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Enforcing China’s Anti-Monopoly law in regulated industries: a study of the airline industry

Enforcing China’s Anti-Monopoly law in regulated industries: a study of the airline industry Abstract Since China enacted its Anti-Monopoly Law (AML) in 2007, foreign observers and business operators have constantly raised concerns as to whether the AML can inject a modern competition spirit into the world’s largest transitional economy or whether the AML will be overridden by policy objectives. These concerns become more obvious in industries that have been heavily regulated by the government. In this article, we choose the airline industry as a research target to explore possible ways to restrain industrial regulators from unduly interfering in competition and to reinforce the role of the AML. We focus on three kinds of administrative regulations in China’s domestic aviation market: limiting the threshold of market entry, price regulations, and subsidies. Then we analyse the policy objectives these regulations intend to achieve and their anti-competitive effects. Finally, we conclude with two suggestions from long-term and short-term perspectives: first, the newly established Fair Competition Review System (FCRS) should be effectively used to normalize and limit regulators’ policy-making authority. Moreover, the reviewing criteria should be made clearer and more meticulous to offer both FCRS reviewers and anti-monopoly agencies guidelines for assessing the effects of administrative behaviours on competition. Second, in the long term, industrial regulators are encouraged to set up competition-friendly industrial policies, embrace modern competition concepts in their traditional regulatory paradigm, and foster a competitive culture. I. INTRODUCTION Since China enacted its Anti-Monopoly Law (AML)1 in 2007, foreign observers and business operators have constantly raised concerns as to whether the AML can inject a modern competition spirit into the world’s largest transitional economy or whether the AML will be overridden by policy objectives.2 These concerns become more obvious in industries (like transportation, telecommunications, and petroleum) that have been heavily regulated by the government for various reasons, such as the state’s macroeconomic plan, the nature of industries, or wider strategic considerations. These industries can be referred to as ‘regulated industries’ (Guanzhi Hangye).3 The application of competition law to regulated industries has been the subject of considerable debate in academia4 as well as the courts. For instance, the US Supreme Court in Trinko5 and Credit Suisse6 discussed the boundary between the applicability of antitrust law and the regulation over regulated markets. However, the applicability and enforcement of the AML in China’s airline industry, as a regulated industry with its own particularities, has not been sufficiently researched although the literature includes some good general discussion of the topic of enforcing the AML in regulated industries, especially those with natural monopolies.7 This article’s goal is to contribute to the literature by providing a legal analysis of the features of the airline industry and the applicable scope of the AML in this field. The starting point of this article is that the AML’s provision for enforcing competition law in regulated industries in Article 7 is rather abstract and brief. That leaves uncertainty about at least three questions: to what extent the AML applies to regulated industries, what conflicts could arise between competition law and industrial policy, and what measures can be tailored to enhance the AML’s enforcement in specific regulated industries. We choose the airline industry as a research subject to explore these three questions. This research can help us explore ways to enforce the AML in specific regulated industries, which has also been set as an important task8 at the present stage by the State Administration for Market Regulation (SAMR), the authority responsible for antitrust enforcement in China. China’s airline industry has experienced rapid growth and comprehensive reform through deregulation over the past 40 years, making it the second-largest aviation market in the world.9 Due to the history of being highly regulated by the government, the airline industry in China has been affected by the mindset and regulatory paradigm of the state-controlled economy. Some policies and regulations implemented by industrial regulators may unduly interfere in the market and thus impede competition. On the other hand, the airline industry is regarded as a ‘crucial strategic sector for the development of the national economy’.10 The airline sector has to achieve certain policy objectives, such as improving public safety, creating national champions, supporting national security, and directing investments. Therefore, conflicts inevitably emerge in the airline industry between driving economic efficiency and consumer welfare and achieving immediate policy objectives. Although we will broadly discuss the international aviation market in Section III, the focus of this article is the Chinese domestic aviation market. It is important to note that the international aviation market and domestic aviation market, despite their obvious connections, are significantly different. But whether domestic or international, the aviation market is traditionally defined as the set of individual routes connecting a point of origin to a point of destination (O&D city pair).11 However, the regulatory structure and competitive dynamics of the international aviation market are much more complex than that of the domestic aviation market. Although a detailed analysis is beyond the scope of this article, one of the key differences is the fact that competition in the international aviation market is primarily regulated by air services agreements in which governments stipulate mutual restrictions on market access.12 In contrast, the domestic aviation market is more easily affected by a state’s industrial policy. In general, the AML regulates four major anti-competitive behaviours: monopoly agreements, abuse of dominant position, business concentration with anti-competitive effects, and administrative monopolies. Compared to other jurisdictions, the AML is unique in that it explicitly addresses administrative monopolies. This unique treatment reflects both the challenge of implementing competition law in a transitional economy, given the pervasiveness of administrative monopolies, and Chinese lawmakers’ determination to deal with this stubborn problem. The Chinese central government has stressed repeatedly that restraining administrative officials from interfering in the market is important for moving forward with the country’s economic reform. On 18 May 2020, the central government issued an opinion in which it emphasized that ‘governments should respect the market mechanism … enforcing the AML to break down administrative monopoly … ’.13 Therefore, the issue of administrative monopolies would be a prominent and inevitable problem when enforcing the AML, especially in regulated industries. Considering our article’s subject and space limitations, we narrow our focus to administrative monopolies in the airline industry. This article intends to discuss three types of administrative regulations implemented by aviation regulators and assess their respective impacts on competition. Then, the article endeavours to explore possible ways to restrain industrial regulators from unduly interfering in competitive forces and to reinforce the role of the AML in regulated industries. Section I of this article introduces the specific issues that arise in the enforcement of AML in the airline industry. Section II aims to discuss to what extent the AML can apply to regulated industries. Section III sketches a brief history of the regulatory reform of China’s airline industry. Section IV focuses on three kinds of administrative regulations in the domestic aviation market: limiting the threshold of market entry, price regulations, and subsidies. Then it analyses the policy objectives these regulations intend to achieve and their anti-competitive effects. Section V suggests two measures from short-term and long-term perspectives. At present, the newly established Fair Competition Review System (FCRS) could be used as an effective mechanism to make up for the inadequacy of the AML’s existing stipulations, which provide ex-ante regulation of administrative monopolies. Moreover, the article suggests that reviewing criteria should be made clearer and more meticulous to offer both reviewers of the FCRS and anti-monopoly agencies guidelines for determining whether a governmental regulation or an administrative behaviour injures competition and should be condemned by the AML. In the long run, industrial regulators should embrace modern competition concepts in their traditional regulatory paradigm, be respectful of competition law, and foster a competitive culture. A well-designed industrial policy can not only co-exist with competition law, but also better foster the industry’s future prosperity. Section VI is the conclusion. II. TO WHAT EXTENT CAN THE ANTI-MONOPOLY LAW BE APPLIED TO REGULATED INDUSTRIES? According to a literal reading of the law, the AML does not generally articulate any exemptions to regulated industries. Article 7 of the AML addresses regulated industries as follows: With respect to the industries which are under the control of the State-owned economic sector and have a bearing on the lifeline of the national economy or national security and the industries which exercise monopoly over the production and sale of certain commodities according to law, the State shall protect the lawful business operations of undertakings in these industries, and shall, in accordance with law, supervise and regulate their business operations and the prices of commodities and services provided by them, in order to protect the consumers’ interests and facilitate technological advance. The undertakings … shall do business according to law, be honest, faithful and strictly self-disciplined, and subject themselves to public supervision, and they shall not harm the consumers’ interests by taking advantage of their position of control or their monopolistic production and sale of certain commodities.14 To be clear, Article 7 does not mean that ‘state-owned enterprises’ (SOEs) are exempted when the AML is enforced in regulated industries. Since the regulated industries normally involve key fields relating to national security and economic lifelines of the State, there are many SOEs in regulated industries. AML enforcement record shows that SOEs in regulated industries are subject to AML.15 Indeed, the application of AML to SOEs has been widely researched.16 In this article, we will not separately discuss SOEs and the discussion are applicable to all companies in the regulated industry. According to Article 7 of AML, some industries may be allowed to maintain their monopoly position, subject to governmental regulations on business behaviour and pricing, given their important or pivotal role in the national economy. Nevertheless, undertakings and regulators in these industries shall abide by the AML, so as to prevent them from harming consumers’ welfare, hindering technological advance, or abusing their dominant position. Unless the AML grants an unequivocal exemption, therefore, we cannot infer that a regulated industry is exempted from the application of the law. Reading through the AML, the only exemption is given to the agricultural sector in Article 56.17 Thus, it is reasonable to infer that the AML is generally applicable to all industries, except the agricultural sector. Furthermore, in recent years, the central government has been increasingly requiring industrial regulators to reinforce the role of competitive forces and follow competition law when they make and implement industrial polices. In 2013, the Third Plenary Session of the 18th Central Committee of the Communist Party of China resolved to proceed with economic reforms to make the market play a decisive role in resource allocation, to establish ‘a unified, open, competitive and orderly market system’ in which enterprises enjoy independent management and fair competition and to reduce market entry barriers.18 Following such requirements, the Civil Aviation Administration of China (CAAC), an industrial regulator in the airline industry, issued the 13th Five-Year Plan of Airline Industry Development (13th Five-Year Plan) in 2016, which states that ‘letting the market play a decisive role in resource allocation and better coordinating it with governmental regulation’ is one of the major considerations for planning the airline industry’s blueprint.19 Although the AML is in theory generally and equally applicable to all industries, in practice, more challenges are faced when enforcing the AML in regulated industries. On the one hand, anti-monopoly enforcers must ‘respect’ the boundary between free competition and governmental regulation that has already been drawn by lawmakers.20 For example, the Price Law stipulates the prices of particular products and services set by government officials, rather than the market mechanism.21 In addition, it is common for some limitations and requirements to be provided by governmental regulations, administrative orders, and agencies’ decisions, which are all inferior to the AML in the legal hierarchy. For instance, the foreign investment negative list (2020) issued by the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MofCom) provides that Chinese investors must have a controlling stake in any public air transportation company and that the stake of a foreign investor and its affiliates must not exceed 25 per cent.22 However, it is not the AML’s responsibility or authority to judge whether the ‘boundary’ between market competition and governmental regulation is justifiable or not, so the AML cannot override these regulations (even though their legal status is lower than the AML), which restrains its application in these industries.23 But even when behaviours are not explicitly reserved for the oversight of industrial regulators, it is still difficult to enforce the AML in these areas. For instance, in May 2009, less than one year after the AML was enacted, the NDRC investigated China TravelSky Holding Company Limited (TravelSky)—a central enterprise administrated by State-owned Assets Supervision and Administration Commission of the State Council (SASAC)—for organizing a price cartel.24 TravelSky, as the only operator of an online flight booking system at the time (with a 97 per cent share of that market), created a new ticketing formula that caused a widespread price increase.25 If the AML had been applied, TravelSky would have faced a huge number of fines.26 However, the NDRC’s investigation ended up with nothing definite, as some ‘insiders’ in the airline industry had anticipated at the beginning of the investigation.27 The TravelSky case is no exception: In other cases, the anti-monopoly agency has launched several other investigations that ended without substantial penalties or fines,28 which reflects the bumpy road of enforcing the AML in regulated industries. In sum, from both the AML’s textual provisions and the State’s intention to proceed with economic reforms, the AML is applicable to almost all regulated industries, but its actual implementation in regulated industries would suggest otherwise. Due to the traditional paradigm of industrial regulators as well as the complicated relationship between competitive and industrial agencies, anti-monopoly investigations are sometimes more bark than bite when they target business operators in these areas. III. DEVELOPMENT AND REGULATORY STRUCTURE OF CHINA’S AIRLINE INDUSTRY The airline sector has traditionally been a strategic sector in China from the beginning of civil aviation. The PRC government created the CAAC in 1949 to oversee all civil aviation matters, while a single state-run airline was operated as a division of the CAAC (CAAC Airlines). The ensuing 30 years were to see slow development as witnessed by the fact that by 1981 only 15 small airlines had been added to the 12 that were operational in 1951.29 In the 1980s, the airline industry in China embarked on the very first reform under the leadership of Deng Xiaoping. Instead of managing and operating CAAC Airlines, the new strategy was to establish new generations of state-owned airlines that would be responsible for their own finances with the CAAC as the majority shareholder.30 Eventually, in 1988, CAAC Airlines was broken up into six state-owned airlines: Air China (based in Beijing), China Eastern Airlines (based in Shanghai), China Southern Airlines (based in Guangzhou), China Northern Airlines (based in Shenyang), China Southwest Airlines (based in Chengdu) and China Northwestern Airlines (based in Xian). China’s airline industry underwent exponential growth in the 1990s. For instance, the annual number of international air passengers increased from 1.09 million to 6.24 million between 1990 and 2000—an annual growth rate of 19.1 per cent, which was much faster than the global growth rate (5.5 per cent).31 China joined the World Trade Organization (WTO) in 2001, driving the demand for international travel. At the same time, foreign airlines were given more opportunities to enter the Chinese market. With this new development, the Chinese government restructured nine air carriers and consolidated them into three groups in 2002. This market consolidation essentially led to a geographical market allocation around China’s three primary hubs: Beijing to Air China, Shanghai to China Eastern and Guangzhou to China Southern. After this consolidation, the three state-owned airline groups became fully independent from the CAAC.32 Along with the consolidation, private airlines including Okay Airways and Spring Airlines entered the market in the 2000s. Newly established airlines began competing with state-owned carriers in both domestic and international services with their lower cost base and higher operating efficiencies. However, the Chinese government stopped accepting applications for new airlines in 2007,33 which solidified the 2002 market allocation. China lifted a six-year ban on setting up new independent airlines in May 2013.34 In addition to incumbent airlines, a dozen new Chinese airlines were launched between 2013 and 2015.35 Currently, there are 29 Chinese airlines operating international services, a staggering 14 of which have launched international services over the past three years.36 Due to rapid expansion by Chinese airlines, competition has intensified not only in the Chinese domestic aviation market but also in the Asian aviation market overall. Clearly, liberalization efforts were effective in enhancing the overall efficiency of the airline industry in China. However, the intense competition put state-owned carriers in jeopardy. This is a major concern for the CAAC. Potentially conflicting goals for the CAAC are enhancing competition on the one hand and improving state-owned airlines’ competitiveness in the global aviation market. The CAAC’s policy goals were complicated by the enactment of the AML in 2007. As noted, the AML deals with four major kinds of regulated or prohibited behaviours: reaching monopoly agreements, abusing a dominant market position, business concentrations with the effects of restricting and limiting competition, and abusing administrative power to eliminate or restrict competition.37 In regulated industries, anti-monopoly concerns are more likely to arise from the fourth category than in other industries. Industrial regulators in these sectors have traditionally exercised great power in directing investment, organizing market structure and regulating market entry. They would naturally feel that anti-monopoly enforcement might interfere with their own industrial scheme and disturb their agendas to achieve policy objectives. Although industrial regulators are required to respect competitive forces, in practice, the boundary between achieving justified industrial objectives and undue interference in competition is not easy to discern. IV. THREE TYPES OF INDUSTRIAL REGULATIONS AND ANTI-MONOPOLY CONCERNS In this part, discussion will revolve around three