

fine of RMB 2,495,422.79 (USD 383,296.94) amounting to 6% of Sitong Taixing's sales in 2018.

Provincial AMRs hit hard on trade associations for price-fixing in this quarter

In this quarter alone, SAMR published five penalty decisions made by provincial-level Administrations for

Market Regulation ("local AMRs") concerning price-fixing led by industry associations in various sectors.

This marks the Chinese competition authorities' increasing focus on the role of industry associations in anti-

competitive behaviours. In this quarter's five cases, the local AMRs invariably held that the associations

concerned infringed Article 16 of the AML by organizing undertakings to reach monopoly agreements, and

the participating undertakings infringed Article 13(1) of the AML for price fixing. Please refer to below for

more details of the five cases:

• Shanghai Tourism Industry Association ("STIA") – Since 2011, STIA through one of its branches has

organized nine cruise operators to fix or increase ticket prices of cruise services and has imposed

penalties in case of non-compliance. A ticket centre has been engaged to monitor the implementation of

the price-fixing agreements. Shanghai Administration for Market Regulation imposed a fine of RMB

200,000 (USD 30,760) on STIA, and a total fine of RMB 1.61 million (USD 247,618) on the nine

operators, amounting to 1% of their respective revenues in 2015.

• Bozhou Insurance Industry Association ("BIIA") – In May 2018, BIIA, together with six government

authorities, jointly issued a notice regarding mandatory work safety liability insurance for high-risk

industries in Bozhou City, Anhui Province. The notice designated two companies as the exclusive

insurance underwriters for all work safety liability insurances in Bozhou with a fixed insurance premium.

The six government authorities were investigated under separate proceedings. Anhui Administration for

Market Regulation fined BIIA RMB 200,000 (USD 30,760).

• Hainan Fire Protection Association ("HFPA") – In 2017, HFPA through a branch drafted three policies

to monitor its members' inspection fees. According to HFPA's policies, all members shall adopt a fixed

price for supplying inspection services, and non-compliant members are subject to a pecuniary penalty.

Hainan Administration for Market Regulation imposed a fine of RMB 400,000 (USD 61,080) on HFPA,

and a total fine of RMB 9,078,638.53 (USD 1,396,294.61) on the participating members, amounting to

1% of their respective revenues in 2018.

CLIFFORD CHANCE 15



China Focus

• Jiaxing Used Car Industry Association ("JUCIA") – In May 2018, JUCIA convened a meeting with all

the nine used car dealers in Jiaxing City, Zhejiang Province, to discuss an increase of service fees for

used car trading. The participants reached an agreement to implement a fixed service fee and a penalty

in case of non-compliance. Zhejiang AMR imposed a fine of RMB 300,000 (USD 46,140) on JUCIA, and

a total fine of RMB 675,881.97 (USD 103,950.65) on eight car dealers, amounting to 2% to 3% of their

respective revenue in 2019. One dealer was exempt from the penalty for reporting the infringement to

the authority.

• Sichuan Cement Association ("SCA") – In October 2016, SCA organized six cement companies to

reach an agreement to increase prices of bulk cement products. Sichuan Administration for Market

Regulation fined SCA RMB 500,000 (USD 76,800), the highest fine under the AML for industry

associations, for its failure to mitigate the negative impact upon authorities' warning. One cement

company was exempted from the penalty for reporting the infringement, whereas the others were fined

RMB 43,700,801 (USD 6,712,443) in total, amounting to 1% or 2% of their respective sales in 2016.

