China amends Anti-Monopoly Law for the first time amid tech crackdown, increasing penalties and regulatory control

China is amending its Anti-Monopoly Law for the first time since it came into force in 2008, beefing up antitrust penalties in an explicit push for more control over the digital sector.

A draft amendment of the law was submitted to the Standing Committee of the National People’s Congress for a first reading last week, with the final version expected to be rolled out sometime next year.

The draft significantly increases penalties, expands the discretionary power of the State Administration for Market Regulation (SAMR), and “sends a clear signal of tightening control over tech firms”, according to Angela Zhang, an associate professor at the University of Hong Kong’s Faculty of Law.

Among the increased penalties are a tenfold increase in the maximum fine for a procedural failure to notify authorities of a merger transaction, raising it to 5 million yuan (US$783,000). This applies even if the transaction does not pose an anticompetitive threat, Zhang noted.

The new rules would also allow the SAMR to impose fines of up to 1 million yuan on individuals directly responsible for violating the law, including legal representatives, directors and other employees. This is a first for China, lawyers from Baker McKenzie noted on the firm’s website this week.

Among the SAMR’s increased discretionary power is the ability to increase fines when it is difficult to calculate a company’s illegal gains. For violations considered “particularly severe”, fines can be increased to up to five times the amount stipulated.

“[The draft amendments] add to the Anti-Monopoly Law’s flexibility and deterrent effect,” said Du Guangpu, an antitrust lawyer with the Jingsh Law Firm in Beijing. “The existing version doesn’t have enough deterrent effect.”