typical types of regulations in the airline industry with the goal of examining conflicts between the AML and policy objectives in a regulated industry and evaluating their effects on competition. Mega mergers among state-owned carriers and entry barriers Creating large-scale aviation companies with international networks and strong competitive power is a major objective of industrial policy.38 Thus, mergers impelled by administrative measures, rather than competitive forces, have been widely used by regulators, especially over the past two decades. As discussed in Section II, six major state-owned airlines were set up in 1988 through mega mergers. In 2002, these airlines merged with air transport services enterprises to set up six large state-owned companies.39 That was when the ‘big three’ state-owned companies (Air China, China Southern Airlines, and Eastern Airlines) became the oligopolists and started to dominate the aviation transportation market. Thereafter, in 2010, Air China merged with Shenzhen Airlines and Tibet Airlines, and China Eastern Airlines merged with Shanghai Airlines; the MofCom gave these mergers the green light without imposing any conditions.40 Besides mergers, other types of concentrations have also been prevalent in the airline industry in recent years. By acquiring shares, Xiamen Airlines, with China Southern Airlines as its majority shareholder, purchased a 99.23 per cent stake in Hebei Airlines.41 This paved the way for China Southern Airlines to compete in the market of northern China. Meanwhile, Eastern Airlines gained control of Yunnan Airlines and Xibei Airlines by acquiring assets valued RMB 95.4 billion.42 The number of competitors in the relevant market has been substantially reduced through these mergers. Although reducing the number of competitors does not necessarily suffocate competition, the combination of higher market entry barriers and mega mergers is very likely to do so. Mergers among state-owned companies may enable them to enhance their competitive ability. Nevertheless, if the administrative regulators set unnecessarily high barriers to prevent other competitors from entering the market, these barriers would build a fortress for the state-owned carriers and guarantee them monopoly profits. In order to operate an airline business in China, an applicant must receive an air operator’s certificate (AOC) from the CAAC. Essentially, an applicant must prove itself a competent air operator by submitting general information demonstrating sufficient capital and sound management and plans for handling maintenance and addressing safety concerns.43 Together with legal standards under the Provisions on Business Licensing for Public Air Transportation Enterprises, the CAAC has no choice but to exercise discretionary powers when granting an AOC. Both legal standards and the CAAC’s discretion can be high barriers for new applicants. Although the reform of deregulation in the airline industry opened many business areas to foreign and private companies, in practice, industrial regulators sometimes set stricter requirements and imposed heavier burdens on market entry for non-state-owned enterprises to achieve certain policy objectives. For example, in 2007 the CAAC issued a notice44 imposing strict requirements on non-state-owned enterprises with the purpose of overcoming financial difficulties in the whole industry. This notice had the effect of blocking approval for new private airlines from July 2007 to May 2013. Moreover, the notice limited the growth of transport capacity and allocated preferable capacity ratios to state-owned carriers.45 Another example is that the geographical ban on airlines’ business was lifted in 2006 as a deregulation measure. This means that carriers only need to register their operating airline routes with the CAAC, rather than applying for the CAAC’s approval, which used to be mandatory.46 Although these deregulation measures lowered entry barriers to a great extent, in practice, the most profitable routes (the so-called golden routes) among hub cities like Beijing, Shanghai, and Guangzhou are still under the control of the CAAC, and its approval is required to operate them.47 Table 1 shows the domestic aviation market shares of the four major air carriers from 2010 to 2018. The Herfindahl–Hirschman Index (HHI) calculated based on these data can show the level of market concentration in the airline industry. Based on cases disclosed by the national competition authority, the State Administration for Market Regulation (SAMR), we can roughly define that a market in which the HHI is between 1500 and 2500 points is considered moderately concentrated, and a market with the HHI in excess of 2500 points is highly concentrated.48 The HHI index of a competitive market should be lower than 1000. Table 1. Major air carriers’ market share and HHI index . 2010 (%) . 2011 (%) . 2012 (%) . 2013 (%) . 2014 (%) . 2015 (%) . 2016 (%) . 2017 (%) . 2018 (%) . Air China 33 31 28.9 28.1 27.9 27.6 27.2 26.4 25.9 Southern Airlines 24 25 26.6 26.0 26.4 26.3 25.3 25.2 25.1 Eastern Airlines 25 24 23.6 23.1 21.5 20.9 20.5 19.7 19.3 Hainan Airlines 11 11 11.5 12.5 13.4 13.6 14.8 15.5 16.1 Others 7 9 9.3 10.2 10.8 11.6 12.2 13.1 13.6 (HHI) (2460) (2364) (2318) (2260) (2234) (2210) (2168) (2132) (2117) . 2010 (%) . 2011 (%) . 2012 (%) . 2013 (%) . 2014 (%) . 2015 (%) . 2016 (%) . 2017 (%) . 2018 (%) . Air China 33 31 28.9 28.1 27.9 27.6 27.2 26.4 25.9 Southern Airlines 24 25 26.6 26.0 26.4 26.3 25.3 25.2 25.1 Eastern Airlines 25 24 23.6 23.1 21.5 20.9 20.5 19.7 19.3 Hainan Airlines 11 11 11.5 12.5 13.4 13.6 14.8 15.5 16.1 Others 7 9 9.3 10.2 10.8 11.6 12.2 13.1 13.6 (HHI) (2460) (2364) (2318) (2260) (2234) (2210) (2168) (2132) (2117) Data is collected from ‘Statistical Bulletins about Development of Civil Aviation Industry’, issued by CAAC at its official website from 2010 to 2018 successively. Open in new tab Table 1. Major air carriers’ market share and HHI index . 2010 (%) . 2011 (%) . 2012 (%) . 2013 (%) . 2014 (%) . 2015 (%) . 2016 (%) . 2017 (%) . 2018 (%) . Air China 33 31 28.9 28.1 27.9 27.6 27.2 26.4 25.9 Southern Airlines 24 25 26.6 26.0 26.4 26.3 25.3 25.2 25.1 Eastern Airlines 25 24 23.6 23.1 21.5 20.9 20.5 19.7 19.3 Hainan Airlines 11 11 11.5 12.5 13.4 13.6 14.8 15.5 16.1 Others 7 9 9.3 10.2 10.8 11.6 12.2 13.1 13.6 (HHI) (2460) (2364) (2318) (2260) (2234) (2210) (2168) (2132) (2117) . 2010 (%) . 2011 (%) . 2012 (%) . 2013 (%) . 2014 (%) . 2015 (%) . 2016 (%) . 2017 (%) . 2018 (%) . Air China 33 31 28.9 28.1 27.9 27.6 27.2 26.4 25.9 Southern Airlines 24 25 26.6 26.0 26.4 26.3 25.3 25.2 25.1 Eastern Airlines 25 24 23.6 23.1 21.5 20.9 20.5 19.7 19.3 Hainan Airlines 11 11 11.5 12.5 13.4 13.6 14.8 15.5 16.1 Others 7 9 9.3 10.2 10.8 11.6 12.2 13.1 13.6 (HHI) (2460) (2364) (2318) (2260) (2234) (2210) (2168) (2132) (2117) Data is collected from ‘Statistical Bulletins about Development of Civil Aviation Industry’, issued by CAAC at its official website from 2010 to 2018 successively. Open in new tab From Table 1, we can tell that the Chinese domestic aviation market is a moderately concentrated market. Based on our earlier discussion, we can analyse how industrial policies affect the level of market concentration to a great extent. Because the CAAC restricted market entry and suspended approval for new firms from 2007 to 2013, the HHI indexes in 2010 (2460) and 2011 (2364) are higher and the proportions of other carriers’ market shares are smaller (7 per cent and 9 per cent) than in the other seven years. In 2012, the State Council issued an opinion promoting the development of the airline industry,49 which requires regulators to respect the decisive role of competitive forces. In addition, the CAAC lifted the ban on approving new carriers in 2013. Thereafter, the HHI indexes started to decrease and more new players joined the market to dilute the market shares of the ‘big four’ (Air China, Southern Airlines, Eastern Airlines, and Hainan Airlines), pushing the HHI down to its lowest point (2177) and giving other market players the largest proportion (13.6 per cent) in 2018. Thus, it can be inferred that industrial regulators raising the entry threshold for new players in the relevant market is very likely to increase the level of market concentration and weaken the competition. Price regulation Price is the most sensitive factor in the market, conveying information about scarce sources, echoing supply and demand, and driving product allocation. Low efficiency in China’s planned-economy era attests to the failure of ignoring the function of price. In some industries, however, prices regulated by the government could be tolerated by the AML due to macroeconomic regulations, the public welfare, or other reasons.50 Considering the crucial role of prices in the market, regulators’ authority over pricing should be carefully limited and supervised. Pursuant to the Civil Aviation Law of the People’s Republic of China (2018 Amendment): Prices and charges levied by airline enterprises are determined by the department of civil aviation under the State Council; regulations on airline transport fares are determined by the industrial regulator together with the price regulation department of the State Council; and price regulations should be reported to the State Council for approval … 51 Thus, prices in the airline industry have been regulated by the State. Over the past 40 years, such regulation has experienced a series of ups and down, from high control to gradual deregulation and from renewed control to another round of deregulation. Prior to 1997, prices in the airline industry were set strictly by the CAAC, which only permitted a very limited floating range (normally 10 per cent).52 At the end of 1997, even though fares were still fixed, the CAAC permitted airlines to set their own discounts, which in essence loosened the price controls.53 Thereafter, after keenly observing that the door had been cracked open by the CAAC, airlines participated with great enthusiasm in price competition. But due to the fierce price war and the negative impact of the Asian financial crisis of 1997, the airline industry as a whole suffered a huge loss of RMB 2.44 billion in 1998.54 Soon after, the CAAC promptly slammed that ‘door’ to re-fix prices and prohibit airlines from giving discounts at will.55 That price-fixing policy was not altered until the CAAC issued ‘Opinions on Improving the Reform of the Airline Transport Pricing and Charging Mechanism’ in 2015,56 which resumed progress on pricing reform. In December 2017, the CAAC together with the NDRC issued the ‘Notice of Rules on Pricing in Domestic Civil Aviation Transport’ (Notice of Pricing),57 which specifies the requirements for pricing passenger and freight air transport in the domestic market. In accordance with the Notice of Pricing, as of April 2018, the CAAC announced 1030 airline routes on which airlines would be allowed to determine their own ticket prices independently (so-called market-oriented pricing routes). The passenger capacity of these 1030 routes was nearly 50 per cent of the total passenger capacity in the airline industry.58 Although the achievement of price reform should be applauded, the traditional regulatory paradigm may be embedded in regulators’ mind, decreasing their motivation to fully assess the anti-competitive effects of their proposed regulations. Here, we will discuss two cases. The first case involves direct price fixing. Although it happened before the enactment of the AML, it exactly reflects the traditional regulatory mindset of stiffly regulating prices. From this case, it can reasonably be inferred why conflicts between competition law and industrial policies are inevitable after the AML was enacted. The other case, which occurred in the year that the AML was took effect, involves an indirect price restriction. Spring Airlines: violating administrative regulation on price fixing In 2006, Spring Airlines, the first privately owned budget airline in China, offered over 400 flight tickets from Shanghai to Jinan for only RMB 1.59 These tickets were snapped up in the first three days. Before 2015, as we discussed earlier, the prices of flight tickets had been strictly subject to government regulation. As early as 2004, the CAAC issued a ‘discount restricting order’ that fixed the floating range of prices.60 Under that order, airlines could not raise the price by more than 25 per cent or decrease it by more than 45 per cent.61 Therefore, Spring Airlines’ 1-yuan tickets violated the CAAC’s order. Consequently, Jinan Municipal Price Bureau imposed an administrative punishment on Spring Airlines, fining it RMB 150,000.62 Because this case occurred when airlines’ discretion for setting prices was strictly limited by the CAAC, Jinan Municipal Price Bureau did not need to assess the effect of the relevant behavior on competition, but simply fined Spring Airlines according to the industrial regulation. However, since April 2018, the CAAC has stopped the strict price controls, and most airline operators can determine their prices independently. Therefore, nowadays it is of value to discuss whether behaviour such as Spring Airlines’ could constitute predatory pricing and injure competition. Prior to the AML, predatory pricing was mainly governed by the Price Law (1993) and the Anti-Unfair Competition Law (AUCL 1993).63 Both the Price Law and the AUCL emphasize two factors to determine whether predatory pricing is illegal: one is selling products or services at below-cost prices, and the other is the business operator’s purpose, namely squeezing out its competitors and dominating the relevant market. A case heard by the Shanghai Intellectual Property Court in 201864 also addressed these two factors to examine whether the defendant’s behaviour constituted predatory pricing. The judge held that ‘without the purpose of squeezing rivals out of the market, even if the price is low or lower than cost, it cannot be determined to be predatory pricing … ’.65 After the enactment of the AML, the AUCL was revised in 2017 and the provisions related to price behaviours removed to avoid conflicts and overlaps with the AML. Therefore, the major law regulating predatory pricing at present is the AML. Furthermore, it can be reasonably assumed that the two factors for determining predatory pricing set by the AUCL would also be taken into consideration by the AML. The AML defines predatory pricing in Article 17 as a behavioural pattern of abusing dominant position: ‘Business operators with a dominant market position are prohibited from committing the following behaviors … (2) Selling products at prices below cost without any justifiable causes … .’ The Price Law also regulates predatory pricing, but there are several discrepancies in implementing this law compared to the AML, which include enforcers, the scope of regulating objects, procedures, and legal responsibilities.66 In order to avoid inconsistent results for similar behaviours, it is necessary to solve the relationship between the Price Law and the AML. Although academic scholars and practitioners have not yet reached a general consensus on this issue, most agree that the AML should be applied preferentially. Huang Yong, a leading anti-monopoly scholar in China, claims that the Price Law was enacted at an early stage of China’s economic reform that reflected vestiges of the planned economy; compared to the Price Law, the AML provides more methods of scientific analysis to assess price behaviours and stipulates severer consequences for illegal behaviours.67 Thus, although Huang states that the Price Law should not be simply overridden, the AML is likely to be applied when there is an overlap between the two laws. Moreover, an article written by the NDRC staffs claims that the AML is newer and more specific than the Price Law and so should be applied preferentially according to the principle of solving conflicts between laws.68 Therefore, this article’s discussion about predatory pricing will only be based on the AML. From that perspective, the legality and rationality of the punishment on the Spring Airlines are doubtful. First of all, the essential question is whether Spring Airlines’ 1-yuan tickets constituted predatory pricing and injured competition. Predatory pricing is defined as the incumbent firm setting a price below cost with the purpose of driving out current or future rival firms. Although low prices are a major goal of anti-monopoly laws, predatory pricing is condemned because the price is too low to be competitive.69 In practice, determining whether a low price can be condemned as predatory is not an easy task. Although the AML has not yet developed a mature test for determining illegal predatory pricing, it defines predatory pricing as a behavioural pattern of abusing dominant position. Therefore, following the AML logic, only a competitor with a dominant market position (or at least a large market share) has the ability to conduct predatory pricing. First, the firm must have enough financial power to forgo or sacrifice profits for a period of time; second, it can reasonably anticipate recouping its losses and returning prices to a monopoly level again once other competitors have been squeezed out of the market. If we follow the AML’s analytical approach in examining the case of Spring Airlines, neither of these conditions can be satisfied. First, compared to other state-owned airlines, Spring Airlines was a vulnerable competitor with only three planes in operation at the time. It neither was capable of squeezing competitors out of the market by selling below-cost tickets nor had a reasonable anticipation of recouping its losses and increasing prices to a monopoly level in the future. Moreover, the number of those below-cost tickets was limited to 400. Therefore, other competitors knew when Spring Airlines’ low-price sale would end and could adjust their business strategy accordingly. In short, Spring Airlines’ intent was to hold a promotion, rather than squeeze other competitors out of the market. From the anti-monopoly law’s perspective, Spring Airlines’ behaviour stirred up price competition and offered consumers with cheaper prices and more choices, which should not be punished as illegal. Beijing-Shanghai Airline Express Services: disguised pricing fixing In order to cope with the pressure of competition from high-speed train transportation between Beijing and Shanghai, the CAAC let five major airlines companies form Beijing–Shanghai Airline Express Services (Express Services) on 6 August 2007.70 Considering the large passenger volume between the two major metropolises, the airlines tried to grab more customers via ‘express airline services’ to provide passengers a better travel experience. The five participating airlines (Air China, China Eastern Airlines, China Southern Airlines, Hainan Airlines and Shanghai Airlines) provided passengers travelling between Beijing and Shanghai quicker and easier services including check-ins, security checks, baggage claims, and boarding.71 Moreover, more frequent flights were allocated to this route: there was a flight taking off or landing between the two cities every 30 minutes.72 Seemingly, the Express Services generated benefits to passengers and stimulated the competition between airline and railway transportation. However, after the Express Services were launched, passengers complained about the increased prices of flight tickets and fewer discounts, even though more flights were allocated between the two cities. That abnormal phenomenon can be understood if we carefully examine the CAAC’s requirements for Express Services. Probably with good intentions, the CAAC required the five participating airlines to allow passengers to transfer tickets freely among different flights without any extra charge. In order to satisfy the CAAC’s ticket transfer requirement, an agreement was naturally reached among these five airlines. That agreement provided that, when a passenger transferred a flight ticket with a discounted price from one airline to another, the actual carrier could charge 85 per cent of the full-price ticket from the airline selling the discounted ticket. For example, let us assume a full-price ticket from Beijing to Shanghai is RMB 2000. A person purchased a ticket at a 70 per cent discount (RMB 600) from Eastern Airlines and then changed their ticket without any extra