CLIFFORD CHANCE 16ANTITRUST IN CHINA AND ACROSS THE REGION

Hong Kong

CA refuses amendment to pleadings and expert evidence on damages and quantum

On 5 January 2021, the Court of Appeal ("CA") dismissed the appeals against the decisions

of Competition Tribunal (the "Tribunal") in refusing to grant leave to the defendant, Meyer

Aluminium Limited (“Meyer”), for (i) amending its Points of Defence to expand its allegation of

collusion; and (ii) adducing expert evidence on quantum of damages. The case before the

Tribunal involves the first proceedings in which a competition law defence was raised in High

Court actions, as Meyer alleges price fixing and collusion between its two industrial diesel

suppliers, Taching Petroleum Company Limited and Shell Hong Kong Limited. As a result,

such proceedings were transferred from Court of First Instance ("CFI") to the Tribunal.

The amendments sought by the defendant seek to add further unidentified parties to the

colluding arrangement, by which it is advancing a substantially new case. In any event, the

applications for amendment should first be made in the High Court actions coupled with

applications for transfer of the expanded allegations to the Tribunal. As for the application for

leave to adduce expert evidence on damages and quantum, the CA is of the view that the

proper forum for such application should be the CFI, instead of the Tribunal.

Tribunal imposes pecuniary penalty on decoration contractors

In this case, decoration contractors acted in breach of the First Conduct Rule by allocating

customers and coordinating pricing in relation to the provision of renovation services at a

public housing estate. On 5 January 2021, the Tribunal handed down its judgment on

pecuniary penalties, imposing a total fine of HKD 3.26 million (USD 419,236) on eight

respondents. The respondents who cooperated with the Competition Commission ("HKCC")

at an early stage (i.e. after filing of defences) received a 10% discount on their fines. The

other respondents who only cooperated after the HKCC had completed its preparation of

documents and evidence for the trial received a 5% discount on their fines.

HKCC issues infringement notices to six hotel groups and a tour counter operator for

facilitating a price-fixing cartel

On 17 February 2021, the HKCC issued infringement notices to six hotel groups and a tour

counter operator, for facilitating a cartel arrangement between two competing travel service

providers to fix and/or control prices of tourist attractions and transportation tickets sold at the

premises of certain hotels in Hong Kong. All the recipients of the infringement notices

admitted that they had contravened the First Conduct Rule and committed to take concrete

measures to effectively enhance competition compliance within their respective businesses.


Singapore

CAB upholds CCCS infringement decision against Uber and Grab

On 29 December 2020, the Competition Appeal Board ("CAB") dismissed Uber's

appeal against the decision of the Competition and Consumer Commission of

Singapore ("CCCS") that Uber's sale of its Southeast Asian business to Grab for a

27.5% stake in Grab resulted in a substantial lessening of competition in the ride-

hailing platformer market in Singapore. The CAB upheld (i) the directions issued by

CCCS to Uber and Grab at the material time to lessen the impact of the transaction on

drivers and riders and ensure the ride-hailing platform market remained open to new

players; and (ii) the financial penalty of SGD 6,582,055 (USD 4,915,283) imposed on

Uber. Uber was also ordered to pay CCCS’s costs in relation to the appeal.

Indonesia

Indonesia issues first fine on predatory pricing

On 15 January 2021, Indonesia Competition Commission ("KPPU") imposed a fine of IDR 22.3 billion

(USD 1.5 million) on cement manufacturer Conch South Kalimantan Cement ("Conch") for predatory

pricing. This is the first predatory pricing fine imposed by KPPU. KPPU found that from 2015 to 2019,

Conch sold its Portland Composite Cement below costs, which are therefore significantly cheaper

than competing products on the market. KPPU also found that Conch's parent company, Anhui

Conch Cement Co. Ltd., is the largest cement manufacturer in China which provides financial support

to Conch so that it can sustain the losses incurred by the below-cost pricing strategy. In

consequence, Conch's market share grew to more than 40% in the South Kalimantan province, and

at least five competitors were kicked out of the market. KPPU held that Conch has violated the Law

Number 5/1999 on the Prohibition of Monopolistic Practices and Unfair Business Competition. On 3

February 2021, Conch appealed the KPPU decision to the Commercial Court under the Central

Jakarta District Court, which upheld the KPPU decision on 4 March 2021.

