China Issues Implementation Measures for the Fair Competition Review Regulations
Published 20 March 2025
Sarah Xuan
To Ensure that all market participants can compete freely under the same rules and promote economic prosperity and social equity, on February 28, 2025, the State Administration for Market Regulation (SAMR) issued the Implementation Measures for the Fair Competition Review Regulations (hereinafter referred to as the Implementation Measures), which will take effect on April 1, 2025. As a detailed refinement and enforcement of the Fair Competition Review Regulations, these Implementation Measures not only define the scope and standards of fair competition review but also establish specific supervisory and enforcement mechanisms to ensure their effective implementation.
This article will explore the key aspects of the Implementation Measures, and analyze the potential far-reaching impact.
1. Scope of Fair Competition Review and Regulatory Responsibilities The Implementation Measures first clarify the scope of fair competition review: any policy measures related to market access, industrial development, government procurement, bidding, qualification standards, and other economic activities must undergo fair competition review. This means that before enacting any policy that could affect market competition, the government must first conduct a compliance evaluation to ensure that it does not impose unreasonable restrictions or discriminatory measures on market participants. The market regulation authorities are responsible for overseeing and guiding this process. The SAMR provides national-level guidance on fair competition review, while local market regulation authorities are responsible for implementation and supervision within their respective regions. This hierarchical regulatory system helps to establish uniform review standards while also placing greater implementation responsibilities on local governments. Additionally, the Implementation Measures emphasize the primary responsibility of policy-drafting units. These units must establish sound mechanisms for fair competition review, designate institutions responsible for conducting the review, and enhance their review capabilities. This requirement ensures that not only market regulatory authorities play a supervisory role but also that policy-making institutions themselves take proactive measures to prevent anti-competitive policies from being introduced.
2. Core Standards for Fair Competition Review The Implementation Measures enumerate the specific standards for evaluating whether a policy affects fair competition, covering the following key areas: 1) Fairness in Market Entry and Exit: Policies must not arbitrarily increase market entry barriers or impose unreasonable restrictions on business exits. For example, if a local government imposes additional qualification requirements or approval procedures beyond the nationally unified market access negative list, it may violate fair competition principles.2) Free Flow of Goods and Production Factors: Policies must not use administrative means to block businesses from other regions from entering the local market or impose discriminatory measures on non-local goods. For example, if a local government introduces additional certification requirements or technical standards to protect local businesses, thereby limiting the circulation of external products, such measures would be subject to strict review.3) Fairness in Business Operating Costs: Policies must not grant specific businesses tax incentives, financial subsidies, or lower production factor costs unless explicitly authorized by law or approved by the State Council. This regulation plays a crucial role in preventing local governments from unfairly favoring "local champion" companies, thereby creating an uneven competitive environment.4) Fairness in Business Operations: The government must not use administrative orders to compel enterprises to engage in monopolistic behavior, such as price-fixing or market allocation. Furthermore, authorities must not interfere with market-regulated pricing of goods and production factors to prevent distortions in market mechanisms.5) Fairness in Government Procurement and Bidding: Policy measures must not impose unreasonable qualification requirements or assessment criteria that restrict non-local enterprises from participating in government procurement or bidding activities. For example, if local governments require businesses to pay taxes locally or establish a branch within the jurisdiction as a prerequisite for bidding, such practices will be strictly scrutinized. Additionally, the Implementation Measures specify that if a policy has the potential to affect market competition but is necessary for national security, technological innovation, environmental protection, or other public interests, it may be approved as an exception after a rigorous evaluation. However, such policies must include a clear implementation period and termination conditions to ensure they do not have a long-term negative impact on market fairness.
3. The Implementation of Fair Competition Review Although the Implementation Measures stipulate strict review standards, ensuring their practical enforcement is a key challenge.First, policy measures must undergo fair competition review at the drafting stage, and a written review conclusion must be prepared. If there are significant changes to the policy content, a new review must be conducted. This requirement ensures that fair competition review is not merely a formality but an essential part of the policy-making process.Second, when conducting a fair competition review, the government must widely solicit opinions from market participants, particularly those who may be affected, including businesses, industry associations, and experts. For policies related to public interest, public feedback should be gathered through government websites or new media channels. This approach not only enhances policy transparency but also provides market participants with a platform to express their views.Moreover, to improve the scientific rigor of the fair competition review, the government may engage third-party institutions to conduct independent evaluations of the policy's competitive impact. This practice helps to mitigate potential biases in self-reviews and enhances the objectivity of review conclusions.