charge to a flight with Air China; however, the ticket fare for Air China’s flight was RMB 1800 (with only a 10 per cent discount). According to the agreement, therefore, Air China can require Eastern Airlines to pay it as much as RMB 1700 (85 per cent of the full price), leaving Eastern Airlines to cover the balance of RMB 1100 itself. Two conclusions can be naturally drawn from the CAAC’s ticket transfer requirement. First, no airlines want to run the risk of losing money by selling discounted tickets. Therefore, a rational strategy for airlines is selling tickets without (or with very low) discounts.73 Second, considering how prices are settled among the airlines, they likely reached some form of agreement to fix tickets’ full price. From the AML’s perspective, such agreements are a price cartel. In this case, the price cartel is motivated by regulators’ requirement for the free transfer of tickets. On 24 August 2007, the NDRC notified the CAAC that it was investigating the five airline companies involved.74 Several days later, on 2 September, the NDRC instructed the CAAC to abolish the requirement for transferring tickets at a unified settled price.75 Although price fixing was promptly banned by the NDRC, no substantive penalties were given to the participants. Afterwards, airlines operating Beijing-Shanghai routes have raised prices from time to time at a ‘consistent’ pace. The latest price raise happened on 1 January 2020, when Eastern Airline and Air China (the largest two air carriers on Beijing–Shanghai routes) raised prices by 10 per cent simultaneously; other airlines soon followed suit.76 Subsidies and local protectionism Subsidies granted by governments to airlines are a controversial topic, and this article does not mean to discuss the legality of subsidies generally. Our focus is limited to subsidies given to carriers in the Chinese domestic market with the purpose of achieving certain policy objectives that may distort competitive forces. Normally, subsidies are granted for various underlying reasons. Under China’s current industrial policies, subsidies can be roughly divided into three types. First, subsidies are given to certain areas of aviation in order to assist their development for the purpose of achieving certain industrial policies. For example, a major goal of industrial policy since 2010 has been granting support (including financial support) to general aviation operators and to attract investment in this area,77 which has significantly accelerated the development of general aviation. Second, subsidies are given for the construction of regional airports in remote areas or the operation of less profitable airline routes in order to enhance airlines’ function of connecting people and regions throughout the country, which is also a major objective of airline industrial policy.78 For example, in September 2019, the CAAC disclosed the ‘Budget Plan for Subsidies for Regional Airlines’.79 According to this budget, the CAAC planned to provide subsidies of over RMB 11 billion to 49 airlines in 2020.80 Third, subsidies are given by local governments to regional carriers and airports. Taking Hainan Province as an example, the provincial government enacted the ‘Measure of Financial Subsidies for Encouraging the Development of Civil Airlines’,81 which allocates a certain amount of provincial funds to subsidize local airlines, air traffic management, and general aviation in Hainan Province.82 Moreover, additional subsidies would be given to airlines that have headquarters, branches, or substantial bases of operations in Hannan Province.83 Anti-monopoly concerns could arise from the third type of subsidies. Driven to benefit the local economy and improve administrative performance, local governments are highly motivated to grant abundant subsidies to attract airlines to operate air routes from or to local cities and invest in regional airports’ construction. Unfortunately, such subsidies, being merely based on local needs and short-term plans, often become a ‘useful’ instrument in forming local protectionism and injuring the integrated domestic market. For example, Hainan Province, as discussed above, grants preferential subsidies to airlines with local headquarters, branches, or substantial bases of operations. This imposes an unfair competitive disadvantage on competitors without local business sites and impedes the free flow of commodities and services between regions, which is prohibited by the AML.84 In addition, as we discussed earlier, one value of subsidies is to correct market failure to better connect people and regions in the domestic market; some local subsidies, however, may damage that value. For example, in 2018, Anhui Province granted subsidies to a regional airport in Fuyang City (a prefecture-level city) to operate 14 air routes with hub cities such as Beijing, Shanghai, and Guangzhou with the purpose of attracting more tourists and business opportunities. Less airline routes, however, were allocated to neighbouring cities, the kind of routes that are actually needed to set up national transport connectivity but cannot be achieved through market mechanisms alone.85 These local subsidies have two negative impacts. For one, they aggravate the traffic congestion in the hub cities’ airports. For another, they reduce the resources that can be allocated to less popular and more remote airline routes and airports. That will undermine the fundamental objectives of the AML as well as China’s overall plan for economic development—namely, setting up ‘a unified, open, competitive and orderly market system’ in China. V. SUGGESTIONS TO ENFORCE THE ANTI-MONOPOLY LAW IN REGULATED INDUSTRIES The discussion above shows that industrial regulators may unduly interfere in competition and thereby injure economic efficiency and consumers’ welfare when they endeavour to achieve certain policy objectives. Since the AML should apply to all sectors of the economy (except the agricultural sector), we will make two suggestions to limit such undue administrative interventions and improve the enforcement of the AML in regulated industries. The two suggested measures reflect two perspectives, one being the most feasible and effective approaches that can be adopted at the present stage and the other being a long-term way to smooth the relationship between industrial policies and competition law. FCRS and solid analytical approaches Fair competition review system Chapter 5 of the AML stipulates six illegal behaviours conducted by administrative organs, which include forcing to deal, regional blockades, restricting cross-regional bidding, restricting interregional investment, forcing business operators to conduct monopolistic behaviours, and enacting rules and regulations to injure competition.86 All these behaviours are so-called administrative monopolies. However, administrative monopolies are subject to ex-post regulation under the AML, which means that the AML can only be applied after administrative organs have conducted anti-competitive behaviours or issued regulations hampering competition. Moreover, the anti-monopoly agency cannot directly correct anti-competitive regulations or impose punishments on policy makers. Article 51 of the AML states that, ‘when administrative organs abuse their administrative power to eliminate or restrict competition, superior organs shall instruct them to rectify those abuses, and the anti-monopoly agency may give suggestions to those superior organs’.87 In other words, if the CAAC enacts a regulation with the effect of restricting competition, the Ministry of Transport would be the superior organ that is supposed to order the CAAC to rectify that regulation, rather than the SAMR. Thus, the AML has been criticized as ‘toothless’ in the face of industrial regulators’ anti-competitive behaviour.88 The newly established FCRS has been established to make up for the inadequacy of the AML vis-à-vis administrative monopolies. Compared to the ex-post legal provisions under the AML, it provides ex-ante regulation. The FCRS requires policy makers to conduct a mandatory evaluation about the impacts of their proposed regulations on competition before enacting the regulations, an approach known as self-review.89 Specifically, on 1 June 2016, the ‘Opinion of the State Council on Establishing a Fair Competition Review System During the Development of Market-Oriented Systems’ (the Opinion) was promulgated by the State Council.90 In November 2017, a more detailed ‘Implementing Regulation (Interim)’ (the Interim Regulation) was issued as well.91 These documents indicate that China has established the FCRS to review governmental regulations and policies that place undue restraints on competition. Many concerns, however, arise about whether the FCRS’s self-review approach can effectively curb local governments’ anti-competitive behaviours.92 A massive volume of administrative regulations have been made by local governments, which may review regulations in a cursory or negligent fashion in order to obtain local benefits or sustain vested interests. Moreover, if a decision-maker fails to implement the FCRS, its superior administrative organ will order it to rectify the regulation in question,93 rather than the SAMR imposing any penalties. Besides, when regulations are made by industrial regulators, which are normally at the same level of the hierarchy as the SAMR or even more powerful (such as the NDRC), the efficacy of FCRS implementation is doubtful. Fortunately, the AML is presently undergoing its first revision since it took effect in 2008. The SAMR issued a draft of the revised AML to solicit public opinion.94 In that draft, Article 9 explicitly incorporates FCRS into the AML. Therefore, if the draft passes, enforcing the FCRS would be not only an advocated policy or a performance indicator for governmental officials, but also a legal responsibility. Importantly, the draft grants the SAMR the authority to directly rectify administrative organs to correct any anti-competitive behaviours.95 Scholars in the anti-monopoly community have high hopes for the new draft and claim that the FCRS, in essence, uses competition law to normalize industrial polices and that its status will be cemented by incorporating the AML.96 Therefore, the incorporation of the FCRS is expected to give the AML ‘sharp teeth’ to regulate administrative monopolies.97 Analytical approaches When determining whether a governmental regulation or an administrative behaviour injures competition and should be condemned by the AML, both reviewers of the FCRS and anti-monopoly agencies should effectively evaluate what effect the relevant regulations or behaviours have on competition. However, the reviewing criteria provided by the Opinion,98 the Interim Regulation and relevant articles of the AML are too general to be applied specifically to the regulated industries. Therefore, clearer and more meticulously designed analytical approaches and/or reviewing criteria should be made by the competition authority for different regulated industries, which is also needed to better implement the AML in those areas. At this point, we will discuss the assessment approaches that could be given to anti-monopoly agencies and airline regulators in regard to the problems identified above. Regulations related to market entry barriers Regulations on market entry are necessary, whether in a competitive industry or a regulated industry. In a contestable market, when incumbents take illegal or improper measures to raise entry barriers that cannot be self-corrected by competitive forces, regulators should step in and help newcomers enter the market. In regulated markets, regulators should strike a balance between economic efficiency and industrial objectives. Unreasonably high entry barriers are likely to suffocate the market dynamic, help incumbent companies abuse their market power, and harm consumers’ welfare. In order to set sound regulations on market entry, therefore, it is important for regulators to correctly distinguish competitive areas from natural monopolies in a regulated industry and then adopt different regulatory measures accordingly. In the airline industry, based on whether there are substituted products and services, we can roughly define different relevant product markets: transportation services, aviation services (such as maintenance and aviation oil), and airport operation. We will discuss the contestable nature of each market and related market entry regulations respectively. The monopolistic nature of the air transport market is constantly questioned since the costs of transportation have gradually decreased. For example, air travel has become increasingly more affordable, and other means of transport (such as high-speed trains) have become sound substitutes for consumers. Moreover, more airline-related services are available (such as aircraft leasing and maintenance) that significantly lower the entry barrier. Therefore, the claim of the contestable nature of air transport has provided the theoretical basis for regulators in some countries to proceed with the deregulation of the airline industry. Since the EU initiated the liberalization of the airline industry in 1997, for instance, ‘the industry has expanded as never before, and this has contributed to economic growth and job creation. This has also paved the way for the emergence of low-cost carriers, operating a new business model based on quick turn-around times and very efficient fleet use’.99 The contestable nature of the industry is more apparent when we consider aviation services markets (like aviation oil, ground services, inflight meal catering, aircraft maintenance, and warehousing). Furthermore, the services markets are upstream markets for the air transport market. Loosening the regulations on market entry could make competition more dynamic, which could provide airlines with better and cheaper services and meanwhile improve competition among airlines. Compared to the air transport and aviation services markets, competition in airport operation has some unique features. Similar to a natural monopolistic market, the airport market has the feature of cost subadditivity, which means that a single firm can produce at a lower cost than two or more firms in the relevant market. Since building and operating multiple airports in a region will result in wasted resources and less efficiency, it is necessary for regulators to restrict market entry. The airport market, however, is not an absolutely natural monopoly because some elements of airport operation can still be spun off to enhance economic efficiency. These services include retailing, facilities, shuttle buses, and so on, which are contestable and whose market entry should not be strictly limited. In markets that are not natural monopolies, therefore, industrial regulators should not set high entry barriers or impose additional requirements on market entry. For example, setting more stringent requirements on private companies or suspending the approval of new applications is not justified unless the policy makers have sufficiently justifiable reasons and can strictly satisfy the FCRS’s conditions for exceptions.100 Regulations related to pricing Since price is the key issue in the competitive mechanism, regulators should be cautious about regulating it. As to airline services that are not natural monopolies (such as aviation services markets and air routes that have already been deregulated as market-oriented pricing routes), industrial regulators should, to the greatest extent possible, refrain from interfering in price setting in the airline industry, unless it is really necessary. Price cuts and discounts taken by small airlines are unlikely to be condemned as predatory pricing, as we already discussed, since such airlines do not have a dominant position and are unlikely to have the ‘purpose’ of squeezing out competitors. On the other hand, considering that the ‘big four’ state-owned airlines monopolize the market, raising prices on certain routes by a similar percentage within the same time period can be reasonably suspected to be implicit price collusion,101 even if there is no solid evidence of communication or arrangement among the airlines. Regulators should not directly or indirectly assist those companies in forming or cementing such collusion. The government-led ‘Beijing-Shanghai Airline Express Services’, for instance, is a negative example of improper interference in price setting, though the regulators did not intend to do so. However, some pricing regulations are justified in the airline industry. For example, prices related to airport services cannot be totally market-determined, since airports are a kind of important public infrastructure and have some features of natural monopolies, as we noted earlier. The areas under governmental pricing regulations should be strictly limited as well. One aspect of China’s reform of the airline industry is to more finely distinguish services that can be driven by the market mechanism from those that should be regulated by the government, and airline regulators are required to set reasonable pricing standards for regulated items and to expand the scope for items that can be priced by the market mechanism.102 Thus, pricing regulations, as the ‘visible hand’ that can directly and harshly intervene in the market, should be used sparingly, and regulators cannot expand their discretionary power at will to restrict price competition, unless laws or regulations explicitly permit them to do so. Regulations related to subsidies As discussed earlier, subsidies given to companies in the airline industry can be roughly divided into three types. Here are some criteria for AML enforcers and regulators to use when assessing subsidies regulations. For the first type of subsidies, those designed to improve the development of certain area (such as general aviation) in the short term can attract investment and competitors and assist new players in entering the relevant market. As long as those subsidies are promptly terminated once the market flourishes and competition forces function effectively, they would not substantially injure competition. The second type of subsidies, those used to correct market failure with the purpose of linking people and regions, particularly in undeveloped or remote areas, are consistent with the AML’s fundamental objectives. These subsidies are justifiable only if they are given generally to all qualified companies, rather than tailored to specific firms (such as state-owned companies). Regarding the third type, however, subsidies given to local airlines and airports are likely to be used as a form of local protectionism, segmenting China’s domestic market, and disrupting normal competitive forces. Therefore, these subsidies should be subject to a more rigorous review and need sufficient justification. As for approaches to assessment, the EU’s state aid policy provides a good reference point for China, since China and EU share the same view that improving and protecting their competitive internal market is the fundamental objective of competition law. The EU Commission enacted its Guidelines on State Aid to Airports and Airlines in 2014 (Guidelines).103 At the very beginning, the Guidelines explicitly state, ‘Linking people and regions, air transport plays a vital role in the integration and the competitiveness of the European Union, as well as its interaction with the world’.104 Thus, potential state aid can be immune from competition law only if it conforms to or contributes to the EU’s internal market objectives. For instance, the Guidelines provide that investment aid to an airport should contribute to the achievement of the objective of common interests. That requirement can be met if the airport ‘(a) increases the mobility of Union citizens and the connectivity of the regions by establishing access points for intra-Union flights; or (b) combats air traffic congestion at major Union hub airports; or (c) facilitates regional development’.105 For a subsidy to be immune from the AML, therefore, it should not harm the fundamental objective of setting up an ‘integrated, open, competitive, and ordered market’ in China. Bearing that in mind, the AML enforcers and regulators should carefully assess how a proposed subsidy would impact competition. If the purpose of granting that subsidy conforms to the AML’s fundamental