New leaders of Indonesian competition authority are appointed

On 15 December 2020, Kodrat Wibowo and Guntur Saragih were appointed as the new chair and

vice chair of the KPPU, respectively. Both Kodrat Wibowo and Guntur Saragih have been

commissioners in KPPU since 2018 and are experts in economics. Kodrat Wibowo graduated from

Oklahoma University with a PhD in economics and had experience in relation to economics while

working at the Center for Economics and Development Studies at Padjadjaran University. Mr.

Saragih holds a master's degree in economics and has taught Marketing Management and Strategic

Management at University of Indonesia. Their office terms would expire on 27 April 2023.


Japan

JFTC approves Google's proposed acquisition of Fitbit

On 14 January 2021, the Japan Fair Trade Commission ("JFTC") announced that they had

approved a plan for the acquisition of Fitbit, a U.S. wearable device maker, by Google LLC.

The acquisition did not meet the mandatory notification thresholds, but the voluntary

notification thresholds (i.e., the total consideration for the acquisition was large and domestic

consumers were expected to be affected) were met. During their review, the JFTC raised the

concerns that, by completion of the acquisition, Google could make the health-related data

which FitBit currently holds available for Google's advertising. Google proposed a remedy

similar to that proposed to the European Commission (i.e. non-use of health-related data for its

digital advertising for 10 years, maintaining access to users' health and fitness data without

charging (subject to user consent) for 10 years, and continuing to license for free to Android

OEMs for 10 years). The European Commission and other foreign competition authorities also

reviewed this case, and the JFTC conducted its review in cooperation with these foreign

competition authorities.

Japanese digital platform bill comes into force

On 1 February 2021, the Act on Improving Transparency and Fairness of Specified Digital Platforms

("TFDPA") became effective. The TFDPA has three features. Firstly, regarding the business area, currently

it covers only online mall operators and app store operators. Secondly, regarding target companies, only

certain companies meeting turnover thresholds will be regulated by the TFDPA (i.e. JPY 300 billion (USD

3 billion) for online malls, JPY 200 billion (USD 2 billion) for app stores). Currently, six companies (i.e.

Amazon Japan G.K., Rakuten Group, Inc., Yahoo Japan Corporation, Apple Inc., iTunes K.K. and Google

LLC) are designated. Finally, regarding the obligations under the TFDPA, such companies will have three

types of obligations: (i) disclosure of terms and conditions to vendors, (ii) setting up of a procedure to

secure fairness, such as complaints handling; and (iii) annual reporting to the Japanese government,

including self-assessment of their compliance with disclosure and fair process obligations.

JFTC releases final report on digital advertising

On 17 February 2021, the JFTC published a final report regarding digital advertising. Based on a survey,

the JFTC pointed out in the report that digital platform operators engage in conduct that may restrict the

business activities of their business partners or compromise fairness and transparency, for instance: (i) the

restriction of transactions with competitors, (ii) the restriction of use of competing functions such as third-

party ad verification services, (iii) abusive use of consumers' information and (iv) lack of transparency such

as fee calculation. The JFTC will keep conducting fact-finding surveys on the digital market as well as

exchanging opinions with other competition authorities.

JFTC accepts BMW Japan's proposed commitments

On 12 March 2021, the JFTC approved the commitment plan submitted by BMW Japan Corp. ("BMW

Japan"), in relation to an alleged unfair trade practice by BMW Japan whereby it had asked dealers to

formulate a sales plan which could not be attained in light of their past sales performance, and to register

new cars in their own name in order to achieve the sales plan. BMW Japan's commitment plan included

that the above actions have been and will be discontinued, and BMW Japan will report on compliance with

the commitment plan to the JFTC annually for three years.


