China’s Antitrust Regulator Bulking Up As Crackdown On Behemoths Widens

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China’s competition watchdog is adding staff and other resources because it ramps up efforts to clamp down on anti-competitive behaviour, especially among the country’s powerful companies, people with knowledge of the matter told Reuters.

Beijing’s decide to bulk up the State Administration for Market Regulation (SAMR) comes as China revamps its competition law with proposed amendments including a pointy increase in fines and expanded criteria for judging a company’s control of a market.

On Saturday, the watchdog slapped a record $2.75 billion fine on Alibaba after an antimonopoly probe found the e-commerce giant had abused its dominant market position for several years.

The fine underscores the challenges ahead for companies, including global firms with operations in China, mainly during a tech sector that thrived during years of relatively laissez-faire market regulation.

It also mirrors the increasing activism of U.S. and European antitrust authorities in recent years.

The Beijing-headquartered agency plans to expand its antitrust workforce by around 20 to 30 staff, up from about 40 now, two people with direct knowledge of the matter said.

The watchdog also plans to delegate case reviewing power to its local bureaux and source additional manpower from other government bodies and agencies to handle cases that need extensive investigation, four people said.

Budgets allocated for antimonopoly investigations, daily operations and research projects also will be increased, said three of the people cited above and another person with knowledge of the matter.

The people declined to be named as they weren’t authorised to talk to the media.

The SAMR didn’t immediately answer Reuters request for comment.

“An increase in staffing also as within the quality of the bureau’s enforcement capabilities may be a must for an antitrust push,” said Liu Xu, a researcher at the National Strategy Institute of Tsinghua University.

“Otherwise regulators won’t be ready to handle multiple cases at just one occasion , and therefore the public will question how transparent the investigation process would be,” said Liu, a long-time advocate for antitrust enforcement.

GROWING SCRUTINY

The SAMR’s antitrust bureau was established in early 2018 after two other government departments were merged into it to make one authority to police monopoli­stic activities.

The bureau has also been armed with new and more stringent laws within the past few months.

SAMR’s enhanced powers come as Chinese President Xi Jinping weighed in last month on the necessity to “strengthen antitrust powers” to rein in behemoths that play a dominant role within the country’s consumer sector.

“They didn’t feel that they had the mandate to try to to it but now they are doing . and that they are happy that ,” said a legal source on the brink of SAMR, pertaining to the necessity to manage the web companies, which, he said, were seen as “a bit above the law.”

With growing scrutiny, executives of major internet firms are now required to form routine reports to the antitrust bureau for merger deals or of practices that would fall foul of antimonopoly rules, one among the sources said.

Reeling from the workload, the SAMR has began to expand its presence in additional cities like Hangzhou and Shenzhen on an attempt basis, rather than handling the cases beat Beijing, to delegate case reviewing power to local bureaux, two of the sources said. it’s also started outsourcing more research work, covering areas including economic and industry analysis, to scholars and its own consultancy committee to hurry up cases ongoing , one among the sources said.

For now, however, the investor focus is on who among the home-grown technology champions are going to be subsequent target of the Chinese antitrust watchdog.

“Other tech companies would be knowing assume they’ll be receiving an equivalent level of scrutiny and penalty,” said Fred Hu, chairman of personal equity firm Primavera Group, pertaining to the fine imposed on Alibaba.

“The heavy fine on one among the country’s dominant tech leaders also sends a robust message to the broader tech sector that the Chinese regulators, like their European counterparts, are serious about cracking down on Big Tech.”

Source: Yahoo Finance