4. Supervisory Safeguards to Ensure Policies Comply with Fair Competition Principles In a market economy, the effectiveness of fair competition review depends not only on regulations but also on robust enforcement mechanisms. The Implementation Measures introduce a multi-layered supervisory framework, including whistleblower reports, random inspections, and special audits as follows: 1) Whistleblower System: Any organization or individual may report suspected violations of fair competition review regulations. Reports will be handled by the market regulation authorities, which will investigate the claims accordingly. This system provides a bottom-up oversight mechanism.2) Random Inspection Mechanism: Market regulation authorities may conduct random inspections on fair competition reviews in specific regions or industries. For instance, if a local government’s bidding process is frequently reported for “pre-determined winners,” market regulators may conduct targeted inspections.3) Supervisory Audits and Rectifications: The SAMR has the authority to audit the enforcement of fair competition reviews nationwide and require relevant authorities to rectify any issues. Officials who refuse to implement corrective actions may be summoned for discussions or even face administrative penalties.4) Accountability Mechanism: If a policy that violates fair competition review regulations is implemented, responsible individuals may be held accountable. This ensures that fair competition review is not just a procedural requirement but a substantive regulatory framework that must be strictly enforced.
[Comment] Overall, the Implementation Measures refine the fair competition review system, addressing potential market inequities that may arise in government decision-making. By placing explicit restrictions on anti-competitive policies, they effectively regulate government policy-making behavior and create a more level playing field for businesses. However, enforcing these regulations still presents challenges. Local governments, under pressure to drive economic growth, may attempt to bypass fair competition review, particularly in their investment attraction policies. Balancing fair competition with local economic development remains a practical issue. Additionally, many businesses lack sufficient awareness of fair competition review mechanisms, therefore, raising awareness and providing training will be crucial in ensuring that fair competition review becomes an effective tool for businesses to safeguard their interests. In conclusion, the Implementation Measures mark an important step toward strengthening China’s rule of law in market regulation. As regulatory oversight increases and businesses become more legally aware, a more fair and transparent competitive environment can be expected in the future.
1. Scope of Fair Competition Review and Regulatory Responsibilities The Implementation Measures first clarify the scope of fair competition review: any policy measures related to market access, industrial development, government procurement, bidding, qualification standards, and other economic activities must undergo fair competition review. This means that before enacting any policy that could affect market competition, the government must first conduct a compliance evaluation to ensure that it does not impose unreasonable restrictions or discriminatory measures on market participants. The market regulation authorities are responsible for overseeing and guiding this process. The SAMR provides national-level guidance on fair competition review, while local market regulation authorities are responsible for implementation and supervision within their respective regions. This hierarchical regulatory system helps to establish uniform review standards while also placing greater implementation responsibilities on local governments. Additionally, the Implementation Measures emphasize the primary responsibility of policy-drafting units. These units must establish sound mechanisms for fair competition review, designate institutions responsible for conducting the review, and enhance their review capabilities. This requirement ensures that not only market regulatory authorities play a supervisory role but also that policy-making institutions themselves take proactive measures to prevent anti-competitive policies from being introduced.