Japan

JFTC releases the final guidelines on cooperation with start-ups

On 29 March 2021, the JFTC and the Ministry of Economy, Trade and Industry jointly

issued guidelines on business collaboration with start-ups. These guidelines aim to

show an ideal form of contract between a start-up and a large enterprise when they

proceed with business collaboration in order to avoid an unbalanced contracting

situation, such as where the start-up's patent rights are monopolized by the large

enterprise or the large enterprise applies for patents of its own peripheral technology.

In particular, the guidelines focus on four types of contract: NDAs, proof of concept

agreements, joint research agreements, and licence agreements, and provide case

studies and show the direction of solutions that the JFTC suggests.

JFTC publishes a report concerning the impact of algorithms and AI

On 31 March 2021, the JFTC's study group on competition policy in digital markets, which consists of

professors and experts, published the Report on Algorithms/AI and Competition Policy. The report aims to

help the JFTC to properly address the risk to competition associated with algorithms and AI. The report

indicated five areas where algorithms and AI are relevant to competition policy: concerted practices,

ranking manipulation, personalization (which could lead to discriminatory treatment), competitiveness (the

JFTC needs to have cross-layer perspectives when it looks at relevant markets), and issues regarding

digital platforms (issues surrounding algorithms/AI would be relevant to digital platforms).

Malaysia

MyCC fines online customs platform for exclusive dealing

On 16 February 2021, the Malaysia Competition Commission ("MyCC") imposed a fine of MYR 10.3

million (USD 2.54 million) on Dagang Net Technologies Sdn Bhd ("Dagang Net") for exclusive dealing.

Dagang Net currently is the only authorized operator of the National Single Window ("NSW") in Malaysia.

NSW is an electronic system to transfer customs-related documents between end users and the

Malaysian customs authority. A recent development is that NSW will soon be replaced by a new customs

clearance system called the uCustoms system, and the Malaysian customs authority has appointed

Edaran Trade and other operators to run uCustoms. MyCC found that in reaction to uCustoms, Dagang

Net required its NSW software providers not to engage with service providers (such as Edaran Trade)

which are appointed to operate uCustoms. Therefore, MyCC held that Dagang Net's conduct constituted

abuse of market dominance through exclusive dealing. Dagang Net's parent company announced on 26

February 2021 that it would appeal MyCC's decision.


South Korea

Korean Cabinet passes the Act on Fair Intermediate Transactions on Online Platforms

On 26 January 2021, the Cabinet approved the Act on Fair Intermediate Transactions on

Online Platforms, which requires online platform operators which meet a revenue threshold

(expected to be more than KRW 10 billion (USD 9 million)) to sign contracts with vendors on

key terms such as commission rates and to notify vendors when contract details change or

services are suspended.

KFTC approves Apple's consent decree to resolve allegations of antitrust violations

On 3 February 2021, the Korea Fair Trade Commission ("KFTC") announced that it had

approved the consent decree proposed by Apple Korea regarding the alleged abuse of its

market position by imposing advertising and repair service costs on mobile carriers. Apple

Korea would revise the relevant clauses in their contracts and provide KRW 100 billion (USD

90 million) in support, including support to a research and development centre for mobile

carriers. An auditor to be appointed by the KFTC would monitor the progress of

implementation.

Naver appeals KFTC's penalty decision on search algorithm manipulation

On 24 February 2021, it was reported that Naver, a South Korean internet company, had appealed the

KFTC's decision in October 2020 to impose a fine of KRW 26.7 billion (USD 23 million) on manipulation of

search algorithms.

KFTC's survey on online travel agencies and app stores reveals unfair market practices

On 2 March 2021, the KFTC published the results of a survey of online travel agencies and app stores.

The result shows that about 31% of respondents answered that they were subject to unfair treatment by

online travel agencies and about 40% that answered they experienced unfair treatment by app store

operators (including treatment in relation to the use of proprietary payment systems of app stores). The

KFTC said that based on these survey results, it would strengthen the monitoring of unfair transactions by

online travel agencies and app stores.

