As we move into the second half of 2024, the competition law landscape across the Asia-Pacific region continues to shift towards tighter regulation and increased enforcement. Faced with the intricate challenges of modern market structures and the evolving dynamics of the digital economy, competition regulators have placed legislative reform at the top of their agendas. This alert provides a snapshot of some of the prominent antitrust developments and proposals in the APAC region.
Australia
Mandatory Merger Control
In early March 2024, the Australian government announced its proposal to implement a mandatory and suspensory merger regime in line with most other developed economies. Under this reform, parties must notify the Australian Competition and Consumer Commission (ACCC) of transactions meeting specific thresholds, and a transaction cannot close until approval is obtained. Thresholds are still being determined. The new regime takes effect on January 1, 2026, so businesses will need to be considering transactions in 2025 that could complete in 2026. Further, the new regime proposes to capture the cumulative effect of any completed transactions in the three years prior, so current acquisition strategies will need to be considered more broadly than the imminent transaction.
On 24 July, the Australian government has commenced its consultation on amendments to the Competition and Consumer Act 2010 (Cth) to implement the proposed amendments to Australia's merger control regime.
ACCC's Compliance and Enforcement Priorities
The ACCC's 2024-25 Compliance and Enforcement Priorities focus on net zero transition, cost of living pressures, and digital transformation challenges. Notably, consumer protection matters account for a significant proportion of all priorities. However, cartel conduct remains an enduring priority.
New Legislation and Partnerships
China
Proposed horizontal merger review guidelines
On 17 June 2024 the State Administration for Market Regulation (SAMR) released the Guidelines for the Review of Horizontal Mergers (Draft Horizontal Merger Guidelines) for public consultation. The Draft Horizontal Merger Guidelines consider both procedural rules and substantive criteria for assessing horizontal mergers, including market definition, market share and concentration measures, unilateral and coordinated effects, potential competition, barriers to entry and other considerations. Significantly, under the Draft Horizontal Merger Guidelines a merger resulting in a combined market share greater than 50% is presumed to be anti-competitive while a merger resulting in a combined market share less than 15% is presumed not to be anti-competitive.
Fair Competition Review Regulations
Chinese Premier Li Qiang issued a State Council order to publish the Regulations on Fair Competition Review, effective from August 1, 2024. These rules mandate that government agencies assess draft laws, regulations, and policies for anticompetitive elements before putting them into practice, aiming to ensure compliance among local governments. Notable features include State Council-led coordination, transparent review criteria, a multi-stakeholder process, and stricter oversight with penalties for non-compliance.
Hong Kong
Budget Increase
In 2024, the Hong Kong Competition Commission (HKCC) secured a 33% increase in funding for the upcoming fiscal year. This boost aims to bolster the HKCC's litigation efforts, despite a significant decrease in litigation spending during the preceding year.
Competition Compliance Manual
On January 10, 2024, the HKCC and Guangdong Administration for Market Regulation jointly released the Competition Compliance Manual for Businesses in Guangdong and Hong Kong. This manual assists small and medium-sized enterprises in understanding competition law in both regions, enhancing internal risk assessments, and ensuring compliance. It covers key legal elements, enforcement mechanisms, case studies, and practical recommendations for businesses.
Crackdown on Cartels
Since 2023, the HKCC has prioritised three key areas: combating anti-competitive practices related to essential livelihood matters, scrutinising digital market conduct, and investigating cartels that exploit government or public funding. Cartels have been a major focus, with 13 out of 15 cases before the Competition Tribunal involving this aspect. The HKCC has addressed various violations across six categories, including bid-rigging and price fixing. Joint operations with criminal investigation authorities and reliance on the Leniency Policy have been instrumental in prosecuting recent cartel cases. Additionally, the HKCC has indicated it prefers using Section 60 Commitments instead of litigation to rectify potential anticompetitive behaviour and enhance competition.
Japan
The Act on Promotion for Specified Smartphone Software
On 12 June 2024, the Japanese government passed the Act on Promotion of Competition for Specified Smartphone Software. The law stipulates prohibitions and compliance rules for Specified Smartphone Software companies (i.e., providers of operating system (OS), application stores, browsers and search engines) of a certain size or larger. The Specified Smartphone Software companies will be designated by the Japan Fair Trade Commission ("JFTC"). The legislation will have stronger enforcement tools than existing laws - it includes a 20% administrative fine on sales for violations. It is expected to take effect by the end of 2025. Cabinet orders/ordinances will be enacted before then, and specific matters such as justifications will be clarified. The JFTC guidelines are also expected to be issued.
Act on Regulation of Transactions Pertaining to Specified Entrusted Business Operators (so-called "Freelance Law")
The Freelance Law will become effective on November 1, 2024. This law covers transactions that cannot be covered by existing Subcontract Act, a special law for abuse of superior bargaining position (one of the unfair trade practices prohibited by the Anti-Monopoly Act), and promotes the appropriateness of transactions. This is viewed as a manifestation of the application of competition law to the labor sector.
Philippines
Increased Threshold for Mandatory Merger Review
Starting from 1 March 2024, the PCC has increased the minimum financial criteria for mandatory evaluations of mergers and acquisitions. Now, transactions must involve a party size of at least P 7.8 billion (USD 132 million) and a transaction size of P 3.2 billion (USD 54 million) to necessitate review. However, the PCC has noted that transactions falling below these thresholds may still be subject to a review if there is sufficient evidence to suggest that the merger or acquisition could significantly diminish competition.
South Korea
Merger Notification and Review Guidelines
South Korea's competition regulator - the Korea Fair Trade Commission (KFTC)'s amended Merger Review Guidelines came into effect on 1 May 2024 (Guidelines). The amended Guidelines aim to reduce reporting burdens, enhance transparency, and improve predictability in merger filings and reviews. Key revisions include expanding merger notification exemptions for private equity funds and interlocking directorates, raising the reporting threshold for business transfers, introducing pre-notification consultations for complex mergers, and allowing merging companies to propose voluntary commitments. Additionally, the KFTC seeks to modernise its enforcement against digital economy players by considering distinct features like zero-price services, multi-sided platforms, and network effects.
Taiwan
Cartel Fines
The Taipei High Administrative Court has upheld a total of TWD 45.45 million (USD 1.4 million) in cartel fines imposed on nine container terminal firms in 2021 for jointly deciding to resume the collection of cargo handling equipment usage fees for export cargo weighing less than 3 tonnes at container freight stations in 2014. The court ruling can be appealed.
In an era marked by rapid economic transformations and digital advancements, the ongoing refinement of competition law across numerous global jurisdictions signals a concerted push towards establishing more rigorous and all-encompassing regulatory landscapes. In short, the evolution of competition policy in the Asia-Pacific region is poised to advance in the forthcoming period.
With thanks to Vidushi Sinha, Graduate for her assistance in drafting this update.