2. Core Standards for Fair Competition Review The Implementation Measures enumerate the specific standards for evaluating whether a policy affects fair competition, covering the following key areas: 1) Fairness in Market Entry and Exit: Policies must not arbitrarily increase market entry barriers or impose unreasonable restrictions on business exits. For example, if a local government imposes additional qualification requirements or approval procedures beyond the nationally unified market access negative list, it may violate fair competition principles.2) Free Flow of Goods and Production Factors: Policies must not use administrative means to block businesses from other regions from entering the local market or impose discriminatory measures on non-local goods. For example, if a local government introduces additional certification requirements or technical standards to protect local businesses, thereby limiting the circulation of external products, such measures would be subject to strict review.3) Fairness in Business Operating Costs: Policies must not grant specific businesses tax incentives, financial subsidies, or lower production factor costs unless explicitly authorized by law or approved by the State Council. This regulation plays a crucial role in preventing local governments from unfairly favoring "local champion" companies, thereby creating an uneven competitive environment.4) Fairness in Business Operations: The government must not use administrative orders to compel enterprises to engage in monopolistic behavior, such as price-fixing or market allocation. Furthermore, authorities must not interfere with market-regulated pricing of goods and production factors to prevent distortions in market mechanisms.5) Fairness in Government Procurement and Bidding: Policy measures must not impose unreasonable qualification requirements or assessment criteria that restrict non-local enterprises from participating in government procurement or bidding activities. For example, if local governments require businesses to pay taxes locally or establish a branch within the jurisdiction as a prerequisite for bidding, such practices will be strictly scrutinized. Additionally, the Implementation Measures specify that if a policy has the potential to affect market competition but is necessary for national security, technological innovation, environmental protection, or other public interests, it may be approved as an exception after a rigorous evaluation. However, such policies must include a clear implementation period and termination conditions to ensure they do not have a long-term negative impact on market fairness.
3. The Implementation of Fair Competition Review Although the Implementation Measures stipulate strict review standards, ensuring their practical enforcement is a key challenge.First, policy measures must undergo fair competition review at the drafting stage, and a written review conclusion must be prepared. If there are significant changes to the policy content, a new review must be conducted. This requirement ensures that fair competition review is not merely a formality but an essential part of the policy-making process.Second, when conducting a fair competition review, the government must widely solicit opinions from market participants, particularly those who may be affected, including businesses, industry associations, and experts. For policies related to public interest, public feedback should be gathered through government websites or new media channels. This approach not only enhances policy transparency but also provides market participants with a platform to express their views.Moreover, to improve the scientific rigor of the fair competition review, the government may engage third-party institutions to conduct independent evaluations of the policy's competitive impact. This practice helps to mitigate potential biases in self-reviews and enhances the objectivity of review conclusions.
4. Supervisory Safeguards to Ensure Policies Comply with Fair Competition Principles In a market economy, the effectiveness of fair competition review depends not only on regulations but also on robust enforcement mechanisms. The Implementation Measures introduce a multi-layered supervisory framework, including whistleblower reports, random inspections, and special audits as follows: 1) Whistleblower System: Any organization or individual may report suspected violations of fair competition review regulations. Reports will be handled by the market regulation authorities, which will investigate the claims accordingly. This system provides a bottom-up oversight mechanism.2) Random Inspection Mechanism: Market regulation authorities may conduct random inspections on fair competition reviews in specific regions or industries. For instance, if a local government’s bidding process is frequently reported for “pre-determined winners,” market regulators may conduct targeted inspections.3) Supervisory Audits and Rectifications: The SAMR has the authority to audit the enforcement of fair competition reviews nationwide and require relevant authorities to rectify any issues. Officials who refuse to implement corrective actions may be summoned for discussions or even face administrative penalties.4) Accountability Mechanism: If a policy that violates fair competition review regulations is implemented, responsible individuals may be held accountable. This ensures that fair competition review is not just a procedural requirement but a substantive regulatory framework that must be strictly enforced.
[Comment] Overall, the Implementation Measures refine the fair competition review system, addressing potential market inequities that may arise in government decision-making. By placing explicit restrictions on anti-competitive policies, they effectively regulate government policy-making behavior and create a more level playing field for businesses. However, enforcing these regulations still presents challenges. Local governments, under pressure to drive economic growth, may attempt to bypass fair competition review, particularly in their investment attraction policies. Balancing fair competition with local economic development remains a practical issue. Additionally, many businesses lack sufficient awareness of fair competition review mechanisms, therefore, raising awareness and providing training will be crucial in ensuring that fair competition review becomes an effective tool for businesses to safeguard their interests. In conclusion, the Implementation Measures mark an important step toward strengthening China’s rule of law in market regulation. As regulatory oversight increases and businesses become more legally aware, a more fair and transparent competitive environment can be expected in the future.