objectives, it is not likely to seriously distort competition. But if, on the contrary, the subsidy is given to assist a few favoured undertakings, with the result of dividing the geographic market and facilitating local protectionism, it should be prohibited or rectified. Converting the regulatory mindset and fostering a competitive culture There are not always conflicts between industrial policy and competition law in regulated industries. They can not only co-exist but also promote each other. An industrial policy that has been properly designed to respect competition law can effectively correct market failure. Meanwhile, as a significant instrument for protecting competition, competition law can guarantee a dynamic and prosperous industry. In the long run, therefore, if regulators can make ‘properly designed industrial policies’ that are consistent with enhancing consumers’ long-term welfare and promoting efficiency, they will hardly be in conflict with competition law.106 Professor Meng Yanbei, a Chinese competition scholar, has suggested that regulators design competition-friendly industrial policies.107 She contends that industrial policy should (i) assist the competitive forces in playing a greater and better role in economic activities, (ii) avoid allowing regulators’ decisions or choices to take the place of the business operators’ judgments, (iii) refrain from undue or unreasonable interference in competition, and (iv) enact regulations that minimize the negative impact on competition, if such an impact is unavoidable.108 Changing regulators’ traditional regulatory paradigm and fostering a competitive culture is critical for pushing regulators to set up competition-friendly industrial policies and to harmonize the relations between industrial polices and competition law. In order to achieve this transition, industrial regulators should take three principles into consideration. First, the scope of application of industrial policy should be kept as far from the market as possible. More specifically, where competitive forces and market mechanisms can function fully and efficiently, industrial policy should not intrude. For example, since the marketplace is considered an effective way to set prices, regulations on pricing should be minimized. Second, industrial policies can be justified as a method of correcting market failures, such as providing subsidies for the construction of remote airports and for carriers operating less profitable air routes. However, such policies should be promptly terminated once the market failures have been corrected and competitive forces can play a dynamic role. In addition, subsidies should generally be given to all qualified companies, rather than a few specific companies (like state-owned carriers with local headquarters). Third, industrial regulators should trust that a sound competition law can help achieve industrial objectives. A State may want to have super-carriers to compete with large international rivals.109 This industrial policy is based on the national champion theory, which presumes that ‘with suppressed competition in domestic markets, firms can achieve large scales that enable them to obtain large market shares and profits in export markets’.110 Industrial regulators may provide financial assistance to state-owned airlines and encourage (or even order) mega mergers between them to create a national champion. However, such a state-guided national champion has not been tested by fierce competition in the domestic market and is thus not strong enough to face international competitors. On the contrary, intense competition would force companies to raise efficiency, reduce costs, stimulate innovation, selecting for strong competitors and weeding out inefficient firms, which would assist in creating national champions. VI. CONCLUSION Many countries face tensions between competition law and industrial policies. Since China has a long history and tradition of a government-regulated economy, enforcing the AML in regulated industries has galvanized these tensions. Taking the airline industry as a case study, we find that the competition authorities face profound challenges in regulated industries since industrial regulators have substantial and pervasive authority in these areas. Can we really cut the Gordian knot to enforce the AML in a regulated industry? This article discussed three types of regulations that significantly impact competition in the airline industry. For the present, the article advocated relying on the FCRS to normalize industrial regulators’ policy-making authority. Furthermore, it suggested drafting clearer and better guidelines and tailoring them to regulated industries to help anti-monopoly agencies and regulators effectively review their behaviours. In the long run, it encouraged regulators to change their traditional regulatory paradigm and foster competitive culture to make industrial policy conform to competition law. These measures will help China build confidence to enforce competition law on the one hand and form harmonious relations between industrial policies and competition law on the other. This article is based on the research project supported by the Beijing Social Science Fund from 2018 to 2022 (No.18FXC016). Of course, all errors are our own. Footnotes 1 2008 AML of the People’s Republic of China (promulgated by the Standing Committee of the National People’s Congress, 30 August 2007, effective 1 August 2008). The term used to refer to the ‘competition law’ area varies among different countries. In the USA, this area of law is referred to as ‘antitrust law’. In European Union, the law is called ‘competition law’. In China, the term used is ‘anti-monopoly law’. In this article, ‘anti-monopoly law,’ ‘competition law,’ and ‘antitrust law’ are used to refer to a set of laws that aims to fight restraints on competition in the marketplace. In this article, the terms ‘competition law’, ‘antitrust law’, and ‘anti-monopoly law’ are used interchangeably. 2 See also Nate Bush and Yue Bo, ‘Disentangling Industry Policy and Competition Policy in China’ (the antitrust source, 2011) <https://www.americanbar.org/content/dam/aba/migrated/2011_build/antitrust_law/feb11_bush2_23f.authcheckdam.pdf> accessed 14 March 2020. 3 See also Yanbei Meng, ‘Characteristics of Enforcing the AML in Regulated Industries’ (2019) 3 Tianjn Legal Science 44, 44. 4 See also GE Hale and Rosemary D Hale, ‘Competition or Control VI: Application of Antitrust Laws to Regulated Industries’ (1962) 111(1) University of Pennsylvania Law Review 46; Howard A Shelanski, ‘Justice Breyer, Professor Kahn, and Antitrust Enforcement in Regulated Industries’ (2012) 100(2) California Law Review 487; Herbert Hovenkamp, ‘Antitrust and the Regulatory Enterprise’ (2004) 2004(2) Columbia Business Law Review 335; Louis B Schwartz, ‘Legal Restriction of Competition in the Regulated Industries: An Abdication of Judicial Responsibility’ (1954) 67(3) Harvard Law Review 436; Giorgio Monti, ‘Managing the Intersection of Utilities Regulation and EC Competition Law’ (2008) 4(2) Competition Law Review 123; Lubos Tichy, ‘Goals of Union Competition Law on Regulated Markets: Pharmaceutical Industry and Parallel Trade – Comment on Negrinotti’ in Daniel Zimmer (ed), The Goals of Competition Law (ASCOLA Competition Law Series 2012). 5 Verizon Communications Inc. v Law Offices of Curtis V. Trinko, LLP 540 US 398 (2004). 6 Credit Suisse Securities (USA) LLC v Billing 551 US 264 (2007). 7 See also Meng Yanbei, ‘Research on Issues about the Applicable Scope of China’s Anti-Monopoly Law in Monopolistic Industries’ (2014) 2 Renmin Chinese Law Review 165; Yanbei Meng, ‘The Uneasy Relationship between Antitrust Enforcement and Industry-Specific Regulation in China’ in Adrian Emch and David Stallibrass (eds), China’s Anti-Monopoly Law: The First Five Years (Kluwer Law International 2013); Angela Huyue Zhang, ‘Taming the Chinese Leviathan: Is Antitrust Regulation a False Hope’ (2015) 51 Stanford Journal of International Law 195. 10 CAAC, NDRC and Ministry of Transport, The 13th Five-Year Plan of Airline Industry Development (Cm, 2017) <http://www.caac.gov.cn/XXGK/XXGK/FZGH/201704/P020170405610579468910.pdf> accessed 15 March 2020. 11 See also Ben Van Houtte, ‘Relevant Markets in Air Transport’ (1990) 27(3) Common Market Law Review 521. 12 See also Jae Woon Lee, Regional Liberalization in International Air Transport (1st edn, Eleven Publishing 2016) 1–27. 13 The Central Committee of the Communist Party and State Council, Opinion about Accelerating the Improvement of the Socialist Market Economy in the New Era (Cm, 2020) <http://www.gov.cn/zhengce/2020-05/18/content_5512696.htm> accessed 4 July 2020. 14 AML, art 7. 15 Taking the abuse of dominant market position cases as examples, there are eight civil lawsuits against SOEs during 2019. For instance, Wang Xibing v China Mobile Communications Group ((2017) Jing 73 Minchu No 10) and Songxin v China Railway Corporation ((2019) XiangZhi Minzhong No 79) are typical cases against SOEs in regulated industries. In these two cases, consumers brought civil lawsuits against SOEs in the telecommunication and railway industries respectively, asserting that defendants abused their dominant market positions in the relevant markets. 16 For example, see William E Kovacic, ‘Competition Policy and State-Owned Enterprises in China’ (2017) 16 World Trade Review 693; see also Angela Huyue Zhang, ‘The Single-Entity Theory: An Antitrust Time Bomb for Chinese State-Owned Enterprises’ (2012) 8 J Comp L & Econ 805; see also Fang Xiaomin, ‘The Application of the Chinese Antimonopoly Law to State-owned Enterprises’ in Fabiana Di Porto and Rupprecht Podszun (eds), Abusive Practices in Competition Law (Edward Elgar Pub 2018) 318–42. 17 See also AML, art 56: ‘This Law is not applicable to the association or cooperation by agricultural producers or rural economic organizations in their business activities of production, processing, sale, transportation, storage of farm products, etc.’ 18 See also China.org.cn, ‘Communiqué of the Third Plenary Session of the 18th Central Committee of the Communist Party of China’ (China.org.cn, 15 January 2014) <http://www.china.org.cn/china/third_plenary_session/2014-01/15/content_31203056.htm> accessed 14 March 2020. 19 Lei Wang, ‘Authoritative Interpretation: 13th Five-Year Plan of Airline Industry Development’ CAAC News (Beijing, 22 December 2016) <http://www.caacnews.com.cn/1/1/201612/t20161222_1207218.html> accessed 14 March 2020. 20 See also Yanbei Meng, ‘Research on Issues about the Applicable Scope of China’s Anti-Monopoly Law in Monopolistic Industries’ (2012) 6 The Jurist 44, 51. 21 Price Law of the People’s Republic of China (promulgated by the Standing Committee of the National People’s Congress, 29 December 1997, effective 1 May 1998) c 3. 22 Special Administrative Measures (Negative List) for the Access of Foreign Investment (2020) (promulgated by the National Development and Reform Commission and the Ministry of Commerce, 23 June 2020, effective 23 July 2020) item 15. 23 See Meng (n 20) 52–53. 24 Biqiang Wang and Weixun Liu, ‘NDRC Investigates TravelSky for Alleged Ticket Price Manipulation’ The Economic Observer (Beijing, 17 May 2009) <http://www.eeo.com.cn/finance/other/2009/05/16/137823.shtml> accessed 2 July 2020. 25 ibid. 26 art 46 of the AML provides that, ‘Where the business operators reach and fulfill a monopoly agreement in violation of this Law, the Anti-Monopoly Law enforcement agency shall order them to stop the violations, confiscate the illegal gains and impose a fine of from 1% to 10% of sales made in the previous year … ’. Therefore, roughly based on the sales revenue of TravelSky and the ‘big three’ airline companies in 2008, the fine would have been at least RMB 1.5 billion and at most RMB 15 billion. See Wang and Liu (n 24). 27 See Wang and Liu (n 24). 28 For example, the NDRC investigated branches and gas stations of three oligopolies (PetroChina, Sinopec, and CNOOC) in several cities for price monopoly agreements from July 2012 to September 2012, but no decisions or penalties have been disclosed to the public. See Price Supervision Bureau of NDRC, ‘Work Events of the Price Supervision and Anti-Monopoly Inspection Bureau (March to September 2012)’ (2012) 3 Price Supervision and Anti-Monopoly in China 10, 13. Another example is an investigation into two tycoons in the telecom industry. On November 9, 2011, China Telecom and China Unicom were placed under investigation by the NDRC for suspected anti-competitive conduct in the broadband access market in China. The investigation ended with the NDRC accepting these companies’ commitments to ‘rectify’ their conduct, indicating that ‘the enforcement authority had to put up with pressure it should not have to put up with’. See also Xiaoye Wang, ‘The China Telecom and China Unicom Case and the Future of Chinese Antitrust’ in Adrian Emch and David Stallibrass (eds), China’s Anti-Monopoly Law: The First Five Years (Kluwer Law International 2013) 467. 29 Alan Williams, Contemporary Issues Shaping China's Civil Aviation Policy: Balancing International with Domestic Priorities (1st edn, Ashgate Publishing 2009) 40. 30 ibid 41. 31 Han Wang, Haoran Yang and Jiaoe Wang, ‘The Evolution of China’s International Aviation Markets from a Policy Perspective on Air Passenger Flows’ (2019) 11 Sustainability 1, 4 <https://www.mdpi.com/2071-1050/11/13/3566/pdf> accessed 14 March 2020. 32 ibid 5. 33 Joanne Chiu, ‘China’s Air Regulator Will Consider Ways to Boost Budget-Carrier Market’ The Wall Street Journal (Shanghai, 29 July 2013) <http://online.wsj.com/news/articles/SB10001424127887323854904578634920047272886> accessed 14 March 2020. 34 ibid. 35 CAPA, ‘For Northeast Asia’s Airlines, Previously Slow to Adapt, 2015 Spells Opportunity’ (CAPA, 10 February 2015) <https://centreforaviation.com/analysis/airline-leader/for-northeast-asias-airlines-previously-slow-to-adapt-2015-spells-opportunity-209070> accessed 14 March 2020. 36 CAPA, ‘Chinese Airlines: Rapid International Growth Impacts Foreign Airlines’ (CAPA, 20 March 2019) <https://centreforaviation.com/analysis/reports/chinese-airlines-rapid-international-growth-impacts-foreign-airlines-460504> accessed 14 March 2020. 37 AML, cc II, III and IV. 38 State Council, Several Opinions Issued by State Council for Developing Airline Industry (Cm 24, 2012) art 7 <http://www.gov.cn/zwgk/2012-07/12/content_2181497.htm> accessed 16 March 2020 (Opinions for Developing Airline Industry). 39 Jun Zhang, ‘Monopoly Behaviors and Legal Regulation over Aviation Transport’ (2016) 11 Guangxi Social Science 121, 123. 40 MofCom, Undertakings Concentration for Approval without Conditions 2008.8.1-2012.9.30 (Cm) items 78 and 124 <http://images.mofcom.gov.cn/fldj/accessory/201211/1353031118730.pdf> accessed 14 March 2020. 41 Lufang Xu, ‘Xiamen Airlines Acquired Hebei Airlines’ 99.23% Shares with 749 million RMB’ Beijing Daily News (Beijing, 15 October 2014) <http://finance.ce.cn/rolling/201410/15/t20141015_3703008.shtml> accessed 14 March 2020. 42 IFNEWS, ‘China Eastern Airlines Swallowed Xibei Airlines and Yunan Airlines’ IFNEWS (Shanghai, 24 May 2005) <http://www.ce.cn/ceph/home/sbqyxw/200505/24/t20050524_3900528.shtml> accessed 14 March 2020. 43 Jae Woon Lee, ‘Should the Government Control the Number of Airlines in Korea?’ in Jae Woon Lee (ed), Aviation Law and Policy in Asia: Smart Regulation in Liberalized Markets (Brill 2020) (forthcoming). 44 CAAC, Notice on Regulating the Total Number of Flights, Market Entry and Transport Capacity Growth (Cm 101, 2007) <http://www.caac.gov.cn/website/dev/yshs/gztz/200707/t20070726_6932.html> accessed 14 March 2020. 45 ibid. 46 2006 Provisions on Air Routes Operation in Domestic Market of PRC, c 3. <http://www.gov.cn/gongbao/content/2007/content_494441.htm> accessed 14 March 2020. 47 Zhang (n 39) 123. 48 The MofCom uses the HHI index and the CRn index (the combined market share of the top companies in the industry) to measure the degree of market concentration, which is a description about the structure of the relevant market. After April 2018, SAMR replaced MofCom to review business concentration. In Cargotec/Dirise Electric Decision, the SAMR hold that when the HHI increases from 2038 to 3429, a market was from moderately concentrated to highly concentrated. As well, when the HHI increases from 1556 to 2848, the agency decided the market was from moderately concentrated to highly concentrated. See also SAMR, Decisions of Imposing conditions on Cargotec/Dirise Electric Concentration (Cm, 2019) <http://www.samr.gov.cn/fldj/tzgg/ftjpz/201907/t20190712_303428.html> accessed 14 March 2020; 2011 Interim Provisions on Assessing the Impact of Concentration of Business Operators on Competition, art 6 <http://www.lawinfochina.com/display.aspx?lib=law&id=8929&CGid=> accessed 14 March 2020. 49 See Opinions for Developing Airline Industry (n 38). 50 AML, art 7. 51 Civil Aviation Law of the People's Republic of China (2018 Amendment) art 97. 52 Jianghong Li and Xiaosong Zhang, ‘Reform of Regulation on Airline Fares’ Xinhua News (Beijing, 14 July 2003) <http://news.carnoc.com/list/27/27934.html> accessed 15 March 2020. 53 ibid. 54 See also Bochun Xiao and Jie Peng, ‘A study of Passenger Transport Pricing Strategy for China’s Civil Aviation Industry’ (2000) 6 Journal of Sichuan University 10, 10. 55 NDRC and CACC, Notice on Reinforce Prices Regulation and Prohibiting Low Prices Competition in Domestic Aviation Industry (annulled on 2011, Cm 74, 1999). 56 CAAC, Opinions of Improving the Reform of Airline Transport Pricing and Charging Mechanism (Cm 132, 2015). 57 CAAC, Notice of Rules on Pricing in Domestic Civil Aviation Transport (Cm 145, 2017). 58 See also Chunyu Chen, ‘1030 Routes are Market-Oriented Prices: Fares Increasing? The CAAC’s Reply’ China News (Beijing, 18 April 2018) <http://www.chinanews.com/cj/2018/04-18/8493941.shtml> accessed 15 March 2020. 59 Hongbin Wu and Jun Wang, ‘Price Bureau Claims ChunQiu Airlines Violating Limited Discounts Giving Order, Agency in Jinan Bans ‘One-Yuan’ Tickets’ Dazhong News (Jinan, 17 December 2006) <http://news.carnoc.com/list/78/78982.html> accessed 15 March 2020. 60 ibid. 61 ibid. 62 ibid. 63 art 14 of the Price Law: Business operators must not engage in any of the following behaviours to cause abnormal prices: …(2) To engage in dumping sales (except in the cases of fresh and live merchandise, seasonal merchandise and stockpiled merchandise at a discount) below cost in order to squeeze out rivals or dominate the market and disrupt the normal order of production and operation to the great detriment of the interests of the State or the lawful rights and interests of other business operators … ; art 11 of AUCL (1993) prohibited businesses from selling commodities at prices below their costs in order to squeeze out competitors. 64 Wuhan Fengjing Cixuan Technology Ltd v Shanghai Ciying Mining Machinery Ltd, Shanghai Intellectual Property Court (2018 Hu 73 Minzhong No 160). 65 ibid. 66 eg the price departments of local governments at and above the country level are responsible for managing prices and implementing the Price Law. The SAMR enjoys the power to enforce the AML and can authorize competent departments at the provincial level to deal with anti-monopoly issues and cases. Moreover, the Price Law only regulates business operators, but the AML can be applied to business operators, trade associations and administrative organs. The AML provides severer penalties for violation than the Price Law. 67 See also Yong Huang and Yannan Liu, ‘Reconsidering the Relationship and Enforcement Coordination between the Price Law and Anti-Monopoly Law’ (2013) 4 Price: Theory & Practice 19. 68 See also Changqing Li and Jiang Wan, ‘A Study on the Convergence and Application of the Price Law and the Anti-Monopoly Law’ (2012) 12 Price Supervision and Anti-Monopoly in China 23. 69 Herbert Hovencamp, The Antitrust Enterprise: Principle and Execution (1st edn, Harvard University Press 2005) 159. 70 CAAC, Development Report of China’s Airline Industry (Cm, 2008) ch I, s 7, item 8 <http://www.caac.gov.cn/GYMH/MHGK/ZGMH/201509/t20150923_1952.html> accessed 15 March 2020. 71 ibid. 72 Xiaojuan Miao, ‘Express Flights Link Beijing to Shanghai’ China Daily (Shanghai, 7 August 2007) <http://www.chinadaily.com.cn/china/2007-08/07/content_5448751.htm> accessed 15 March 2020. 