China establishes a fair competition review system

On 1 June 2016, the State Council published its Opinions on Establishing a Fair Competition Review System in the Development of the Market Regime, demonstrating that China has formally established a fair competition review system. The opinions, promoting reforms from the top level, is a key step in establishing a fundamental position on competition policy, and also the major initiatives to implement reforms of the State Council to streamline administration and delegate more power to lower-level government. The opinions have a profound influence on the supervision and regulation of government behaviour, as well as a positive effect on the promotion of market-oriented development and the maintenance of fair competition.

Q: What is the fair competition review system? A: This refers to government authorities fully considering the impact of policies and measures that they formulate on market competition. The review system aims to regulate the behaviour of government, preventing the introduction of policies or measures that eliminate or restrain market competition, ensuring a decisive role of the market in resource allocation, and making sure the government carries out its administration function according to the law.

Q: Which targets are subject to review under the fair competition review system? A: The following items are subject to the review: all administrative regulations and rules; normative documents; local regulations; other policies and measures concerning the economic activities of market players that are formulated and issued by administrative authorities at various levels (including the State Council) and organizations that have the functions of public affairs administration (policy-making authorities). The review must be conducted by policy-making authorities during the process of formulating or drafting policies and measures involving the economic activities of market players (including market access, industry development, investment solicitation, tendering and bidding, government procurement, business codes of conduct, qualification criterion, etc.).

Michael Gu is a partner and Sun Sihui is an associate at AnJie Law Firm