BEIJING / HONG KONG (Reuters) – China’s watchdog adds staff and other resources as it intensifies efforts to combat anti-competitive behavior, especially among the country’s strong companies, people familiar with the matter told Reuters.
Beijing’s plan to expand state administration for market regulation (MRSA) comes as China renews its competition law with proposed changes, including a sharp increase in fines and extended criteria for judging a company’s control of a market.
On Saturday, the watchdog imposed a record $ 2.75 billion fine on Alibaba after an antitrust investigation found that the e-commerce giant had abused its dominant market position for several years.
The fine highlights future challenges for companies, including global firms operating in China, mainly in a technology sector that has thrived in the years of relatively free 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 workforce by about 20 to 30 employees, up from about 40 today, said two people with direct knowledge of the issue.
The watchdog also intends to delegate case review power to its local offices and obtain additional workforce from other government agencies and agencies to handle cases that require extensive investigation, four others said.
Budgets for antitrust investigations, day-to-day operations and research projects will also be increased, said three of the people quoted above and another person with knowledge of the matter.
People refused to be named because they were not allowed to speak to the media.
MRSA did not immediately respond to Reuters’ request for comment.
“An increase in staff as well as the quality of law enforcement capabilities of the office is a necessity for antitrust action,” said Liu Xu, a researcher at Tsinghua University’s National Strategy Institute.
“Otherwise, regulators will not be able to handle more than one case at a time, and the public will question how transparent the investigation process would be,” said Liu, a longtime antitrust lawyer.
INCREASING CRITINIA
The MRSA antitrust office was established in early 2018, after two other government departments were merged into it to form a single police authority for monopolistic activities.
The office has also been armed with new and stricter laws in recent months.
The increased powers of MRSA come as Chinese President Xi Jinping weighed in last month on the need to “strengthen antitrust powers” to curb monsters that play a dominant role in the country’s consumer sector.
“They did not feel that they had the mandate to do it, but now they are doing it. And they are satisfied with that, “said a legal source close to SAMR, referring to the need to regulate internet companies, which, he said, were seen as” slightly above the law “.
With increased control, the directors of large Internet companies are now required to submit routine reports to the antitrust office for merger transactions or practices that could fall short of antitrust rules, said one source.
By giving up the workload, MRSA has begun to expand its presence in several cities, such as Hangzhou and Shenzhen, on a trial basis, instead of dealing with cases in Beijing, to delegate the power to review the case to local offices, two of the sources said. It has also begun outsourcing more research, covering areas, including economic and industrial analysis, to researchers and its own advisory committee to speed up ongoing cases, said one source.
For now, however, the investor is focusing on which of the champions of home-grown technology will be the next target of the Chinese antitrust watchdog.
“Other technology companies would be wise to assume that they could receive the same level of control and penalties,” said Fred Hu, president of private equity firm Primavera Group, referring to Alibaba’s fine.
“The heavy fine imposed on one of the country’s dominant technology leaders also sends a strong message to the wider technology sector that Chinese regulators, like their European counterparts, are serious about cracking down on Big Tech.”
Reporting by Cheng Leng, Julie Zhu, Pei Li, Kane Wu; Additional reporting by Josh Horwitz; Editing by Sumeet Chatterjee and Jacqueline Wong