73 Jian Zhou, ‘Five Big Airlines Reach Price Ally, Fare Increase Between Beijing and Shanghai’ Shanghai Bus Daily (6 August 2007) <http://finance.people.com.cn/GB/1037/6073810.html> accessed 15 March 2020. 74 See also Price Supervision Bureau of NDRC, ‘Work Events of the Price Supervision and Anti-Monopoly Inspection Bureau (August to September 2007)’ (2007) 12 Price Supervision and Anti-Monopoly in China 22, 23. 75 ibid. 76 Canbang Liu, ‘Price Increasing Again for Beijing-Shanghai Air Routes, Opportunities Open for High-Speed Trains?’ Security Daily (20 December 2019) <http://www.zqrb.cn/finance/hangyedongtai/2019-12-20/A1576781622576.html> accessed 2 July 2020. 77 Jinajun Zou, ‘Several Major Trends of the Development of Airline Industry under the New Economic Era’ (CARNOC, 26 November 2014) <http://news.163.com/air/14/1126/15/AC05Q92000014P42.html> accessed 15 March 2020. 78 See Opinions for Developing Airline Industry (n 38), arts 4–5. 79 See also CAAC, Budget Plan of Subsidies for Regional Airlines in 2020 (Cm, 2019) <http://www.caac.gov.cn/XXGK/XXGK/TZTG/201909/t20190925_198795.html> accessed 15 March 2020. 80 ibid. 81 2015 Measure of Financial Subsidies for Encouraging the Development of Civil Airlines in Hainan Province PRC <http://www.hainan.gov.cn/data/zfgb/2015/03/3242/> accessed 17 March 2020. 82 ibid, arts 2, 5 and 6. 83 ibid, art 8. 84 AML, art 33. 85 Rong Zhao, Siming Zhang and Yuchao Yi, ‘Research on the Coordination of Central and Local Civil Aviation Subsidy Policies’ (2019) 2 Civil Aviation Management 160, 161. 86 AML, ch 5, arts 32–37. 87 AML, art 51. 88 Zhiquan Zhang, ‘Against Administrative Monopolies, Enforcers Should Grow Sharp Teeth’ Legal Daily (1 September 2017) <http://legal.qianlong.com/2017/0901/1994557.shtml> accessed 21 July 2020. 89 State Council, Opinions of the State Council on Establishing a Fair Competition Review System During the Development of Market-Oriented Systems (Cm 34, 2016) ch 3, art 2. 90 State Council, Opinions of the State Council on Establishing A Fair Competition Review System During the Development of Market-Oriented Systems (Cm 34, 2016) (Opinion). 91 NDRC and others, Notice of the National Development and Reform Commission, the Ministry of Finance, the Ministry of Commerce and Other Departments on Issuing the Detailed Regulations for the Implementation of the Fair Competition Review System (Interim) (Cm 1849, 2017) (Interim Regulation). 92 Jian Wang, ‘Features of Fair Competition Review System and Suggestions for its Optimization’ (2016) Competition Law and Policy Review 27. 93 Interim Regulation (n 91), art 24. 94 The full text of the revisions can be found at SAMR’s official website <http://www.samr.gov.cn/hd/zjdc/202001/t20200102_310120.html> accessed 15 March 2020. 95 ibid, art 58. 96 See also Yanbei Meng, ‘Research on the Fair Competition Review of Industrial Policy’ (2018) 2 The Jurist 118; Maozhong Ding, ‘Study on Competition Evaluation of Industrial Policy’ (2016) 3 Legal Science Magazine 70; Xiaoye Wang, ‘Several Thoughts about the Fair Competition Review System’ (2017) 1 Economic Law Review 75; Jing Wan, ‘Major Revision of AML, the Fair Competition Review System incorporated into the Law for the First Time’ Legal Daily (14 January 2020) <http://www.xinhuanet.com/fortune/2020-01/14/c_1125457964.htm> accessed 21 July 2020. 97 Wan, ibid. 98 The Opinion provides four types of reviewing criteria, each of which is subdivided into four or five items. Generally speaking, administrative policies cannot be enacted or passed if they (i) limit or adversely affect market entry and exit; (ii) restrict the free distribution and circulation of merchandise and productive materials; (iii) affect the costs of production and business operation, such as granting preferential policies to certain market players; or (iv) impact companies’ behaviour in business operations, such as interfering with companies’ pricing or requiring the disclosure of confidential business information. See Opinion, ch 3, title 3, arts 1–4. 100 The Opinion details exceptions to applying the FCRS. If regulations or policies concern national safety, social security (such as disaster relief), the public interest (like environmental conservation), or other situations specified by law, they can still be enacted even if they harm competition. Such exceptions must be applied strictly to avoid abuse. First, policy makers are required to thoroughly explain the need for issuing such regulations to achieve certain administrative policies; second, there must not be any alternatives available that would cause less harm to competition; and third, the regulations’ enforcement period should be explicitly limited. 101 Liu (n 76). The news report states that within a mere year and a half, airline carriers operating Beijing–Shanghai routes have raised prices three times with a similar increase in the price range during the same period. 102 CAAC, Scheme for Adjusting Fees Charged by Civil Airports (Cm, 2017) <http://www.ccaonline.cn/zhengfu/gf-zhengfu/389722.html> accessed 4 July 2020. 103 ibid. 104 ibid, art 1.1. 105 ibid, art 5.1.1, para 84. 106 OECD, ‘Competition Policy, Industrial Policy and National Champions’ (DAF/COMP/GF(2009)9, OECD 2009) 11 <http://www.oecd.org/daf/competition/44548025.pdf> accessed 15 December 2020. 107 See Meng (n 96). In this article, Professor Meng raised a suggestion to set up a competition-friendly industrial policy, which could help to achieve the harmony or convergency between competition law and industrial policy. 108 See Meng (n 96) 121–24. 109 See Williams (n 29) 213. 110 Ruowei Chen and others, ‘Dominant Carrier Performance and International Liberalization – The case of Northeast Asia’ (2015) 43(C) Transport Policy 61, 66. 8 The SAMR is the market regulator in China, which has the authority for enforcing the AML. In a report, the SAMR disclosed that one of its major tasks at the present stage is to research specific industries to examine the impacts of administrative regulations and policy on competition. See also SAMR, Improving the Fair Competition Review System: Major Tasks of 2019 (Cm, 2019) <http://www.samr.gov.cn/fldj/tzgg/gpjzsc/201905/t20190517_293787.html> accessed 21 July 2020. 9 See also Zhuping Han, ‘China Became the Second Largest Aviation Market’ People’s Daily Overseas Edition (Shanghai, 17 November 2006). 99 Commission Guidelines 2014/C 99/03 of 4 April 2014 on State Aid to Airports and Airlines [2014] OJ C 99/3, art 1.3. © The Author(s) 2020. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Antitrust Enforcement Oxford University Press

Enforcing China’s Anti-Monopoly law in regulated industries: a study of the airline industry

Journal of Antitrust Enforcement , Volume Advance Article – Dec 6, 2020

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2050-0688
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Abstract

Abstract Since China enacted its Anti-Monopoly Law (AML) in 2007, foreign observers and business operators have constantly raised concerns as to whether the AML can inject a modern competition spirit into the world’s largest transitional economy or whether the AML will be overridden by policy objectives. These concerns become more obvious in industries that have been heavily regulated by the government. In this article, we choose the airline industry as a research target to explore possible ways to restrain industrial regulators from unduly interfering in competition and to reinforce the role of the AML. We focus on three kinds of administrative regulations in China’s domestic aviation market: limiting the threshold of market entry, price regulations, and subsidies. Then we analyse the policy objectives these regulations intend to achieve and their anti-competitive effects. Finally, we conclude with two suggestions from long-term and short-term perspectives: first, the newly established Fair Competition Review System (FCRS) should be effectively used to normalize and limit regulators’ policy-making authority. Moreover, the reviewing criteria should be made clearer and more meticulous to offer both FCRS reviewers and anti-monopoly agencies guidelines for assessing the effects of administrative behaviours on competition. Second, in the long term, industrial regulators are encouraged to set up competition-friendly industrial policies, embrace modern competition concepts in their traditional regulatory paradigm, and foster a competitive culture. I. INTRODUCTION Since China enacted its Anti-Monopoly Law (AML)1 in 2007, foreign observers and business operators have constantly raised concerns as to whether the AML can inject a modern competition spirit into the world’s largest transitional economy or whether the AML will be overridden by policy objectives.2 These concerns become more obvious in industries (like transportation, telecommunications, and petroleum) that have been heavily regulated by the government for various reasons, such as the state’s macroeconomic plan, the nature of industries, or wider strategic considerations. These industries can be referred to as ‘regulated industries’ (Guanzhi Hangye).3 The application of competition law to regulated industries has been the subject of considerable debate in academia4 as well as the courts. For instance, the US Supreme Court in Trinko5 and Credit Suisse6 discussed the boundary between the applicability of antitrust law and the regulation over regulated markets. However, the applicability and enforcement of the AML in China’s airline industry, as a regulated industry with its own particularities, has not been sufficiently researched although the literature includes some good general discussion of the topic of enforcing the AML in regulated industries, especially those with natural monopolies.7 This article’s goal is to contribute to the literature by providing a legal analysis of the features of the airline industry and the applicable scope of the AML in this field. The starting point of this article is that the AML’s provision for enforcing competition law in regulated industries in Article 7 is rather abstract and brief. That leaves uncertainty about at least three questions: to what extent the AML applies to regulated industries, what conflicts could arise between competition law and industrial policy, and what measures can be tailored to enhance the AML’s enforcement in specific regulated industries. We choose the airline industry as a research subject to explore these three questions. This research can help us explore ways to enforce the AML in specific regulated industries, which has also been set as an important task8 at the present stage by the State Administration for Market Regulation (SAMR), the authority responsible for antitrust enforcement in China. China’s airline industry has experienced rapid growth and comprehensive reform through deregulation over the past 40 years, making it the second-largest aviation market in the world.9 Due to the history of being highly regulated by the government, the airline industry in China has been affected by the mindset and regulatory paradigm of the state-controlled economy. Some policies and regulations implemented by industrial regulators may unduly interfere in the market and thus impede competition. On the other hand, the airline industry is regarded as a ‘crucial strategic sector for the development of the national economy’.10 The airline sector has to achieve certain policy objectives, such as improving public safety, creating national champions, supporting national security, and directing investments. Therefore, conflicts inevitably emerge in the airline industry between driving economic efficiency and consumer welfare and achieving immediate policy objectives. Although we will broadly discuss the international aviation market in Section III, the focus of this article is the Chinese domestic aviation market. It is important to note that the international aviation market and domestic aviation market, despite their obvious connections, are significantly different. But whether domestic or international, the aviation market is traditionally defined as the set of individual routes connecting a point of origin to a point of destination (O&D city pair).11 However, the regulatory structure and competitive dynamics of the international aviation market are much more complex than that of the domestic aviation market. Although a detailed analysis is beyond the scope of this article, one of the key differences is the fact that competition in the international aviation market is primarily regulated by air services agreements in which governments stipulate mutual restrictions on market access.12 In contrast, the domestic aviation market is more easily affected by a state’s industrial policy. In general, the AML regulates four major anti-competitive behaviours: monopoly agreements, abuse of dominant position, business concentration with anti-competitive effects, and administrative monopolies. Compared to other jurisdictions, the AML is unique in that it explicitly addresses administrative monopolies. This unique treatment reflects both the challenge of implementing competition law in a transitional economy, given the pervasiveness of administrative monopolies, and Chinese lawmakers’ determination to deal with this stubborn problem. The Chinese central government has stressed repeatedly that restraining administrative officials from interfering in the market is important for moving forward with the country’s economic reform. On 18 May 2020, the central government issued an opinion in which it emphasized that ‘governments should respect the market mechanism … enforcing the AML to break down administrative monopoly … ’.13 Therefore, the issue of administrative monopolies would be a prominent and inevitable problem when enforcing the AML, especially in regulated industries. Considering our article’s subject and space limitations, we narrow our focus to administrative monopolies in the airline industry. This article intends to discuss three types of administrative regulations implemented by aviation regulators and assess their respective impacts on competition. Then, the article endeavours to explore possible ways to restrain industrial regulators from unduly interfering in competitive forces and to reinforce the role of the AML in regulated industries. Section I of this article introduces the specific issues that arise in the enforcement of AML in the airline industry. Section II aims to discuss to what extent the AML can apply to regulated industries. Section III sketches a brief history of the regulatory reform of China’s airline industry. Section IV focuses on three kinds of administrative regulations in the domestic aviation market: limiting the threshold of market entry, price regulations, and subsidies. Then it analyses the policy objectives these regulations intend to achieve and their anti-competitive effects. Section V suggests two measures from short-term and long-term perspectives. At present, the newly established Fair Competition Review System (FCRS) could be used as an effective mechanism to make up for the inadequacy of the AML’s existing stipulations, which provide ex-ante regulation of administrative monopolies. Moreover, the article suggests that reviewing criteria should be made clearer and more meticulous to offer both reviewers of the FCRS and anti-monopoly agencies guidelines for determining whether a governmental regulation or an administrative behaviour injures competition and should be condemned by the AML. In the long run, industrial regulators should embrace modern competition concepts in their traditional regulatory paradigm, be respectful of competition law, and foster a competitive culture. A well-designed industrial policy can not only co-exist with competition law, but also better foster the industry’s future prosperity. Section VI is the conclusion. II. TO WHAT EXTENT CAN THE ANTI-MONOPOLY LAW BE APPLIED TO REGULATED INDUSTRIES? According to a literal reading of the law, the AML does not generally articulate any exemptions to regulated industries. Article 7 of the AML addresses regulated industries as follows: With respect to the industries which are under the control of the State-owned economic sector and have a bearing on the lifeline of the national economy or national security and the industries which exercise monopoly over the production and sale of certain commodities according to law, the State shall protect the lawful business operations of undertakings in these industries, and shall, in accordance with law, supervise and regulate their business operations and the prices of commodities and services provided by them, in order to protect the consumers’ interests and facilitate technological advance. The undertakings … shall do business according to law, be honest, faithful and strictly self-disciplined, and subject themselves to public supervision, and they shall not harm the consumers’ interests by taking advantage of their position of control or their monopolistic production and sale of certain commodities.14 To be clear, Article 7 does not mean that ‘state-owned enterprises’ (SOEs) are exempted when the AML is enforced in regulated industries. Since the regulated industries normally involve key fields relating to national security and economic lifelines of the State, there are many SOEs in regulated industries. AML enforcement record shows that SOEs in regulated industries are subject to AML.15 Indeed, the application of AML to SOEs has been widely researched.16 In this article, we will not separately discuss SOEs and the discussion are applicable to all companies in the regulated industry. According to Article 7 of AML, some industries may be allowed to maintain their monopoly position, subject to governmental regulations on business behaviour and pricing, given their important or pivotal role in the national economy. Nevertheless, undertakings and regulators in these industries shall abide by the AML, so as to prevent them from harming consumers’ welfare, hindering technological advance, or abusing their dominant position. Unless the AML grants an unequivocal exemption, therefore, we cannot infer that a regulated industry is exempted from the application of the law. Reading through the AML, the only exemption is given to the agricultural sector in Article 56.17 Thus, it is reasonable to infer that the AML is generally applicable to all industries, except the agricultural sector. Furthermore, in recent years, the central government has been increasingly requiring industrial regulators to reinforce the role of competitive forces and follow competition law when they make and implement industrial polices. In 2013, the Third Plenary Session of the 18th Central Committee of the Communist Party of China resolved to proceed with economic reforms to make the market play a decisive role in resource allocation, to establish ‘a unified, open, competitive and orderly market system’ in which enterprises enjoy independent management and fair competition and to reduce market entry barriers.18 Following such requirements, the Civil Aviation Administration of China (CAAC), an industrial regulator in the airline industry, issued the 13th Five-Year Plan of Airline Industry Development (13th Five-Year Plan) in 2016, which states that ‘letting the market play a decisive role in resource allocation and better coordinating it with governmental regulation’ is one of the major considerations for planning the airline industry’s blueprint.19 Although the AML is in theory generally and equally applicable to all industries, in practice, more challenges are faced when enforcing the AML in regulated industries. On the one hand, anti-monopoly enforcers must ‘respect’ the boundary between free competition and governmental regulation that has already been drawn by lawmakers.20 For example, the Price Law stipulates the prices of particular products and services set by government officials, rather than the market mechanism.21 In addition, it is common for some limitations and requirements to be provided by governmental regulations, administrative orders, and agencies’ decisions, which are all inferior to the AML in the legal hierarchy. For instance, the foreign investment negative list (2020) issued by the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MofCom) provides that Chinese investors must have a controlling stake in any public air transportation company and that the stake of a foreign investor and its