The author of this article is Jin Yi
1. Overview
On January 12, 2024, the Anti-Monopoly and Anti-Unfair Competition Commission issued the Anti-Monopoly Guidelines for Industry Associations (hereinafter referred to as the "Guidelines"), which provides further guidance on how industry associations should strengthen anti-monopoly compliance. The Guidelines shall come into force on the date of promulgation.
Industry associations refer to social group legal persons composed of economic organizations and individuals in the same industry that exercise industry services and self-discipline management functions, mainly composed of business operators with competitive relationships, and may also include upstream and downstream business operators, or business operators with other business contacts; Some industry associations are authorized by laws and regulations and also have certain functions for the management of public affairs.
Due to the composition of industry associations and their identity characteristics, some industry associations improperly interfere in market competition and organize member enterprises to engage in monopolistic behaviors from time to time. Since the Anti-Monopoly Law came into effect in 2008, the market regulation authorities have investigated and dealt with more than 50 typical monopoly cases involving industry associations. [1] However, industry associations also play the role of a bridge and link between the industry and the business entity, so it is not simply the object of supervision, and also has the dual identity of the anti-monopoly compliance organizer of the industry.
2. Industry associations are the targets of anti-monopoly supervision
When an industry association is the object of anti-monopoly supervision, its specific role is divided into three different situations: as the organizer of monopolistic behavior of enterprises in the industry, as a participant in administrative monopoly, and as an operator of the industry association itself.
1.Industry associations act as organizers of monopolistic behavior of enterprises
Since industry associations are mainly composed of business operators with a competitive relationship or a relationship between supply and demand, in reality, the most common violation of the Anti-Monopoly Law is the act of organizing enterprises to conclude and implement monopoly agreements. Article 21 of the Anti-Monopoly Law stipulates that "industry associations shall not organize business operators in their respective industries to engage in monopolistic acts prohibited by this Chapter." The "Chapter" here refers to Chapter II of the Anti-Monopoly Law - Monopoly Agreements. Article 56 of Chapter VII on Legal Liability stipulates that: "Where an industry association violates the provisions of this Law by organizing business operators in its own industry to reach a monopoly agreement, the anti-monopoly law enforcement agency shall order it to make corrections and may impose a fine of not more than RMB 3 million; where the circumstances are serious, the registration management organs for social groups may revoke registration in accordance with law. ”
Monopoly agreements under the Anti-Monopoly Law are divided into two categories: horizontal monopoly agreements and vertical monopoly agreements, and horizontal monopoly agreements refer to agreements reached between undertakings with competitive relationships, which generally include fixing or changing goods or services (hereinafter collectively referred to as commodities)** restricting the production quantity or sales quantity of goods; Segmentation of the sales market or the raw material procurement market; restricting the purchase of new technologies and equipment, or restricting the development of new technologies or products; boycott deals, etc. Vertical monopoly agreements refer to agreements reached between undertakings and trading counterparties, and the vertical monopoly agreements expressly prohibited by the Anti-Monopoly Law include fixed resale of goods to third parties, and minimum resale of goods to third parties. Articles 4 to 9 of the Guidelines prohibit industry associations from entering into and implementing monopoly agreements.
In particular, monopoly agreements can take the form of written, oral, or even concerted acts. Therefore, Article 10 of the Guidelines specifically lists the high-risk behaviors of industry associations, including facilitating the exchange and discussion of competitively sensitive information by business operators; By publishing the industry's guide price, benchmark price, calculation formula, etc., or by publishing false or exaggerated market information such as cost trends, supply and demand conditions, etc., guide operators to coordinate commodities.
2.Industry associations act as participants in administrative monopolies
When industry associations are authorized by laws and regulations to manage public affairs, their conduct shall be regulated by Chapter 5 of the Anti-Monopoly Law, which prohibits the abuse of administrative power to eliminate or restrict competition. Articles 13 and 14 of the Guidelines stipulate the circumstances under which trade associations engage in or assist administrative authorities in abusing their administrative power to eliminate or restrict competition. Specifically, industry associations should avoid engaging in or assisting in restricted transactions, obstructing business operators from entering the relevant market or imposing unequal treatment on business operators by means of signing cooperation agreements or memorandums, obstructing the free circulation of goods, excluding or restricting business operators from participating in business activities such as bidding and bidding, restricting or coercing business operators to establish branches, forcing business operators to engage in monopolistic behaviors, and formulating regulations containing content that excludes or restricts competition.
When an industry association engages in the above-mentioned acts, it shall bear the legal liabilities stipulated in Article 61 of the Anti-Monopoly Law, including ordering the superior authority to correct the illegal acts, and imposing sanctions on the directly responsible managers and other directly responsible personnel in accordance with the law.