Five online travel agencies correct MFN clauses upon KFTC's investigation

On 15 March 2021, the KFTC announced that five online travel agencies (Interpark, Booking.com, Agoda,

Expedia, and Hotels.com) had amended or deleted their most-favoured nation clauses after the KFTC's

investigation.

KFTC fines four car parts manufacturers for bid-rigging

On 24 March 2021, four car parts manufacturers were fined for bid-rigging in relation to 99 tenders by

Hyundai Motor and Kia Motors between 2007 and 2018. The total fine was KRW 82.4 billion (USD 73

million).

KFTC refers Apple Korea and its executive to prosecution for hindering investigation

On 31 March 2021, KFTC announced that it had referred Apple Korea and a senior executive to the

prosecutors regarding interference with the KFTC's investigation. According to the KFTC, Apple Korea

intentionally blocked its network during the KFTC's on-site investigation in June 2016, and refused to

submit data regarding such network block, and the senior executive of Apple Korea physically blocked

KFTC investigators from entering Apple Korea's premises in November 2017. The KFTC imposed a fine of

KRW 200 million (USD 180,000) for network blocking and KRW 100 million (USD 90,000) for refusal to

submit data. This is the first case in South Korea where a company has been fined for obstructing network

access.


India

CCI fines a book association for price-fixing and supply restriction

On 23 February 2021, the Competition Commission of India ("CCI") fined the Federation of

Publishers' and Booksellers' Associations in India ("FPBAI") for price-fixing and supply

restriction. FPBAI is a trade association in book publishing industry and has over 4000

members that are active in India. CCI launched an investigation against FPBAI in 2019

following a complaint from an FPBAI member, and found that FPBAI (i) restricted the

discounts that its members could offer to institutional buyers, thereby indirectly fixing the

members' sales prices; and (ii) coerced members to refrain from participating in certain

book procurements, which indirectly limited the supply of books in the country. As the

Competition Act 2002 expressly prohibits horizontal anti-competitive conduct that aims to

directly or indirectly fix prices or limit supply, CCI fined FPBAI INR 200,000 (USD 2,727)

and FPBAI's current president and former president INR 100,000 (USD 1,364) individually

for their leading role in FPBAI's anti-competitive conduct.

CCI issues an interim order over its investigation of MMT-Go and OYO's exclusive arrangements

On 9 March 2021, CCI issued an interim order requiring MMT-Go, an online travel booking platform to

immediately restore the listing of two hotel chains (FabHotels and Treebo) on its platform. The interim

order came in the context of the CCI's investigation on whether MMT-Go has provided preferential

treatment to OYO through making OYO the exclusive hotel supplier on the MMT-GO platform.

FabHotels and Treebo were previously de-listed by MMT-Go from its platform given the exclusive role of

OYO.

The CCI found prima facie that MMT-Go has substantial market power in the downstream market for

online hotel booking in India, whereas OYO has substantial market power in the upstream market for the

supply of budget hotels. The CCI tends to think that given the market power of MMT-Go and OYO, their

exclusionary agreement would likely tip the markets in favour of MMT-Go and OYO and lead to

irreversible harm to competition. Timing is critical in dynamic markets, hence the interim order. CCI

caveated that nothing in the interim order amounts to a final opinion on the merits of the case. It was

reported that OYO had challenged the interim order before the Gujarat High Court and the court has

suspended the Order.

CCI starts investigating WhatsApp's new privacy policy

On 24 March 2021, CCI issued an order to investigate WhatsApp's latest update to its privacy policy.

According to the policy notification, from 8 February 2021 onwards, WhatsApp's users would be forced

to accept the new terms of the policy in its entirety, which include, among others, sharing WhatsApp

users' data with Facebook (WhatsApp's parent company) and/or other Facebook's subsidiaries. Note

that the CCI in previous decisions found WhatApp to be dominant in the market for Over-The-Top

messaging apps through smartphones in India. Considering that the new policy does not provide users

with a choice not to share their data and information and that the information sharing scheme itself is far

from transparent, the CCI is of the prima facie view that WhatsApp is engaged in exploitative conduct in

violation of Competition Act 2002. The CCI needs to complete its investigation report within 60 days

which is significantly shorter than in other cases.