affiliates must not exceed 25 per cent.22 However, it is not the AML’s responsibility or authority to judge whether the ‘boundary’ between market competition and governmental regulation is justifiable or not, so the AML cannot override these regulations (even though their legal status is lower than the AML), which restrains its application in these industries.23 But even when behaviours are not explicitly reserved for the oversight of industrial regulators, it is still difficult to enforce the AML in these areas. For instance, in May 2009, less than one year after the AML was enacted, the NDRC investigated China TravelSky Holding Company Limited (TravelSky)—a central enterprise administrated by State-owned Assets Supervision and Administration Commission of the State Council (SASAC)—for organizing a price cartel.24 TravelSky, as the only operator of an online flight booking system at the time (with a 97 per cent share of that market), created a new ticketing formula that caused a widespread price increase.25 If the AML had been applied, TravelSky would have faced a huge number of fines.26 However, the NDRC’s investigation ended up with nothing definite, as some ‘insiders’ in the airline industry had anticipated at the beginning of the investigation.27 The TravelSky case is no exception: In other cases, the anti-monopoly agency has launched several other investigations that ended without substantial penalties or fines,28 which reflects the bumpy road of enforcing the AML in regulated industries. In sum, from both the AML’s textual provisions and the State’s intention to proceed with economic reforms, the AML is applicable to almost all regulated industries, but its actual implementation in regulated industries would suggest otherwise. Due to the traditional paradigm of industrial regulators as well as the complicated relationship between competitive and industrial agencies, anti-monopoly investigations are sometimes more bark than bite when they target business operators in these areas. III. DEVELOPMENT AND REGULATORY STRUCTURE OF CHINA’S AIRLINE INDUSTRY The airline sector has traditionally been a strategic sector in China from the beginning of civil aviation. The PRC government created the CAAC in 1949 to oversee all civil aviation matters, while a single state-run airline was operated as a division of the CAAC (CAAC Airlines). The ensuing 30 years were to see slow development as witnessed by the fact that by 1981 only 15 small airlines had been added to the 12 that were operational in 1951.29 In the 1980s, the airline industry in China embarked on the very first reform under the leadership of Deng Xiaoping. Instead of managing and operating CAAC Airlines, the new strategy was to establish new generations of state-owned airlines that would be responsible for their own finances with the CAAC as the majority shareholder.30 Eventually, in 1988, CAAC Airlines was broken up into six state-owned airlines: Air China (based in Beijing), China Eastern Airlines (based in Shanghai), China Southern Airlines (based in Guangzhou), China Northern Airlines (based in Shenyang), China Southwest Airlines (based in Chengdu) and China Northwestern Airlines (based in Xian). China’s airline industry underwent exponential growth in the 1990s. For instance, the annual number of international air passengers increased from 1.09 million to 6.24 million between 1990 and 2000—an annual growth rate of 19.1 per cent, which was much faster than the global growth rate (5.5 per cent).31 China joined the World Trade Organization (WTO) in 2001, driving the demand for international travel. At the same time, foreign airlines were given more opportunities to enter the Chinese market. With this new development, the Chinese government restructured nine air carriers and consolidated them into three groups in 2002. This market consolidation essentially led to a geographical market allocation around China’s three primary hubs: Beijing to Air China, Shanghai to China Eastern and Guangzhou to China Southern. After this consolidation, the three state-owned airline groups became fully independent from the CAAC.32 Along with the consolidation, private airlines including Okay Airways and Spring Airlines entered the market in the 2000s. Newly established airlines began competing with state-owned carriers in both domestic and international services with their lower cost base and higher operating efficiencies. However, the Chinese government stopped accepting applications for new airlines in 2007,33 which solidified the 2002 market allocation. China lifted a six-year ban on setting up new independent airlines in May 2013.34 In addition to incumbent airlines, a dozen new Chinese airlines were launched between 2013 and 2015.35 Currently, there are 29 Chinese airlines operating international services, a staggering 14 of which have launched international services over the past three years.36 Due to rapid expansion by Chinese airlines, competition has intensified not only in the Chinese domestic aviation market but also in the Asian aviation market overall. Clearly, liberalization efforts were effective in enhancing the overall efficiency of the airline industry in China. However, the intense competition put state-owned carriers in jeopardy. This is a major concern for the CAAC. Potentially conflicting goals for the CAAC are enhancing competition on the one hand and improving state-owned airlines’ competitiveness in the global aviation market. The CAAC’s policy goals were complicated by the enactment of the AML in 2007. As noted, the AML deals with four major kinds of regulated or prohibited behaviours: reaching monopoly agreements, abusing a dominant market position, business concentrations with the effects of restricting and limiting competition, and abusing administrative power to eliminate or restrict competition.37 In regulated industries, anti-monopoly concerns are more likely to arise from the fourth category than in other industries. Industrial regulators in these sectors have traditionally exercised great power in directing investment, organizing market structure and regulating market entry. They would naturally feel that anti-monopoly enforcement might interfere with their own industrial scheme and disturb their agendas to achieve policy objectives. Although industrial regulators are required to respect competitive forces, in practice, the boundary between achieving justified industrial objectives and undue interference in competition is not easy to discern. IV. THREE TYPES OF INDUSTRIAL REGULATIONS AND ANTI-MONOPOLY CONCERNS In this part, discussion will revolve around three typical types of regulations in the airline industry with the goal of examining conflicts between the AML and policy objectives in a regulated industry and evaluating their effects on competition. Mega mergers among state-owned carriers and entry barriers Creating large-scale aviation companies with international networks and strong competitive power is a major objective of industrial policy.38 Thus, mergers impelled by administrative measures, rather than competitive forces, have been widely used by regulators, especially over the past two decades. As discussed in Section II, six major state-owned airlines were set up in 1988 through mega mergers. In 2002, these airlines merged with air transport services enterprises to set up six large state-owned companies.39 That was when the ‘big three’ state-owned companies (Air China, China Southern Airlines, and Eastern Airlines) became the oligopolists and started to dominate the aviation transportation market. Thereafter, in 2010, Air China merged with Shenzhen Airlines and Tibet Airlines, and China Eastern Airlines merged with Shanghai Airlines; the MofCom gave these mergers the green light without imposing any conditions.40 Besides mergers, other types of concentrations have also been prevalent in the airline industry in recent years. By acquiring shares, Xiamen Airlines, with China Southern Airlines as its majority shareholder, purchased a 99.23 per cent stake in Hebei Airlines.41 This paved the way for China Southern Airlines to compete in the market of northern China. Meanwhile, Eastern Airlines gained control of Yunnan Airlines and Xibei Airlines by acquiring assets valued RMB 95.4 billion.42 The number of competitors in the relevant market has been substantially reduced through these mergers. Although reducing the number of competitors does not necessarily suffocate competition, the combination of higher market entry barriers and mega mergers is very likely to do so. Mergers among state-owned companies may enable them to enhance their competitive ability. Nevertheless, if the administrative regulators set unnecessarily high barriers to prevent other competitors from entering the market, these barriers would build a fortress for the state-owned carriers and guarantee them monopoly profits. In order to operate an airline business in China, an applicant must receive an air operator’s certificate (AOC) from the CAAC. Essentially, an applicant must prove itself a competent air operator by submitting general information demonstrating sufficient capital and sound management and plans for handling maintenance and addressing safety concerns.43 Together with legal standards under the Provisions on Business Licensing for Public Air Transportation Enterprises, the CAAC has no choice but to exercise discretionary powers when granting an AOC. Both legal standards and the CAAC’s discretion can be high barriers for new applicants. Although the reform of deregulation in the airline industry opened many business areas to foreign and private companies, in practice, industrial regulators sometimes set stricter requirements and imposed heavier burdens on market entry for non-state-owned enterprises to achieve certain policy objectives. For example, in 2007 the CAAC issued a notice44 imposing strict requirements on non-state-owned enterprises with the purpose of overcoming financial difficulties in the whole industry. This notice had the effect of blocking approval for new private airlines from July 2007 to May 2013. Moreover, the notice limited the growth of transport capacity and allocated preferable capacity ratios to state-owned carriers.45 Another example is that the geographical ban on airlines’ business was lifted in 2006 as a deregulation measure. This means that carriers only need to register their operating airline routes with the CAAC, rather than applying for the CAAC’s approval, which used to be mandatory.46 Although these deregulation measures lowered entry barriers to a great extent, in practice, the most profitable routes (the so-called golden routes) among hub cities like Beijing, Shanghai, and Guangzhou are still under the control of the CAAC, and its approval is required to operate them.47 Table 1 shows the domestic aviation market shares of the four major air carriers from 2010 to 2018. The Herfindahl–Hirschman Index (HHI) calculated based on these data can show the level of market concentration in the airline industry. Based on cases disclosed by the national competition authority, the State Administration for Market Regulation (SAMR), we can roughly define that a market in which the HHI is between 1500 and 2500 points is considered moderately concentrated, and a market with the HHI in excess of 2500 points is highly concentrated.48 The HHI index of a competitive market should be lower than 1000. Table 1. Major air carriers’ market share and HHI index . 2010 (%) . 2011 (%) . 2012 (%) . 2013 (%) . 2014 (%) . 2015 (%) . 2016 (%) . 2017 (%) . 2018 (%) . Air China 33 31 28.9 28.1 27.9 27.6 27.2 26.4 25.9 Southern Airlines 24 25 26.6 26.0 26.4 26.3 25.3 25.2 25.1 Eastern Airlines 25 24 23.6 23.1 21.5 20.9 20.5 19.7 19.3 Hainan Airlines 11 11 11.5 12.5 13.4 13.6 14.8 15.5 16.1 Others 7 9 9.3 10.2 10.8 11.6 12.2 13.1 13.6 (HHI) (2460) (2364) (2318) (2260) (2234) (2210) (2168) (2132) (2117) . 2010 (%) . 2011 (%) . 2012 (%) . 2013 (%) . 2014 (%) . 2015 (%) . 2016 (%) . 2017 (%) . 2018 (%) . Air China 33 31 28.9 28.1 27.9 27.6 27.2 26.4 25.9 Southern Airlines 24 25 26.6 26.0 26.4 26.3 25.3 25.2 25.1 Eastern Airlines 25 24 23.6 23.1 21.5 20.9 20.5 19.7 19.3 Hainan Airlines 11 11 11.5 12.5 13.4 13.6 14.8 15.5 16.1 Others 7 9 9.3 10.2 10.8 11.6 12.2 13.1 13.6 (HHI) (2460) (2364) (2318) (2260) (2234) (2210) (2168) (2132) (2117) Data is collected from ‘Statistical Bulletins about Development of Civil Aviation Industry’, issued by CAAC at its official website from 2010 to 2018 successively. Open in new tab Table 1. Major air carriers’ market share and HHI index . 2010 (%) . 2011 (%) . 2012 (%) . 2013 (%) . 2014 (%) . 2015 (%) . 2016 (%) . 2017 (%) . 2018 (%) . Air China 33 31 28.9 28.1 27.9 27.6 27.2 26.4 25.9 Southern Airlines 24 25 26.6 26.0 26.4 26.3 25.3 25.2 25.1 Eastern Airlines 25 24 23.6 23.1 21.5 20.9 20.5 19.7 19.3 Hainan Airlines 11 11 11.5 12.5 13.4 13.6 14.8 15.5 16.1 Others 7 9 9.3 10.2 10.8 11.6 12.2 13.1 13.6 (HHI) (2460) (2364) (2318) (2260) (2234) (2210) (2168) (2132) (2117) . 2010 (%) . 2011 (%) . 2012 (%) . 2013 (%) . 2014 (%) . 2015 (%) . 2016 (%) . 2017 (%) . 2018 (%) . Air China 33 31 28.9 28.1 27.9 27.6 27.2 26.4 25.9 Southern Airlines 24 25 26.6 26.0 26.4 26.3 25.3 25.2 25.1 Eastern Airlines 25 24 23.6 23.1 21.5 20.9 20.5 19.7 19.3 Hainan Airlines 11 11 11.5 12.5 13.4 13.6 14.8 15.5 16.1 Others 7 9 9.3 10.2 10.8 11.6 12.2 13.1 13.6 (HHI) (2460) (2364) (2318) (2260) (2234) (2210) (2168) (2132) (2117) Data is collected from ‘Statistical Bulletins about Development of Civil Aviation Industry’, issued by CAAC at its official website from 2010 to 2018 successively. Open in new tab From Table 1, we can tell that the Chinese domestic aviation market is a moderately concentrated market. Based on our earlier discussion, we can analyse how industrial policies affect the level of market concentration to a great extent. Because the CAAC restricted market entry and suspended approval for new firms from 2007 to 2013, the HHI indexes in 2010 (2460) and 2011 (2364) are higher and the proportions of other carriers’ market shares are smaller (7 per cent and 9 per cent) than in the other seven years. In 2012, the State Council issued an opinion promoting the development of the airline industry,49 which requires regulators to respect the decisive role of competitive forces. In addition, the CAAC lifted the ban on approving new carriers in 2013. Thereafter, the HHI indexes started to decrease and more new players joined the market to dilute the market shares of the ‘big four’ (Air China, Southern Airlines, Eastern Airlines, and Hainan Airlines), pushing the HHI down to its lowest point (2177) and giving other market players the largest proportion (13.6 per cent) in 2018. Thus, it can be inferred that industrial regulators raising the entry threshold for new players in the relevant market is very likely to increase the level of market concentration and weaken the competition. Price regulation Price is the most sensitive factor in the market, conveying information about scarce sources, echoing supply and demand, and driving product allocation. Low efficiency in China’s planned-economy era attests to the failure of ignoring the function of price. In some industries, however, prices regulated by the government could be tolerated by the AML due to macroeconomic regulations, the public welfare, or other reasons.50 Considering the crucial role of prices in the market, regulators’ authority over pricing should be carefully limited and supervised. Pursuant to the Civil Aviation Law of the People’s Republic of China (2018 Amendment): Prices and charges levied by airline enterprises are determined by the department of civil aviation under the State Council; regulations on airline transport fares are determined by the industrial regulator together with the price regulation department of the State Council; and price regulations should be reported to the State Council for approval … 51 Thus, prices in the airline industry have been regulated by the State. Over the past 40 years, such regulation has experienced a series of ups and down, from high control to gradual deregulation and from renewed control to another round of deregulation. Prior to 1997, prices in the airline industry were set strictly by the CAAC, which only permitted a very limited floating range (normally 10 per cent).52 At the end of 1997, even though fares were still fixed, the CAAC permitted airlines to set their own discounts, which in essence loosened the price controls.53 Thereafter, after keenly observing that the door had been cracked open by the CAAC, airlines participated with great enthusiasm in price competition. But due to the fierce price war and the negative impact of the Asian financial crisis of 1997, the airline industry as a whole suffered a huge loss of RMB 2.44 billion in 1998.54 Soon after, the CAAC promptly slammed that ‘door’ to re-fix prices and prohibit airlines from giving discounts at will.55 That price-fixing policy was not altered until the CAAC issued ‘Opinions on Improving the Reform of the Airline Transport Pricing and Charging Mechanism’ in 2015,56 which resumed progress on pricing reform. In December 2017, the CAAC together with the NDRC issued the ‘Notice of Rules on Pricing in Domestic Civil Aviation Transport’ (Notice of Pricing),57 which specifies the requirements for pricing passenger and freight air transport in the domestic market. In accordance with the Notice of Pricing, as of April 2018, the CAAC announced 1030 airline routes on which airlines would be allowed to determine their own ticket prices independently (so-called market-oriented pricing routes). The passenger capacity of these 1030 routes was nearly 50 per cent of the total passenger capacity in the airline industry.58 Although the achievement of price reform should be applauded, the traditional regulatory paradigm may be embedded in regulators’ mind, decreasing their motivation to fully assess the anti-competitive effects of their proposed regulations. Here, we will discuss two cases. The first case involves direct price fixing. Although it happened before the enactment of the AML, it exactly reflects the traditional regulatory mindset of stiffly regulating prices. From this case, it can reasonably be inferred why conflicts between competition law and industrial policies are inevitable after the AML was enacted. The other case, which occurred in the year that the AML was took effect, involves an indirect price restriction. Spring Airlines: violating administrative regulation on price fixing In 2006, Spring Airlines, the first privately owned budget airline in China, offered over 400 flight tickets from Shanghai to Jinan for only RMB 1.59 These tickets were snapped up in the first three days. Before 2015, as we discussed earlier, the prices of flight tickets had been strictly subject to government regulation. As early as 2004, the CAAC issued a ‘discount restricting order’ that fixed the floating range of prices.60 Under that order, airlines could not raise the price by more than 25 per cent or decrease it by more than 45 per cent.61 Therefore, Spring Airlines’ 1-yuan tickets violated the CAAC’s order. Consequently, Jinan Municipal Price Bureau imposed an administrative punishment on Spring Airlines, fining it RMB 150,000.62 Because this case occurred when airlines’ discretion for setting prices was strictly limited by the CAAC, Jinan Municipal Price Bureau did not need to assess the effect of the relevant behavior on competition, but simply fined Spring Airlines according to the industrial regulation. However, since April 2018, the CAAC has stopped the strict price controls, and most airline operators can determine their prices independently. Therefore, nowadays it is of value to discuss whether behaviour such as Spring Airlines’ could constitute predatory pricing and injure competition. Prior to the AML, predatory pricing was mainly governed by the Price Law (1993) and the Anti-Unfair Competition Law (AUCL 1993).63 Both the Price Law and the AUCL emphasize two factors to determine whether predatory pricing is illegal: one is selling products or services at below-cost prices, and the other is the business operator’s purpose, namely squeezing out its competitors and dominating the relevant market. A case heard by the Shanghai Intellectual Property Court in 201864 also addressed these two factors to examine whether the defendant’s behaviour constituted predatory pricing. The judge held that ‘without the purpose of squeezing rivals out of the market, even if the price is low or lower than cost, it cannot be determined to be predatory pricing … ’.65 After the enactment of the AML, the AUCL was revised in 2017 and the provisions related to price behaviours removed to avoid conflicts and overlaps with the AML. Therefore, the major law regulating predatory pricing at present is the AML. Furthermore, it can be reasonably assumed that the two factors for determining predatory pricing set by the AUCL would also be taken into consideration by the AML. The AML defines predatory pricing in Article 17 as a behavioural pattern of abusing dominant position: ‘Business operators with a dominant market position are prohibited from committing the following behaviors … (2) Selling products at prices below cost without any justifiable causes … .’ The Price Law also regulates predatory pricing, but there are several discrepancies in implementing this law compared to the AML, which include enforcers, the scope of regulating objects, procedures, and legal responsibilities.66 In order to avoid inconsistent results for similar behaviours, it is necessary to solve the relationship between the Price Law and the AML. Although academic scholars and practitioners have not yet reached a general consensus on this issue, most agree that the AML should be applied preferentially. Huang Yong, a leading anti-monopoly scholar in China, claims that the Price Law was enacted at an early stage of China’s economic reform that reflected vestiges of the planned economy; compared to the Price Law, the AML provides more methods of scientific analysis to assess price behaviours and stipulates severer consequences for illegal behaviours.67 Thus, although Huang states that the Price Law should not be simply overridden, the AML is likely to be applied when there is an overlap between the two laws. Moreover, an article written by the NDRC staffs claims that the AML is newer and more specific than the Price Law and so should be applied preferentially according to the principle of solving conflicts between laws.68 Therefore, this article’s discussion about predatory pricing will only be based on the AML. From that perspective, the legality and rationality of the punishment on the Spring Airlines are doubtful. First of all, the essential question is whether Spring Airlines’ 1-yuan tickets constituted predatory pricing and injured competition. Predatory pricing is defined as the incumbent firm setting a price below cost with the purpose of driving out current or future rival firms. Although low prices are a major goal of anti-monopoly laws, predatory pricing is condemned because the price is too low to be competitive.69 In practice, determining whether a low price can be condemned as predatory is not an easy task. Although the AML has not yet developed a mature test for determining illegal predatory pricing, it defines predatory pricing as a behavioural pattern of abusing dominant position. Therefore, following the AML logic, only a competitor with a dominant market position (or at least a large market share) has the ability to conduct predatory pricing. First, the firm must have enough financial power to forgo or sacrifice profits for a period of time; second, it can reasonably anticipate recouping its losses and returning prices to a monopoly level again once other competitors have been squeezed out of the market. If we follow the AML’s analytical approach in examining the case of Spring Airlines, neither of these conditions can be satisfied. First, compared to other state-owned airlines, Spring Airlines was a vulnerable competitor with only three planes in operation at the time. It neither was capable of squeezing competitors out of the market by selling below-cost tickets nor had a reasonable anticipation of recouping its losses and increasing prices to a monopoly level in the future. Moreover, the number of those below-cost tickets was limited to 400. Therefore, other competitors knew when Spring Airlines’ low-price sale would end and could adjust their business strategy accordingly. In short, Spring Airlines’ intent was to hold a promotion, rather than squeeze other competitors out of the market. From the anti-monopoly law’s perspective, Spring Airlines’ behaviour stirred up price competition and offered consumers with cheaper prices and more choices, which should not be punished as illegal. Beijing-Shanghai Airline Express Services: disguised pricing fixing In order to cope with the pressure of competition from high-speed train transportation between Beijing and Shanghai, the CAAC let five major airlines companies form Beijing–Shanghai Airline Express Services (Express Services) on 6 August 2007.70 Considering the large passenger volume between the two major metropolises, the airlines tried to grab more customers via ‘express airline services’ to provide passengers a better travel experience. The five participating airlines (Air China, China Eastern Airlines, China Southern Airlines, Hainan Airlines and Shanghai Airlines) provided passengers travelling between Beijing and Shanghai quicker and easier services including check-ins, security checks, baggage claims, and boarding.71 Moreover, more frequent flights were allocated to this route: there was a flight taking off or landing between the two cities every 30 minutes.72 Seemingly, the Express Services generated benefits to passengers and stimulated the competition between airline and railway transportation. However, after the Express Services were launched, passengers complained about the increased prices of flight tickets and fewer discounts, even though more flights were allocated between the two cities. That abnormal phenomenon can be understood if we carefully examine the CAAC’s requirements for Express Services. Probably with good intentions, the CAAC required the five participating airlines to allow passengers to transfer tickets freely among different flights without any extra charge. In order to satisfy the CAAC’s ticket transfer requirement, an agreement was naturally reached among these five airlines. That agreement provided that, when a passenger transferred a flight ticket with a discounted price from one airline to another, the actual carrier could charge 85 per cent of the full-price ticket from the airline selling the discounted ticket. For example, let us assume a full-price ticket from Beijing to Shanghai is RMB 2000. A person purchased a ticket at a 70 per cent discount (RMB 600) from Eastern Airlines and then changed their ticket without any extra charge to a flight with Air China; however, the ticket fare for Air China’s flight was RMB 1800 (with only a 10 per cent discount). According to the agreement, therefore, Air China can require Eastern Airlines to pay it as much as RMB 1700 (85 per cent of the full price), leaving Eastern Airlines to cover the balance of RMB 1100 itself. Two conclusions can be naturally drawn from the CAAC’s ticket transfer requirement. First, no airlines want to run the risk of losing money by selling discounted tickets. Therefore, a rational strategy for airlines is selling tickets without (or with very low) discounts.73 Second, considering how prices are settled among the airlines, they likely reached some form of agreement to fix tickets’ full price. From the AML’s perspective, such agreements are a price cartel. In this case, the price cartel is motivated by regulators’ requirement for the free transfer of tickets. On 24 August 2007, the NDRC notified the CAAC that it was investigating the five airline companies involved.74 Several days later, on 2 September, the NDRC instructed the CAAC to abolish the requirement for transferring tickets at a unified settled price.75 Although price fixing was promptly banned by the NDRC, no substantive penalties were given to the participants. Afterwards, airlines operating Beijing-Shanghai routes have raised prices from time to time at a ‘consistent’ pace. The latest price raise happened on 1 January 2020, when Eastern Airline and Air China (the largest two air carriers on Beijing–Shanghai routes) raised prices by 10 per cent simultaneously; other airlines soon followed suit.76 Subsidies and local protectionism Subsidies granted by governments to airlines are a controversial topic, and this article does not mean to discuss the legality of subsidies generally. Our focus is limited to subsidies given to carriers in the Chinese domestic market with the purpose of achieving certain policy objectives that may distort competitive forces. Normally, subsidies are granted for various underlying reasons. Under China’s current industrial policies, subsidies can be roughly divided into three types. First, subsidies are given to certain areas of aviation in order to assist their development for the purpose of achieving certain industrial policies. For example, a major goal of industrial policy since 2010 has been granting support (including financial support) to general aviation operators and to attract investment in this area,77 which has significantly accelerated the development of general aviation. Second, subsidies are given for the construction of regional airports in remote areas or the operation of less profitable airline routes in order to enhance airlines’ function of connecting people and regions throughout the country, which is also a major objective of airline industrial policy.78 For example, in September 2019, the CAAC disclosed the ‘Budget Plan for Subsidies for Regional Airlines’.79 According to this budget, the CAAC planned to provide subsidies of over RMB 11 billion to 49 airlines in 2020.80 Third, subsidies are given by local governments to regional carriers and airports. Taking Hainan Province as an example, the provincial government enacted the ‘Measure of Financial Subsidies for Encouraging the Development of Civil Airlines’,81 which allocates a certain amount of provincial funds to subsidize local airlines, air traffic management, and general aviation in Hainan Province.82 Moreover, additional subsidies would be given to airlines that have headquarters, branches, or substantial bases of operations in Hannan Province.83 Anti-monopoly concerns could arise from the third type of subsidies. Driven to benefit the local economy and improve administrative performance, local governments are highly motivated to grant abundant subsidies to attract airlines to operate air routes from or to local cities and invest in regional airports’ construction. Unfortunately, such subsidies, being merely based on local needs and short-term plans, often become a ‘useful’ instrument in forming local protectionism and injuring the integrated domestic market. For example, Hainan Province, as discussed above, grants preferential subsidies to airlines with local headquarters, branches, or substantial bases of operations. This imposes an unfair competitive disadvantage on competitors without local business sites and impedes the free flow of commodities and services between regions, which is prohibited by the AML.84 In addition, as we discussed earlier, one value of subsidies is to correct market failure to better connect people and regions in the domestic market; some local subsidies, however, may damage that value. For example, in 2018, Anhui Province granted subsidies to a regional airport in Fuyang City (a prefecture-level city) to operate 14 air routes with hub cities such as Beijing, Shanghai, and Guangzhou with the purpose of attracting more tourists and business opportunities. Less airline routes, however, were allocated to neighbouring cities, the kind of routes that are actually needed to set up national transport connectivity but cannot be achieved through market mechanisms alone.85 These local subsidies have two negative impacts. For one, they aggravate the traffic congestion in the hub cities’ airports. For another, they reduce the resources that can be allocated to less popular and more remote airline routes and airports. That will undermine the fundamental objectives of the AML as well as China’s overall plan for economic development—namely, setting up ‘a unified, open, competitive and orderly market system’ in China. V. SUGGESTIONS TO ENFORCE THE ANTI-MONOPOLY LAW IN REGULATED INDUSTRIES The discussion above shows that industrial regulators may unduly interfere in competition and thereby injure economic efficiency and consumers’ welfare when they endeavour to achieve certain policy objectives. Since the AML should apply to all sectors of the economy (except the agricultural sector), we will make two suggestions to limit such undue administrative interventions and improve the enforcement of the AML in regulated industries. The two suggested measures reflect two perspectives, one being the most feasible and effective approaches that can be adopted at the present stage and the other being a long-term way to smooth the relationship between industrial policies and competition law. FCRS and solid analytical approaches Fair competition review system Chapter 5 of the AML stipulates six illegal behaviours conducted by administrative organs, which include forcing to deal, regional blockades, restricting cross-regional bidding, restricting interregional investment, forcing business operators to conduct monopolistic behaviours, and enacting rules and regulations to injure competition.86 All these behaviours are so-called administrative monopolies. However, administrative monopolies are subject to ex-post regulation under the AML, which means that the AML can only be applied after administrative organs have conducted anti-competitive behaviours or issued regulations hampering competition. Moreover, the anti-monopoly agency cannot directly correct anti-competitive regulations or impose punishments on policy makers. Article 51 of the AML states that, ‘when administrative organs abuse their administrative power to eliminate or restrict competition, superior organs shall instruct them to rectify those abuses, and the anti-monopoly agency may give suggestions to those superior organs’.87 In other words, if the CAAC enacts a regulation with the effect of restricting competition, the Ministry of Transport would be the superior organ that is supposed to order the CAAC to rectify that regulation, rather than the SAMR. Thus, the AML has been criticized as ‘toothless’ in the face of industrial regulators’ anti-competitive behaviour.88 The newly established FCRS has been established to make up for the inadequacy of the AML vis-à-vis administrative monopolies. Compared to the ex-post legal provisions under the AML, it provides ex-ante regulation. The FCRS requires policy makers to conduct a mandatory evaluation about the impacts of their proposed regulations on competition before enacting the regulations, an approach known as self-review.89 Specifically, on 1 June 2016, the ‘Opinion of the State Council on Establishing a Fair Competition Review System During the Development of Market-Oriented Systems’ (the Opinion) was promulgated by the State Council.90 In November 2017, a more detailed ‘Implementing Regulation (Interim)’ (the Interim Regulation) was issued as well.91 These documents indicate that China has established the FCRS to review governmental regulations and policies that place undue restraints on competition. Many concerns, however, arise about whether the FCRS’s self-review approach can effectively curb local governments’ anti-competitive behaviours.92 A massive volume of administrative regulations have been made by local governments, which may review regulations in a cursory or negligent fashion in order to obtain local benefits or sustain vested interests. Moreover, if a decision-maker fails to implement the FCRS, its superior administrative organ will order it to rectify the regulation in question,93 rather than the SAMR imposing any penalties. Besides, when regulations are made by industrial regulators, which are normally at the same level of the hierarchy as the SAMR or even more powerful (such as the NDRC), the efficacy of FCRS implementation is doubtful. Fortunately, the AML is presently undergoing its first revision since it took effect in 2008. The SAMR issued a draft of the revised AML to solicit public opinion.94 In that draft, Article 9 explicitly incorporates FCRS into the AML. Therefore, if the draft passes, enforcing the FCRS would be not only an advocated policy or a performance indicator for governmental officials, but also a legal responsibility. Importantly, the draft grants the SAMR the authority to directly rectify administrative organs to correct any anti-competitive behaviours.95 Scholars in the anti-monopoly community have high hopes for the new draft and claim that the FCRS, in essence, uses competition law to normalize industrial polices and that its status will be cemented by incorporating the AML.96 Therefore, the incorporation of the FCRS is expected to give the AML ‘sharp teeth’ to regulate administrative monopolies.97 Analytical approaches When determining whether a governmental regulation or an administrative behaviour injures competition and should be condemned by the AML, both reviewers of the FCRS and anti-monopoly agencies should effectively evaluate what effect the relevant regulations or behaviours have on competition. However, the reviewing criteria provided by the Opinion,98 the Interim Regulation and relevant articles of the AML are too general to be applied specifically to the regulated industries. Therefore, clearer and more meticulously designed analytical approaches and/or reviewing criteria should be made by the competition authority for different regulated industries, which is also needed to better implement the AML in those areas. At this point, we will discuss the assessment approaches that could be given to anti-monopoly agencies and airline regulators in regard to the problems identified above. Regulations related to market entry barriers Regulations on market entry are necessary, whether in a competitive industry or a regulated industry. In a contestable market, when incumbents take illegal or improper measures to raise entry barriers that cannot be self-corrected by competitive forces, regulators should step in and help newcomers enter the market. In regulated markets, regulators should strike a balance between economic efficiency and industrial objectives. Unreasonably high entry barriers are likely to suffocate the market dynamic, help incumbent companies abuse their market power, and harm consumers’ welfare. In order to set sound regulations on market entry, therefore, it is important for regulators to correctly distinguish competitive areas from natural monopolies in a regulated industry and then adopt different regulatory measures accordingly. In the airline industry, based on whether there are substituted products and services, we can roughly define different relevant product markets: transportation services, aviation services (such as maintenance and aviation oil), and airport operation. We will discuss the contestable nature of each market and related market entry regulations respectively. The monopolistic nature of the air transport market is constantly questioned since the costs of transportation have gradually decreased. For example, air travel has become increasingly more affordable, and other means of transport (such as high-speed trains) have become sound substitutes for consumers. Moreover, more airline-related services are available (such as aircraft leasing and maintenance) that significantly lower the entry barrier. Therefore, the claim of the contestable nature of air transport has provided the theoretical basis for regulators in some countries to proceed with the deregulation of the airline industry. Since the EU initiated the liberalization of the airline industry in 1997, for instance, ‘the industry has expanded as never before, and this has contributed to economic growth and job creation. This has also paved the way for the emergence of low-cost carriers, operating a new business model based on quick turn-around times and very efficient fleet use’.99 The contestable nature of the industry is more apparent when we consider aviation services markets (like aviation oil, ground services, inflight meal catering, aircraft maintenance, and warehousing). Furthermore, the services markets are upstream markets for the air transport market. Loosening the regulations on market entry