In addition, Article 15 of the Guidelines specifically points out that when an industry association authorized by laws and regulations to administer public affairs formulates normative documents, other policy documents and specific policy measures in the form of "one matter, one discussion" involving the economic activities of business entities, it shall conduct a fair competition review in accordance with the requirements of the Anti-Monopoly Law and relevant provisions.
3.Industry associations themselves act as operators
Since Articles 21 and 56 of the Anti-Monopoly Law focus on monopoly agreements on the prohibition and legal liability of industry associations engaging in monopolistic acts, industry associations may mistakenly believe that they only need to bear the legal consequences for organizing enterprises to conclude and implement monopoly agreements, and ignore the anti-monopoly compliance issues when they are business operators.
The scope of the provisions of the Anti-Monopoly Law on "business operators" is very broad. Article 15 of the Anti-Monopoly Law stipulates that: "For the purposes of this Law, the term "business operator" refers to natural persons, legal persons and unincorporated organizations engaged in the production and sale of goods or the provision of services. Therefore, when an industry association engages in the production or sale of goods or the provision of services, its status is no different from that of other business operators, and it should be subject to the regulations of Chapters 2 to 4 of the Anti-Monopoly Law on the prohibition of monopoly agreements, abuse of dominant market position, and illegal implementation of concentration of undertakings. Article 12 of the Guidelines clearly reminds us of this, "the identity of the operator of an industry association".
3. Industry associations act as organizers of anti-monopoly compliance
Article 1 of the Guidelines stipulates that one of the purposes of formulating the Guidelines is to "give full play to the positive role of industry associations in promoting the healthy and sustainable development of industry norms and maintaining the order of market competition, and guide industry associations to strengthen anti-monopoly compliance"; Article 3 further clearly stipulates that "industry associations shall strengthen industry self-discipline, guide operators in their own industries to compete in accordance with the law, operate in compliance with regulations, and maintain the order of market competition." ”
Therefore, the role of industry associations in anti-monopoly compliance is not to passively accept supervision, but also to shoulder the heavy responsibility of anti-monopoly compliance organizers in the industry. This is specified in articles 11 and 16 to 22 of the Guide:
First of all, industry associations should strengthen their own compliance construction. Industry associations are encouraged to establish an effective anti-monopoly compliance management system, or strengthen anti-monopoly compliance management within the existing compliance management system, including but not limited to: (1) formulating an anti-monopoly compliance code of conduct; (2) Establish an anti-monopoly compliance commitment mechanism; (3) Establish anti-monopoly compliance departments or personnel; (4) Establish a reward and punishment system for anti-monopoly compliance; (5) Strengthen anti-monopoly compliance training.
Second, industry associations should establish a compliance risk identification and control mechanism. Industry associations are encouraged to review whether there is a suspected violation of the Anti-Monopoly Law and relevant provisions when formulating and revising the articles of association, rules, decisions, notices, opinions, standards, self-discipline conventions, etc., and establish an anti-monopoly compliance reporting mechanism.
Third, industry associations are encouraged to take the initiative to communicate with anti-monopoly law enforcement agencies, provide materials such as the market competition status and the situation of business operators in the industry, and put forward opinions and suggestions on strengthening and improving anti-monopoly law enforcement.
Finally, industry associations should strengthen anti-monopoly compliance guidance for members, including guiding members to strengthen anti-monopoly compliance management; Carry out anti-monopoly compliance training for members; Educational and disciplinary actions are given to members when they engage in monopoly violations. When members engage in violations of the Anti-Monopoly Law, industry associations are encouraged to report to the anti-monopoly law enforcement agencies in a timely manner, or guide members to report to the anti-monopoly law enforcement agencies and provide important evidence; Cooperate with interviews and investigations; Instruct members to apply for leniency, waivers, etc.
4. Summary and Recommendations
1.The Guidelines set forth higher requirements for the role of industry associations in anti-monopoly compliance, which should not only ensure their own compliance with the law, but also shoulder the heavy responsibility of organizing anti-monopoly compliance in their own industries.
2.Industry associations should clearly distinguish their identities and legal consequences when engaging in different acts. When acting as an organizer of industry exchanges, it should refrain from organizing enterprises to conclude or implement monopoly agreements or provide conditions for such behavior; When they have the function of managing public affairs in accordance with the law, they should avoid becoming the implementers or helpers of administrative monopolies; When engaged in the production or operation of goods or the provision of services, it shall be subject to the comprehensive supervision of the Anti-Monopoly Law;
3.Industry associations should strengthen the study and research of anti-monopoly law, establish an internal compliance system on the one hand, and improve the professional ability to guide members in anti-monopoly compliance on the other.
Notes:
1] Interpretation of the Anti-Monopoly and Anti-Unfair Competition Commission's Anti-Monopoly Guidelines for Industry Associations
This article was first published in LexisNexis