At the beginning of 2019,the State Administration of Market Supervision announced the"Provisions on Prohibiting Monopoly Agreements(Draft for Comments)",which provides more comprehensive provisions on prohibited monopoly agreements,and the introduction of the"safe harbor"system is one of its very distinctive features.The introduction of safe harbor rules makes monopoly agreements that do not constitute significant restrictions on competition presumed not to exclude or restrict competition,thereby benefiting from the exemption of"safe harbor".The following is an interpretation of the specific provisions on the safe harbor system in the"Provisions on the Prohibition of Monopoly Agreements(Draft for Comments)",and a comparative analysis with similar foreign legislation.

(1)Clause Interpretation

According to Article 14 of the"Provisions on Prohibiting Monopoly Agreements(Draft for Comments)",the application of a safe harbor exemption requires the following conditions:a)For horizontal monopoly agreements,the agreement does not fall under the circumstances listed in Articles 7 to 11 of this provision,and the total market share of the operators participating in the agreement in the relevant market does not exceed 15%;b)For a vertical monopoly agreement,the agreement does not fall under the circumstances listed in Article 12 of these Provisions,and the market share of the operators participating in the agreement in the relevant market does not exceed 25%.

Similar to the provisions on safe harbor in the EU Competition Law,the prerequisite for the exemption from safe harbor in the"Provisions on Prohibiting Monopoly Agreements(Draft for Comments)"is that the monopoly agreement does not constitute a core restriction on competition.For horizontal monopoly agreements,the core restrictions related to it mainly include fixed price behavior,restricting the production or sales volume of goods For vertical monopoly agreements,the core restrictions related to the segmentation of the sales market or raw material procurement market and boycott behavior are mainly manifested in fixed resale prices.For Chinese competition regulators,core restrictions themselves are sufficient to have a significant competitive restriction effect,so they are not applicable to safe harbor exemptions.

Secondly,in addition to meeting non core restrictions,the establishment of the safe harbor system is mainly defined from the perspective of market share.For horizontal monopoly agreements,the total market share of operators participating in the agreement in the relevant market does not exceed 15%,and for vertical monopoly agreements,the market share of operators participating in the agreement in the relevant market does not exceed 25%."Market share is derived based on the concept of related markets,so the definition of related markets is very important for the application of the safe harbor system.Different methods of defining related markets may produce completely different market share data,leading to completely different conclusions as to whether a certain agreement applies to the safe harbor exemption.".

(2)Comparative Analysis Given that China's anti monopoly law is largely created on the basis of learning from the European Union's competition law,both in terms of style and concept,the"safe harbor"system introduced in the"Provisions on Prohibiting Monopoly Agreements(Draft for Comments)"also largely draws on the relevant legislation of the European Union's competition law.The legislation related to the EU competition law and the safe harbor system of monopoly agreements is mainly reflected in the"Notice on agreement of minor importance which does not apply restriction competition under Article 101(1)of the Treatment on the Functioning of the European Union(De Minimis Notice)"legislation.2 This notice issued by the European Commission is also known as the"De Minimis Notice".The provisions on the"safe harbor"system in the Notice on Minimal Permits are mainly reflected in Articles 8 and 9 of the Notice:

The Commission holds the view that agreements between undertakings which may affect trade between Member States and which may have as their effect the prevention,restriction ordistortion of competition within the internal market,do not appreciably restrict competition within the meaning of Article 101(1)of the Treaty:

(a)if the aggregate market share held by the parties to the agreement does not exceed 10%on any of the relevant markets affected by the agreement,where the agreement is made between undertakings which are actual or potential competitors on any of those markets(agreements between competitors)(2);or

(b)if the market share held by each of the parties to the agreement does not exceed 15%on any of the relevant markets affected by the agreement,where the agreement is made between undertakings which are not actual or potential competitors on any of those markets(agreements between non-competitors).

2.In cases where it is difficult to classify the agreement as either an agreement between

competitors or an agreement between non-competitors the 10%threshold is applicable.

Unlike China's antitrust law,the EU competition law defines monopoly agreements from the perspectives of restriction by object and restriction by effect to discuss their possible impact on competition.Article 8 of the"Micro Permit Notice"clearly stipulates that the safe harbor system is only applicable to restriction by effect and not to restriction by object.According to the relevant case 3 of the EU competition law,agreements involving restriction by object can have a significant effect of restricting competition in terms of their nature and the specific effects they may have.Therefore,Article 2 of the Notice on Minimal Permits clearly stipulates that the safe harbor system is not applicable to agreements involving restriction by object.In order to help understand the concept of purpose restrictions in the"Minimis Notice",the European Commission has issued a"Guidance on restriction of competition"by object‟for the purpose of defining which agreements may benefit from the De Minimis Notice",which provides a detailed description of the scope of purpose restrictions by object,with examples for analysis.Based on the analysis of this purpose restriction guidance,it is found that the scope of purpose restriction and core restrictions overlap to a large extent.Therefore,both the"Provisions on Prohibiting Monopoly Agreements(Draft for Comments)"and the EU"Notice of Minimal Permitting"have a negative attitude towards agreements involving core restrictions from the perspective of the scope of application in safe ports.In this regard,The positions of both sides are unanimous.

The establishment of the safe harbor system in the EU"Notice of Minimal Permission"is also defined from the perspective of market share.The difference between it and the"Provisions on Prohibiting Monopoly Agreements(Draft for Comments)"is reflected in the specific market share ratio.The EU"Notice of Minimal Permission"requires a market share of 10%for minimal exemptions from horizontal monopoly agreements,The"Provisions on Prohibiting Monopoly Agreements(Draft for Comments)"requires a proportion of 15%,while the"Notice on Minimal Permission"requires a market share of 15%for minimal exemptions from vertical monopoly agreements,while the"Provisions on Prohibiting Monopoly Agreements(Draft for Comments)"requires a proportion of 25%.It can be seen that compared to the EU's"Notice on Minimal Permits",the exemption scope for safe ports in the"Provisions on Prohibiting Monopoly Agreements(Draft for Comments)"is broader.

In addition,Article 9 of the EU Notice on Minimal Permits stipulates the market share requirements for micro exemptions when it is not possible to define whether the relationship between the parties to the agreement is horizontal or vertical.In response,there are no relevant provisions in the"Provisions on Prohibiting Monopoly Agreements(Draft for Comments)".

(3)In summary,the Safe Harbor System introduced in the"Provisions on Prohibiting Monopoly Agreement Behavior(Draft for Comments)"greatly exempts some monopoly agreements that may violate Articles 13 and 14 of the Anti monopoly Law.For example,in a certain license agreement,the agreement that the licensor requires the licensee to purchase quantitative products every year and other relevant exclusive purchase agreements fall within the scope of safe harbor exemption.The safe harbor system in the"Provisions on Prohibiting Monopoly Agreements(Draft for Comments)"has its specific scope of application,which is not applicable to core restrictions that constitute significant restrictions on competition.In addition,the safe harbor system is mainly defined from the perspective of market share,which can only be generated after the relevant market is defined.Therefore,when determining whether a certain monopoly agreement is applicable to the safe harbor system,The definition of the relevant market is a very important link.

(This article is translated by software translator for reference only.)