China’s Fair Competition Review System: A Single Case Study

Abstract

The case study methodology has proved to be a useful empirical tool for competition policy evaluation. However, as far as China’s Fair Competition Review System (FCRS) is concerned, empirical studies are scarce. This article aims to partly fill this gap by thoroughly studying the first litigation case in light of three questions: (1) does China’s FCRS contribute to a competitive market?; (2) does it face challenges regarding implementation, including judicial proceedings?; and (3) how to tackle these challenges? We find that China’s FCRS promotes a competitive market to some extent, but diverse issues need to be tackled in the coming years. Some policymakers still lack understanding of the system. Public antitrust enforcement also faces understanding and capability problems to fully implement the FCRS. The review standards are not specific enough. Regarding judicial scrutiny of the FCRS, we note that also judges lack knowledge of the FCRS, especially in primary courts. Court jurisdictions for filing administrative monopoly litigation are not of high enough rank. In addition, the nature of the FCRS brings up doubts when entering into litigation as the case has to be connected with the Anti-Monopoly Law (AML). Consequently, we formulate several suggestions for improvement: First, strengthening competition advocacy and FCRS training for policymakers, antitrust enforcement officials, and judges. Second, establishing disciplinary and incentive mechanisms. Third, increasing enforcement capacity. Fourth, specifying industry-specific review standards. In terms of judicial scrutiny, in addition to the training for judges, we also propose to reform the administrative proceeding system, adding corresponding clauses connected to Chapter V of the AML and the FCRS into the Administrative Procedure Law. Abstract administrative actions should also have the possibility to initiate litigation in the near future, and administrative monopoly cases should be filed at least to an intermediate court or intellectual property court, rather than to a primary court. The establishment of a dedicated competition court could also add value. Last, we recommend upgrading the FCRS to proper law. China, Fair Competition Review System, Evaluation, Case study, Administrative monopoly