BEIJING / HONG KONG (Reuters) – China’s competition watchdog is adding staff and other resources as it ramps up its efforts to tackle anti-competitive behavior, especially among the country’s powerful companies, knowledgeable people told Reuters.
Beijing’s plan to increase the State Administration for Market Regulation (SAMR) comes as China overhauls its competition law with proposed changes, including a sharp increase in fines and comprehensive criteria for assessing a company’s control over a market.
On Saturday, watchdog Alibaba struck a record $ 2.75 billion fine after an anti-monopoly investigation found that the e-commerce giant had been abusing its dominant market position for years.
The fine underscores the challenges facing companies, including global companies with operations in China, particularly in a tech sector that has thrived during years of relatively laissez-faire market regulation.
It also reflects the increasing activism of the US and European antitrust authorities in recent years.
The Beijing-headquartered agency plans to expand its antitrust workforce by about 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 review authority to its local offices and engage additional manpower with other government agencies and agencies to handle cases requiring extensive investigation, four other people said.
Budgets for anti-monopoly investigations, day-to-day operations and research projects will also be increased, said three of the people mentioned above and one more knowledgeable person.
The people refused 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 agency’s law enforcement capabilities is a must for an antitrust push,” said Liu Xu, a 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 longtime advocate for antitrust enforcement.
GROWING SCRUTINY
SAMR’s antitrust office was established in early 2018 after two other government departments merged into it to form a single authority for monopolistic police activities.
The agency has also been armed with new and tougher laws in recent months.
SAMR’s enhanced powers come when Chinese President Xi Jinping last month weighed in on the need to “strengthen antitrust powers” to curb behemoths that dominate the country’s consumer sector.
“They didn’t feel they had the mandate to do it, but they do now. And they are happy with that, ” said a legal source close to SAMR, citing the need to regulate the internet companies, which he said were seen as ‘a bit above the law’.
With increasing scrutiny, executives of major Internet companies are now required to make routine reports to the antitrust office for merger deals or practices that may violate antimonopoly rules, one source said.
The SAMR has been shaken up and has begun to expand its presence in more cities such as Hangzhou and Shenzhen on a trial basis, rather than handling cases all in Beijing, to delegate case review authority to local agencies, said two of the sources. It has also begun outsourcing more research work, including economic and industrial analysis, to scientists and its own advisory committee to expedite ongoing business, one source said.
For now, however, the investor’s focus is on which of the home-grown technology champions will be the next target of the Chinese antitrust watchdog.
“Other technology companies would be wise to assume they will receive the same level of control and punishment,” said Fred Hu, chairman of private equity firm Primavera Group, referring to the fine imposed on Alibaba.
“The heavy fine for one of the country’s dominant tech leaders is also a strong message to the wider technology sector that Chinese regulators, like their European counterparts, are serious about tackling Big Tech.”
Reporting by Cheng Leng, Julie Zhu, Pei Li, Kane Wu; Additional reporting by Josh Horwitz; Adaptation by Sumeet Chatterjee and Jacqueline Wong