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The fair competition review system creates a good market environment for all types of business entities. The picture shows a worker assembling products in the workshop of Zhejiang Hangzhou Mingfeng Medical Systems Co., Ltd. Xinhua News Agency

The market environment of fair competition provides fertile ground for the growth and development of various business entities. Jiangsu Yaxing Anchor Chain Company, formerly a small factory in a township, has become a single champion demonstration enterprise. The picture shows a worker working in the company's production workshop. Xinhua News Agency

【Dharma Eye View】

Priority is given to specific enterprises in the bidding process, high thresholds are set for entry of some enterprises, and preferential policies are given to specific business entities... In recent years, some places have had varying degrees of local protectionism, regional blockades, and industry barriers. Invisible barriers such as "glass doors", "revolving doors", and "spring doors" have not yet been completely broken, affecting the formation and improvement of a fair competition environment in the market.

On August 1, the "Fair Competition Review Regulations" (hereinafter referred to as the "Regulations") were officially implemented to further regulate such issues.

Fair competition is the basic principle of the market economy and an objective requirement for building a unified national market. The Third Plenary Session of the 20th CPC Central Committee emphasized the need to strengthen the rigid constraints of fair competition review, strengthen anti-monopoly and anti-unfair competition, and clean up and abolish various regulations and practices that hinder the unified national market and fair competition. The Regulations, for the first time in the form of administrative regulations, made comprehensive, systematic and detailed provisions on the objects, standards, mechanisms, supervision and guarantee of fair competition review, filling the legislative gap in the fair competition review system.

The so-called fair competition review refers to the review of the regulations, normative documents and other policy measures formulated by policy-making agencies on market access, industrial development, investment promotion, bidding and other economic activities involving market entities from the perspective of fair competition. If it is found that the review has the effect of excluding or restricting competition, it will not be issued, or it will be issued after adjustment to meet the relevant requirements; if it has not been subject to fair competition review, it shall not be issued.

The implementation and improvement of a legal and standardized fair competition review system is of great significance for regulating administrative power in accordance with the law and ensuring that operators participate fairly in market competition.

Standardize the "visible hand" and comprehensively upgrade the fair competition review system

Recently, in a project bidding, a county civil affairs bureau was asked to correct its behavior because it proposed restrictive clauses to bidders, which constituted differential or discriminatory treatment of small and medium-sized enterprises. It turned out that when building a senior service center, the civil affairs bureau required bidders to meet the qualification requirement of "undertaking one or more similar projects in the past three years", that is, housing construction performance with a contract amount of 1 million yuan or more. The provincial market supervision bureau believed that this requirement constituted an abuse of administrative power to exclude and restrict competition.

It can be seen that fair competition is an inherent requirement of the market economy and an important indicator for evaluating the business environment. As an important basic system of the market economy, the fair competition legal system is related to the full and effective exercise of the decisive role of the market in resource allocation, and its importance is self-evident.

In June 2016, the release of the "Opinions of the State Council on Establishing a Fair Competition Review System in the Construction of the Market System" marked the formal establishment of the fair competition review system. Xu Xinjian, anti-monopoly director of the State Administration for Market Regulation, said that in the eight years since the implementation of the fair competition review system, it has played an important role in promoting a better combination of effective markets and effective governments and promoting efficient and smooth domestic markets. So far, a total of 1.618 million policies and measures have been reviewed nationwide, 4.47 million backlog documents have been cleared, 93,000 policies and measures that exclude and restrict competition have been abolished and revised, and a number of policies and measures that hinder fair access to business entities, affect fair competition among business entities, and restrict the free flow of commodity factors have been effectively corrected.

With economic development, market improvement and the deepening implementation of my country's Anti-Monopoly Law and Fair Competition Review System, my country has successively issued normative documents such as "Regulations on Preventing Abuse of Administrative Power to Eliminate and Restrict Competition" and "Detailed Rules for the Implementation of the Fair Competition Review System".

In 2022, the Anti-Monopoly Law formally incorporated the "fair competition review system" into it, but this is only a confirmation in principle. The "Regulations" issued this time have improved the specific system content based on the summary of review practices and pilot explorations in recent years.

For the first time, the Regulations include laws and local regulations in the drafting stage into the scope of fair competition review, and further optimize the 19 policy measures that shall not be included in the four aspects of market access and exit, free flow of commodity factors, impacts on production and operation costs, and impacts on production and operation behaviors, and strictly limit the applicable conditions for exceptions.

Peng Xinmin, Director of the Regulations Department of the State Administration for Market Regulation, introduced that the "Regulations" have made a comprehensive upgrade of the fair competition review system, indicating that my country has basically formed an anti-monopoly legal system with Chinese characteristics, with the Anti-Monopoly Law as the core, with relatively complete content and relatively sound systems.

"The promulgation of the Regulations is a solid step forward in the legalization of the fair competition review system." Sun Jin, director of the Competition Law and Policy Research Center of Wuhan University, said that this is a key optimization mechanism that incorporates all government policy measures for economic intervention into the review framework, allowing the government's "visible hand" to respect the market laws of fair competition and the decisive role of the market in resource allocation, thereby enabling the government to better play its role.

Eliminate local protectionism and ensure fairness is not just on paper

An announcement from a certain government that stated "administrative institutions and state-owned enterprises within the district shall give priority to using local enterprises' products and services under the same conditions" sparked heated discussion among local enterprises. During a special inspection, the local market supervision department found that the announcement violated the fair competition review regulations and urged relevant departments to speed up revisions.