ACCC announces its 2021 enforcement and

compliance priorities

On 23 February 2021 at the annual Committee for Economic

Development Australia address the Chair of the Australian

Competition and Consumer Commission ("ACCC") Rod Sims

outlined the ACCC's compliance and enforcement priorities for

2021. As with many other competition agencies, a number of

these priorities relate to consumer and competition issues arising

from the COVID-19 pandemic (such as travel or event

cancellations and the domestic air travel market). Issues relating

to digital platforms, the pricing and selling of essential services

(with a focus on energy and telecommunications), allegations of

anti-competitive conduct in the financial services sector and

conduct affecting competition in the commercial construction

sector (with a focus on large public and private projects) are also

among the ACCC's 2021 enforcement priorities. Cartel conduct

causing detriment in Australia, anti-competitive agreements and

practices, as well as the misuse of market power, have been

identified as enduring priorities for the ACCC.

Australia

Full Federal Court clarifies statutory unconscionable conduct law

An appeal by the ACCC was upheld by the Full Federal Court on 19 March 2021, declaring that Quantum

Housing Group Pty Ltd ("Quantum") engaged in an unconscionable system of conduct in its dealings with

investors in breach of the Australian Consumer Law ("ACL"). The ACCC had appealed the trial judge's

decision to clarify whether "special disadvantage" was necessary to establish unconscionable conduct under

the ACL. The penalties AUD 700,000 (USD 536,111) for Quantum, AUD 50,000 (USD 38,293) for the sole

director) were not appealed by the ACCC.

As stated by ACCC Chair Road Sims, the decision importantly made clear:

• for conduct to be held "unconscionable" under the ACL (and other similar laws) it is not necessary to

establish that the business engaging in the conduct exploited some disadvantage or vulnerability with

respect to consumers or small businesses affected (although this may often be the case); and

• the correct approach to assess statutory unconscionability is to focus on whether the conduct is a sufficient

departure from the norms of acceptable commercial behaviour so as to be against conscience or offend

conscience.

Quantum was an approved participant of the National Rental Affordability Scheme ("NRAS"). In the ACCC's

proceedings against Quantum, it was alleged that Quantum pressured property investors participating in the

NRAS to terminate the arrangements with their existing property managers and to retain property managers

recommended by, approved by or with commercial links to Quantum. Quantum's sole director also admitted

liability for false or misleading representations and unconscionable conduct. In December 2019 Quantum

ceased trading and is in liquidation.


Epic files proceedings against Google in Australia

Epic Games, Inc and Epic Games International S.à r.l. ("Epic")

filed proceedings against Google LLC, Google Asia Pacific Pte.

Ltd. and Google Payment Australia Pty Ltd ("Google") in the

Federal Court of Australia on 10 March 2021. The proceedings

follow those brought by Epic against Apple in the Federal Court in

November 2020. Epic is alleging that Google's conduct hinders or

prevents the ability of Epic (and other app developers) from

distributing its apps to Android devices in Australia in any way

other than through Google's own app store (the Google Play

Store) and that Google also forces Epic (and other app

developers) to use Google's in-app payment processer (Google

Play Billing) providing Google with a near-monopoly in the android

app distribution market and android in-app payment processing

market respectively. The proceeding follows a US lawsuit brought

by Epic against Google in August 2020.

Australia

ACCC releases Digital Platforms Services Inquiry Issues Paper on Google choice screens

As part of its five-year inquiry into the supply of digital platform services in Australia, the ACCC has published

an Issues Paper (11 March 2021) to inform its September 2021 Interim Report on potential competition and

consumer issues in the provision of web browsers and general search services to Australian consumers and

in particular, the impact of default arrangements. The ACCC is also seeking views on the use of "choice

screens" (as announced in August 2019 by Google, said to provide users of new Android mobile devices with

a choice of search engines) and is receiving submissions on the operation of browsers and general search

services in Australia until 15 April 2021.

