© Reuters. FILE PHOTO: The Alibaba Group logo can be seen in their Beijing office
BEIJING / HONG KONG (Reuters) – China’s competition watchdog is adding staff and other resources to step up efforts to combat anti-competitive behavior, especially among the country’s powerful corporations, knowledgeable people told Reuters.
Beijing’s plan to expand the state administration for market regulation (SAMR) stems from the fact that China is revising its competition law with proposed amendments, including a sharp increase in fines and expanded criteria for assessing a company’s market control.
On Saturday, the guard dog imposed a record $ 2.75 billion fine Alibaba (NYSE 🙂 After an antimonopoly investigation found the e-commerce giant had abused its dominant position for several years.
The fine underscores the challenges ahead for businesses, including global companies with offices in China, especially in a technology sector that has thrived in years of relatively laissez-faire market regulation.
It also reflects the increasing activism of US and European antitrust authorities in recent years.
The Beijing-headquartered agency plans to expand its antitrust workforce by around 20 to 30 employees, from around 40 currently, said two people with direct knowledge of the matter.
The watchdog also plans to delegate case review powers to its local offices and recruit additional manpower from other government agencies and agencies to handle cases that require extensive investigation, four other people said.
The budgets allocated for antimonopoly investigations, daily operations and research projects will also be increased, said three of the above and one other person aware of the matter.
The people declined to be named because they were not authorized to speak to the media.
The SAMR did not immediately respond to Reuters’ request for comment.
“Increasing the workforce and the quality of the bureau’s law enforcement capabilities is a must for an antitrust push,” said Liu Xu, researcher at Tsinghua University’s National Strategy Institute.
“Otherwise, regulators will not be able to handle multiple cases at once and the public will wonder how transparent the investigation process would be,” said Liu, a long-time antitrust enforcement advocate.
The SAMR Antitrust Office was set up in early 2018 after two other government departments were merged into a single authority for monopoly police activities.
The office has also been armed with new and stricter laws in recent months.
SAMR’s expanded powers come as Chinese President Xi Jinping weighed the need to “strengthen antitrust powers” last month to contain giants who dominate the country’s consumer sector.
“They didn’t feel they had the mandate for it, but now they are. And they’re excited about it,” said a legal source close to SAMR, citing the need to regulate the internet companies it was seen as “a little above the law.”
With increased scrutiny, executives of large internet firms must now routinely report to the Antitrust Agency about merger deals or practices that could violate antimonopoly rules, one of the sources said.
Due to the workload, the SAMR has started to develop its presence on a trial basis in more cities like Hangzhou and Shenzhen, rather than handling the cases all in Beijing to delegate the powers of reviewing cases to local offices, two of the sources said. It has also started outsourcing more research, covering areas like economic and industrial analysis, to academics and its own advisory committee to help expedite ongoing cases, one of the sources said.
For now, however, investors are focusing on who among the domestic tech champions will be the Chinese antitrust watchdog’s next target.
“Other tech companies should assume that they may receive the same level of scrutiny and punishment,” said Fred Hu, chairman of private equity firm Primavera Group, referring to the fine imposed on Alibaba.
“The heavy fine imposed 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 serious about cracking down on big tech.”