"The purpose of establishing a fair competition review system in our country is to prevent the introduction of policies and measures that exclude or restrict competition and to create a good environment for fair competition among all types of business entities," said Zhou Zhigao, director of the Competition Policy Coordination Department of the State Administration for Market Regulation.

Many places have taken actions to remove barriers and protect fairness. For example, Zhejiang Province has proposed special rectification in the field of bidding for engineering construction projects, strictly implemented the fair competition review system, and strictly implemented the "entry unless prohibited" policy. The relevant person in charge of the Anti-Monopoly Division of the Zhejiang Provincial Market Supervision Bureau pointed out that in order to create a good business environment, the government must do what it should do and what it should not do. The government cannot forcibly intervene in the specific business operations of enterprises, but it must play a major role in clearing and abolishing policies that hinder the unified market and fair competition.

In this regard, the Regulations clarify the responsibilities of all parties. Guo Qiwen, head of the Second Legislative Bureau of the Ministry of Justice, said that according to the Regulations, the State Council will establish a fair competition review coordination mechanism, the State Council's market supervision and management department will be responsible for guiding the implementation of the fair competition review system; and the market supervision and management departments of local people's governments at or above the county level will be responsible for organizing the implementation of the fair competition review system in their administrative regions.

In addition to excluding and restricting competition, in practice, some local governments provide special rewards and subsidies to large-scale enterprises, which may actually allow some enterprises to gain unfair competitive advantages. Meng Yanbei, a professor at the Law School of Renmin University of China, believes that due to objective competition between different places, some local governments tend to give tax incentives and subsidies to local enterprises and projects when formulating relevant economic development policies, thereby setting up market barriers between different administrative divisions, hindering the formation of a unified national market and becoming an obstacle to fair competition.

In response to these issues, the Regulations require that without the basis of laws, administrative regulations or the approval of the State Council, no tax incentives shall be granted to specific operators, no selective, differentiated fiscal rewards or subsidies shall be implemented, and no preferential treatment shall be given to specific operators in terms of factor acquisition, administrative and institutional charges, etc.

"At present, there are relatively few local government-directed industrial subsidy policies involving tax incentives, but there are still controversial areas." Wang Jian, a professor at the School of Law and Politics of Zhejiang Sci-Tech University, believes that if it is a general and non-selective subsidy policy, local governments can issue it, such as subsidizing new energy industries, software industries, and computing power industries that local governments should give priority to. However, if specific policy measures stipulate that certain subsidies will be given to enterprises that meet certain requirements, whether this violates the Regulations requires specific analysis of specific issues.

Strengthen rigid constraints to avoid system idleness

The establishment of a review mechanism actually affects whether the fair competition review system can be finally implemented.

It is worth noting that the Regulations mainly continue the self-examination model of the drafting units of policies and measures. For policies and measures to be issued by departments, the drafting unit or the leading drafting unit shall conduct fair competition review; for policies and measures to be issued by the people's government or submitted to the National People's Congress and its Standing Committee for deliberation, the market supervision and management department shall conduct review together with the drafting unit. Under the self-examination model, how can the fair competition review system be implemented to avoid the system running in vain?

"Our country's fair competition review system covers a wide range and involves a huge number of policy measures. In this case, it is realistic and feasible for the drafting unit to conduct self-review during the drafting stage. It is also conducive to the enthusiasm and initiative of the drafting unit and to ensure the timeliness of policy measures." Zhou Zhigao said that at the same time, it is also necessary to prevent the drafting unit from going through the motions during the review process, to avoid the fair competition review system running in vain and to weaken the effectiveness of policy implementation.

Zhou Zhigao said that in order to ensure the objectivity and accuracy of the review conclusion, the Regulations require that when conducting fair competition reviews, the opinions of stakeholders such as relevant operators, industry associations, chambers of commerce, etc., and if it involves social public interests, the opinions of the public should also be heard. After the review is completed, the drafting unit must also make a clear review conclusion; if an exception is applicable, a detailed explanation must be given in the review conclusion.

"In order to ensure the implementation of the fair competition review system, the Regulations stipulate a series of supervisory and safeguard measures such as spot checks, reporting, inspections, and interviews to further enhance the rigid constraints of the fair competition review system," said Guo Qiwen.

"For example, the regulations require market supervision departments to establish a fair competition review and random inspection mechanism, organize random inspections of relevant policies and measures, and urge rectification if any policies and measures that violate the requirements of the regulations are found; it also makes it clear that the State Council will regularly conduct inspections on the relevant work of county-level and above people's governments." Zhou Zhigao said that if the drafting unit fails to conduct a fair competition review in accordance with the provisions of the regulations, and still fails to rectify after being urged by the market supervision department, the higher-level market supervision department may call in its person in charge for an interview.

Sun Jin believes that although "interviews" are "soft laws", they have great deterrent power in practice. Wang Jian also said that the "interviews" system stipulated in the "Regulations" will further strengthen the rigid constraints of the fair competition review system.

The Regulations require that people's governments at or above the county level should incorporate the fair competition review work into the assessment and evaluation system for building a law-based government and optimizing the business environment.

"This is a more direct and transparent assessment method, and it also meets the requirements of building a law-based government. Incorporating the fair competition review work into the local assessment and evaluation system will help local governments optimize the overall coordination mechanism, ensure relevant budget inputs, and promote more efficient implementation of this work." said Zhong Gang, executive director of the Competition Law Research Center of East China University of Political Science and Law.

(Guangming Daily)