In response to the ACCC's Digital Platforms Inquiry Final Report (26 July 2019) which found that Google had

substantial market power in search services and advertising, the Australian Government had asked that the

ACCC monitor and report back to the Government in 2021 regarding Google's rollout of default internet

browser and search engine choice options on Android devices in Europe. The ACCC's Digital Platforms

Services Inquiry Final Report is not due until 31 March 2025.

Interim Report for ACCC's Digital Services Inquiry declares lack of competition in ad tech affecting

consumers, advertisers and publishers

Released publicly on 28 January 2021, the ACCC's Interim Report for its Digital Advertising Services Inquiry

considers how to address Google's industry-leading position and concerns about opacity in the operation and

pricing of ad tech and ad agency services. Proposals from the Interim Report include mandating the

separation of data sets held by large incumbents, to make it easier for rival ad tech providers to enter and

compete in the supply of ad tech services. The Interim Report also supports the ACCC's previous

recommendations from its Digital Platform Inquiry to introduce an unfair practices provision in the Australian

Consumer Law and the establishment of an ombudsman scheme to address digital platform complaints and

disputes.


ACCC accepts a court enforceable undertaking from

VISA to address merchant dealing competition concerns

The ACCC has accepted a court enforceable section 87B

undertaking from Visa AP (Australia) Pty Limited and Visa

Worldwide Pte Limited ("Visa"), under sections 46 and 47 of the

Competition and Consumer Act 2010 in relation to concerns that

Visa may have limited competition through its dealings with large

merchants' cheaper interchange rates (referred to as "strategic

merchant rates") for processing credit card payments, if those

merchants agreed to process Visa branded dual-network debit

card payments through the Visa network. The ACCC's concern

was that Visa's strong market position in the credit card

acceptance market could allow Visa to harm competition in the

debit card acceptance market. While acknowledging the ACCC's

concerns, Visa has made no admissions of competition law

breaches.

Australia

New Zealand

New Zealand criminalises cartel activity

In New Zealand, corporates and individuals will be subject to criminal sanctions for cartel conduct from 8

April 2021 as a result of the Commerce (Criminalisation of Cartels) Amendment Act receiving royal assent

on 8 April 2019. For agreements containing a cartel provision which were intentionally entered into prior to 8

April 2021, continuing to give effect to such an agreement will be considered criminal. A cartel provision in

an agreement is that which has the purpose, effect, or likely effect, of either fixing price, restricting output or

allocating markets, and is prohibited regardless of effect of competition on the market. The following

penalties can now apply:

• Individual – up to 7 years imprisonment, a fine of up to NZD 500,000 (USD 352,311) or both.

• Corporate – up to NZD 10 million (USD 7,046,223); three times the value of any commercial gain

resulting from the cartel provision (if it can be readily ascertained and the court is satisfied the offence

occurred in the course of producing commercial gain); or 10% of the turnover of the corporate (and all its

interconnected bodies corporate) in each accounting period the contravention occurred (if the commercial

gain cannot be readily ascertained).

On 10 March 2021, a new bill was also introduced to New Zealand's Parliament, including most notably the

addition of an "effects test" to section 36 of the Commerce Act under which entities with substantial market

power would be prohibited from engaging in conduct that has, or is likely to have, the effect of substantially

lessening competition in a market. This new test would bring New Zealand law more into alignment with

current Australian law.

Clifford Chance, 33/F, China World Office 1, No. 1 Jianguomenwai Dajie,

Chaoyang District, Beijing 100004, People's Republic Of China

© Clifford Chance 2021

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whilst we are authorised to provide information concerning the effect of the

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