INTRODUCTION
Welcome to the sixth edition of the Herbert Smith Freehills Asia-Pacific Competition Law Guide. Against the headwinds brought on by the pandemic and global geopolitical tensions, competition law has continued to gain prominence on national agendas across the region, and there have been numerous legislative and enforcement developments across the jurisdictions covered by this Guide.
Significant regulatory and institutional developments
There have been a number of important developments since the publication of the last edition of this Guide in 2020.
In China, major reforms have been taking place, most recently culminating in significant amendments to the Anti-Monopoly Law (AML) approved by the Standing Committee of the National People's Congress on 24 June 2022.The amendments mark an important milestone in antitrust development in China, and follow an institutional reform that took place in November 2021 whereby the status of the anti-monopoly divisions of the State Administration for Market Regulation (SAMR) were elevated. The AML amendments will come into force on 1 August 2022, notably with significantly increased penalties for antitrust violations. The SAMR has consolidated the amendments through updates to a number of underlying competition regulations, the drafts of which are currently open for public consultation.
Turning to Indonesia, significant changes were introduced to its competition law regime in 2021 - many of which took effect under what is commonly referred to as the Omnibus Law, as well as under the Government Regulation on the Implementation of Prohibition of Monopolistic Practices and Unfair Business Competition (No.44).These changes include the substantial increase of administrative fines that can be imposed for competition law infringements, and the removal of most of the criminal sanctions under the law (except for those relating to the obstruction of investigations and examinations).
In Cambodia, a new competition law has come into effect, meaning that all Association of South-East Asian Nation (ASEAN) member states now have competition laws in place. Some of the newer competition authorities in this region, for example, Brunei Darussalam and Myanmar, have yet to actively enforce their laws and have concentrated primarily on capacity building and advocacy matters to increase public and private sector awareness of competition policy.
In Hong Kong, the Hong Kong Competition Commission (HKCC) has been active in policy making and enforcement. Since 2020, the HKCC has issued a revised leniency programme for cartel conduct (as well as introducing a leniency programme for individuals), a new policy on recommended pecuniary penalties, and a new policy on commitments.
Notwithstanding the economic impact of COVID-19, there has been a notable increase in the level of resources available to competition authorities across the region. A 2021 OECD study revealed that overall, budgets and staff levels in the region have been increased by 22.7% and 23.7% respectively in the past six years. The Japan Fair Trade Commission (JFTC) and Korean Fair Trade Commission (KFTC) were among the best-funded globally in 2020, behind only the European Commission and US enforcers. In China, following the institutional reform, increases in both budget and staff (particularly in enforcement) are expected. In Indonesia, following the passing of the Omnibus Law, the Komisi Pengawas Persaingan Usaha (KPPU) is seeking an increase of 300%.Last year (2021), the Australian Competition and Consumer Commission (ACCC) and the New Zealand Commerce Commission (NZCC) secured modest increases.
Merger control is also growing across the Asia-Pacific region, although there remain significant differences in approach. While most jurisdictions have a mandatory, pre-closing notification regime in place, some continue to maintain voluntary notification or post-merger notification regimes. A key and eagerly anticipated development is the introduction of a cross-sector merger control regime in Malaysia, which is currently expected to come into force in 2023.
Stricter penalties and enforcement
The fines and other penalties imposed for infringing competition law in the Asia-Pacific region have continued to rise.
The record fines imposed by the SAMR against Chinese tech giants have been matched by fines imposed by other competition authorities. Total cartel fines imposed by the KFTC in 2021 reached approximately USD 864.5 million, up significantly from fines of USD 147.1 million the year before. With the recent legislative amendments in China, this trend is expected to continue.
Fines are expected to rise elsewhere in the region. In Indonesia, the maximum administrative fines that can be imposed in Indonesia has been increased from IDR 25 billion to either 50% of net profit or 10% of turnover of the relevant company generated during the violation period. In the Philippines, the maximum fine that can be imposed by the PCC has also been increased by 10% to PHP 110 million.
In addition to the administrative fines, criminal enforcement has continued in 2021.In March 2021, the Tokyo District Court imposed criminal fines of JPY 500 million against two major construction companies, and at the same time imposed suspended prison sentences on two former executives (these criminal penalties followed administrative fines of JPY 3.1 billion imposed by the JFTC in January).Australia saw the first guilty plea by an individual under the criminal cartel provisions of its Competition and Consumer Act. In New Zealand, amendments introducing criminal cartel sanctions took effect in April. Notably, the new Cambodian law also provides for potential criminal penalties for cartel conduct.
Digital market under scrutiny
Any commentary on key developments in the region would not be complete without mention of the ever-sharpening focus on digital markets and tech giants.
In China, a reference to infringements involving digital practices has been explicitly added into the AML under the recent legislative amendments. This follows the substantive guidelines targeting the platform economy set out in SAMR's Anti-Monopoly Guidelines for the Platform Economy published in February 2021.We have also seen several significant enforcement cases targeting this sector in 2021.A number of these cases involved abuses of dominance by engaging in a practice described as "choosing one between two", in essence prohibiting (or at least discouraging) in-platform vendors from operating stores or participating in campaigns on rival platforms.
The ACCC has also taken specific enforcement action in relation to consumer law issues relating to digital platforms. A number of these cases concerned the misleading of consumers in relation to the collection and use of their data.
Additionally, Japan's new "Digital Platform Transparency Law" went into effect in February 2021, requiring specified digital platform operators to disclose their terms of use for commercial users and consumers, as well as to publish annual reports on a range of matters.
The Competition and Consumer Commission of Singapore revised a set of guidelines more targeted to the digital era which took effect on 1 February 2022.
In line with these developments, many of the competition authorities in the region have declared digital market to be one of their key enforcement priorities going forward.
About this Guide
As with previous editions, this Guide covers jurisdictions in which Herbert Smith Freehills and its associated offices have an established presence, namely: Australia, Mainland China, Hong Kong, Indonesia, Japan, Malaysia, Singapore and Thailand. The Guide also provides some commentary on the status of competition law in the ASEAN Member States. It is intended to provide clients and lawyers with concise information on the competition law regimes, both antitrust and merger control, in these key jurisdictions.
This year, access to the guide will be made available online. On our website, you will also find links to our latest updates, including our podcast series. We hope that you will find the Guide and this online hub to be a useful resource.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