could make competition more dynamic, which could provide airlines with better and cheaper services and meanwhile improve competition among airlines. Compared to the air transport and aviation services markets, competition in airport operation has some unique features. Similar to a natural monopolistic market, the airport market has the feature of cost subadditivity, which means that a single firm can produce at a lower cost than two or more firms in the relevant market. Since building and operating multiple airports in a region will result in wasted resources and less efficiency, it is necessary for regulators to restrict market entry. The airport market, however, is not an absolutely natural monopoly because some elements of airport operation can still be spun off to enhance economic efficiency. These services include retailing, facilities, shuttle buses, and so on, which are contestable and whose market entry should not be strictly limited. In markets that are not natural monopolies, therefore, industrial regulators should not set high entry barriers or impose additional requirements on market entry. For example, setting more stringent requirements on private companies or suspending the approval of new applications is not justified unless the policy makers have sufficiently justifiable reasons and can strictly satisfy the FCRS’s conditions for exceptions.100 Regulations related to pricing Since price is the key issue in the competitive mechanism, regulators should be cautious about regulating it. As to airline services that are not natural monopolies (such as aviation services markets and air routes that have already been deregulated as market-oriented pricing routes), industrial regulators should, to the greatest extent possible, refrain from interfering in price setting in the airline industry, unless it is really necessary. Price cuts and discounts taken by small airlines are unlikely to be condemned as predatory pricing, as we already discussed, since such airlines do not have a dominant position and are unlikely to have the ‘purpose’ of squeezing out competitors. On the other hand, considering that the ‘big four’ state-owned airlines monopolize the market, raising prices on certain routes by a similar percentage within the same time period can be reasonably suspected to be implicit price collusion,101 even if there is no solid evidence of communication or arrangement among the airlines. Regulators should not directly or indirectly assist those companies in forming or cementing such collusion. The government-led ‘Beijing-Shanghai Airline Express Services’, for instance, is a negative example of improper interference in price setting, though the regulators did not intend to do so. However, some pricing regulations are justified in the airline industry. For example, prices related to airport services cannot be totally market-determined, since airports are a kind of important public infrastructure and have some features of natural monopolies, as we noted earlier. The areas under governmental pricing regulations should be strictly limited as well. One aspect of China’s reform of the airline industry is to more finely distinguish services that can be driven by the market mechanism from those that should be regulated by the government, and airline regulators are required to set reasonable pricing standards for regulated items and to expand the scope for items that can be priced by the market mechanism.102 Thus, pricing regulations, as the ‘visible hand’ that can directly and harshly intervene in the market, should be used sparingly, and regulators cannot expand their discretionary power at will to restrict price competition, unless laws or regulations explicitly permit them to do so. Regulations related to subsidies As discussed earlier, subsidies given to companies in the airline industry can be roughly divided into three types. Here are some criteria for AML enforcers and regulators to use when assessing subsidies regulations. For the first type of subsidies, those designed to improve the development of certain area (such as general aviation) in the short term can attract investment and competitors and assist new players in entering the relevant market. As long as those subsidies are promptly terminated once the market flourishes and competition forces function effectively, they would not substantially injure competition. The second type of subsidies, those used to correct market failure with the purpose of linking people and regions, particularly in undeveloped or remote areas, are consistent with the AML’s fundamental objectives. These subsidies are justifiable only if they are given generally to all qualified companies, rather than tailored to specific firms (such as state-owned companies). Regarding the third type, however, subsidies given to local airlines and airports are likely to be used as a form of local protectionism, segmenting China’s domestic market, and disrupting normal competitive forces. Therefore, these subsidies should be subject to a more rigorous review and need sufficient justification. As for approaches to assessment, the EU’s state aid policy provides a good reference point for China, since China and EU share the same view that improving and protecting their competitive internal market is the fundamental objective of competition law. The EU Commission enacted its Guidelines on State Aid to Airports and Airlines in 2014 (Guidelines).103 At the very beginning, the Guidelines explicitly state, ‘Linking people and regions, air transport plays a vital role in the integration and the competitiveness of the European Union, as well as its interaction with the world’.104 Thus, potential state aid can be immune from competition law only if it conforms to or contributes to the EU’s internal market objectives. For instance, the Guidelines provide that investment aid to an airport should contribute to the achievement of the objective of common interests. That requirement can be met if the airport ‘(a) increases the mobility of Union citizens and the connectivity of the regions by establishing access points for intra-Union flights; or (b) combats air traffic congestion at major Union hub airports; or (c) facilitates regional development’.105 For a subsidy to be immune from the AML, therefore, it should not harm the fundamental objective of setting up an ‘integrated, open, competitive, and ordered market’ in China. Bearing that in mind, the AML enforcers and regulators should carefully assess how a proposed subsidy would impact competition. If the purpose of granting that subsidy conforms to the AML’s fundamental objectives, it is not likely to seriously distort competition. But if, on the contrary, the subsidy is given to assist a few favoured undertakings, with the result of dividing the geographic market and facilitating local protectionism, it should be prohibited or rectified. Converting the regulatory mindset and fostering a competitive culture There are not always conflicts between industrial policy and competition law in regulated industries. They can not only co-exist but also promote each other. An industrial policy that has been properly designed to respect competition law can effectively correct market failure. Meanwhile, as a significant instrument for protecting competition, competition law can guarantee a dynamic and prosperous industry. In the long run, therefore, if regulators can make ‘properly designed industrial policies’ that are consistent with enhancing consumers’ long-term welfare and promoting efficiency, they will hardly be in conflict with competition law.106 Professor Meng Yanbei, a Chinese competition scholar, has suggested that regulators design competition-friendly industrial policies.107 She contends that industrial policy should (i) assist the competitive forces in playing a greater and better role in economic activities, (ii) avoid allowing regulators’ decisions or choices to take the place of the business operators’ judgments, (iii) refrain from undue or unreasonable interference in competition, and (iv) enact regulations that minimize the negative impact on competition, if such an impact is unavoidable.108 Changing regulators’ traditional regulatory paradigm and fostering a competitive culture is critical for pushing regulators to set up competition-friendly industrial policies and to harmonize the relations between industrial polices and competition law. In order to achieve this transition, industrial regulators should take three principles into consideration. First, the scope of application of industrial policy should be kept as far from the market as possible. More specifically, where competitive forces and market mechanisms can function fully and efficiently, industrial policy should not intrude. For example, since the marketplace is considered an effective way to set prices, regulations on pricing should be minimized. Second, industrial policies can be justified as a method of correcting market failures, such as providing subsidies for the construction of remote airports and for carriers operating less profitable air routes. However, such policies should be promptly terminated once the market failures have been corrected and competitive forces can play a dynamic role. In addition, subsidies should generally be given to all qualified companies, rather than a few specific companies (like state-owned carriers with local headquarters). Third, industrial regulators should trust that a sound competition law can help achieve industrial objectives. A State may want to have super-carriers to compete with large international rivals.109 This industrial policy is based on the national champion theory, which presumes that ‘with suppressed competition in domestic markets, firms can achieve large scales that enable them to obtain large market shares and profits in export markets’.110 Industrial regulators may provide financial assistance to state-owned airlines and encourage (or even order) mega mergers between them to create a national champion. However, such a state-guided national champion has not been tested by fierce competition in the domestic market and is thus not strong enough to face international competitors. On the contrary, intense competition would force companies to raise efficiency, reduce costs, stimulate innovation, selecting for strong competitors and weeding out inefficient firms, which would assist in creating national champions. VI. CONCLUSION Many countries face tensions between competition law and industrial policies. Since China has a long history and tradition of a government-regulated economy, enforcing the AML in regulated industries has galvanized these tensions. Taking the airline industry as a case study, we find that the competition authorities face profound challenges in regulated industries since industrial regulators have substantial and pervasive authority in these areas. Can we really cut the Gordian knot to enforce the AML in a regulated industry? This article discussed three types of regulations that significantly impact competition in the airline industry. For the present, the article advocated relying on the FCRS to normalize industrial regulators’ policy-making authority. Furthermore, it suggested drafting clearer and better guidelines and tailoring them to regulated industries to help anti-monopoly agencies and regulators effectively review their behaviours. In the long run, it encouraged regulators to change their traditional regulatory paradigm and foster competitive culture to make industrial policy conform to competition law. These measures will help China build confidence to enforce competition law on the one hand and form harmonious relations between industrial policies and competition law on the other. This article is based on the research project supported by the Beijing Social Science Fund from 2018 to 2022 (No.18FXC016). Of course, all errors are our own. Footnotes 1 2008 AML of the People’s Republic of China (promulgated by the Standing Committee of the National People’s Congress, 30 August 2007, effective 1 August 2008). The term used to refer to the ‘competition law’ area varies among different countries. In the USA, this area of law is referred to as ‘antitrust law’. In European Union, the law is called ‘competition law’. In China, the term used is ‘anti-monopoly law’. In this article, ‘anti-monopoly law,’ ‘competition law,’ and ‘antitrust law’ are used to refer to a set of laws that aims to fight restraints on competition in the marketplace. In this article, the terms ‘competition law’, ‘antitrust law’, and ‘anti-monopoly law’ are used interchangeably. 2 See also Nate Bush and Yue Bo, ‘Disentangling Industry Policy and Competition Policy in China’ (the antitrust source, 2011) <https://www.americanbar.org/content/dam/aba/migrated/2011_build/antitrust_law/feb11_bush2_23f.authcheckdam.pdf> accessed 14 March 2020. 3 See also Yanbei Meng, ‘Characteristics of Enforcing the AML in Regulated Industries’ (2019) 3 Tianjn Legal Science 44, 44. 4 See also GE Hale and Rosemary D Hale, ‘Competition or Control VI: Application of Antitrust Laws to Regulated Industries’ (1962) 111(1) University of Pennsylvania Law Review 46; Howard A Shelanski, ‘Justice Breyer, Professor Kahn, and Antitrust Enforcement in Regulated Industries’ (2012) 100(2) California Law Review 487; Herbert Hovenkamp, ‘Antitrust and the Regulatory Enterprise’ (2004) 2004(2) Columbia Business Law Review 335; Louis B Schwartz, ‘Legal Restriction of Competition in the Regulated Industries: An Abdication of Judicial Responsibility’ (1954) 67(3) Harvard Law Review 436; Giorgio Monti, ‘Managing the Intersection of Utilities Regulation and EC Competition Law’ (2008) 4(2) Competition Law Review 123; Lubos Tichy, ‘Goals of Union Competition Law on Regulated Markets: Pharmaceutical Industry and Parallel Trade – Comment on Negrinotti’ in Daniel Zimmer (ed), The Goals of Competition Law (ASCOLA Competition Law Series 2012). 5 Verizon Communications Inc. v Law Offices of Curtis V. Trinko, LLP 540 US 398 (2004). 6 Credit Suisse Securities (USA) LLC v Billing 551 US 264 (2007). 7 See also Meng Yanbei, ‘Research on Issues about the Applicable Scope of China’s Anti-Monopoly Law in Monopolistic Industries’ (2014) 2 Renmin Chinese Law Review 165; Yanbei Meng, ‘The Uneasy Relationship between Antitrust Enforcement and Industry-Specific Regulation in China’ in Adrian Emch and David Stallibrass (eds), China’s Anti-Monopoly Law: The First Five Years (Kluwer Law International 2013); Angela Huyue Zhang, ‘Taming the Chinese Leviathan: Is Antitrust Regulation a False Hope’ (2015) 51 Stanford Journal of International Law 195. 10 CAAC, NDRC and Ministry of Transport, The 13th Five-Year Plan of Airline Industry Development (Cm, 2017) <http://www.caac.gov.cn/XXGK/XXGK/FZGH/201704/P020170405610579468910.pdf> accessed 15 March 2020. 11 See also Ben Van Houtte, ‘Relevant Markets in Air Transport’ (1990) 27(3) Common Market Law Review 521. 12 See also Jae Woon Lee, Regional Liberalization in International Air Transport (1st edn, Eleven Publishing 2016) 1–27. 13 The Central Committee of the Communist Party and State Council, Opinion about Accelerating the Improvement of the Socialist Market Economy in the New Era (Cm, 2020) <http://www.gov.cn/zhengce/2020-05/18/content_5512696.htm> accessed 4 July 2020. 14 AML, art 7. 15 Taking the abuse of dominant market position cases as examples, there are eight civil lawsuits against SOEs during 2019. For instance, Wang Xibing v China Mobile Communications Group ((2017) Jing 73 Minchu No 10) and Songxin v China Railway Corporation ((2019) XiangZhi Minzhong No 79) are typical cases against SOEs in regulated industries. In these two cases, consumers brought civil lawsuits against SOEs in the telecommunication and railway industries respectively, asserting that defendants abused their dominant market positions in the relevant markets. 16 For example, see William E Kovacic, ‘Competition Policy and State-Owned Enterprises in China’ (2017) 16 World Trade Review 693; see also Angela Huyue Zhang, ‘The Single-Entity Theory: An Antitrust Time Bomb for Chinese State-Owned Enterprises’ (2012) 8 J Comp L & Econ 805; see also Fang Xiaomin, ‘The Application of the Chinese Antimonopoly Law to State-owned Enterprises’ in Fabiana Di Porto and Rupprecht Podszun (eds), Abusive Practices in Competition Law (Edward Elgar Pub 2018) 318–42. 17 See also AML, art 56: ‘This Law is not applicable to the association or cooperation by agricultural producers or rural economic organizations in their business activities of production, processing, sale, transportation, storage of farm products, etc.’ 18 See also China.org.cn, ‘Communiqué of the Third Plenary Session of the 18th Central Committee of the Communist Party of China’ (China.org.cn, 15 January 2014) <http://www.china.org.cn/china/third_plenary_session/2014-01/15/content_31203056.htm> accessed 14 March 2020. 19 Lei Wang, ‘Authoritative Interpretation: 13th Five-Year Plan of Airline Industry Development’ CAAC News (Beijing, 22 December 2016) <http://www.caacnews.com.cn/1/1/201612/t20161222_1207218.html> accessed 14 March 2020. 20 See also Yanbei Meng, ‘Research on Issues about the Applicable Scope of China’s Anti-Monopoly Law in Monopolistic Industries’ (2012) 6 The Jurist 44, 51. 21 Price Law of the People’s Republic of China (promulgated by the Standing Committee of the National People’s Congress, 29 December 1997, effective 1 May 1998) c 3. 22 Special Administrative Measures (Negative List) for the Access of Foreign Investment (2020) (promulgated by the National Development and Reform Commission and the Ministry of Commerce, 23 June 2020, effective 23 July 2020) item 15. 23 See Meng (n 20) 52–53. 24 Biqiang Wang and Weixun Liu, ‘NDRC Investigates TravelSky for Alleged Ticket Price Manipulation’ The Economic Observer (Beijing, 17 May 2009) <http://www.eeo.com.cn/finance/other/2009/05/16/137823.shtml> accessed 2 July 2020. 25 ibid. 26 art 46 of the AML provides that, ‘Where the business operators reach and fulfill a monopoly agreement in violation of this Law, the Anti-Monopoly Law enforcement agency shall order them to stop the violations, confiscate the illegal gains and impose a fine of from 1% to 10% of sales made in the previous year … ’. Therefore, roughly based on the sales revenue of TravelSky and the ‘big three’ airline companies in 2008, the fine would have been at least RMB 1.5 billion and at most RMB 15 billion. See Wang and Liu (n 24). 27 See Wang and Liu (n 24). 28 For example, the NDRC investigated branches and gas stations of three oligopolies (PetroChina, Sinopec, and CNOOC) in several cities for price monopoly agreements from July 2012 to September 2012, but no decisions or penalties have been disclosed to the public. See Price Supervision Bureau of NDRC, ‘Work Events of the Price Supervision and Anti-Monopoly Inspection Bureau (March to September 2012)’ (2012) 3 Price Supervision and Anti-Monopoly in China 10, 13. Another example is an investigation into two tycoons in the telecom industry. On November 9, 2011, China Telecom and China Unicom were placed under investigation by the NDRC for suspected anti-competitive conduct in the broadband access market in China. The investigation ended with the NDRC accepting these companies’ commitments to ‘rectify’ their conduct, indicating that ‘the enforcement authority had to put up with pressure it should not have to put up with’. See also Xiaoye Wang, ‘The China Telecom and China Unicom Case and the Future of Chinese Antitrust’ in Adrian Emch and David Stallibrass (eds), China’s Anti-Monopoly Law: The First Five Years (Kluwer Law International 2013) 467. 29 Alan Williams, Contemporary Issues Shaping China's Civil Aviation Policy: Balancing International with Domestic Priorities (1st edn, Ashgate Publishing 2009) 40. 30 ibid 41. 31 Han Wang, Haoran Yang and Jiaoe Wang, ‘The Evolution of China’s International Aviation Markets from a Policy Perspective on Air Passenger Flows’ (2019) 11 Sustainability 1, 4 <https://www.mdpi.com/2071-1050/11/13/3566/pdf> accessed 14 March 2020. 32 ibid 5. 33 Joanne Chiu, ‘China’s Air Regulator Will Consider Ways to Boost Budget-Carrier Market’ The Wall Street Journal (Shanghai, 29 July 2013) <http://online.wsj.com/news/articles/SB10001424127887323854904578634920047272886> accessed 14 March 2020. 34 ibid. 35 CAPA, ‘For Northeast Asia’s Airlines, Previously Slow to Adapt, 2015 Spells Opportunity’ (CAPA, 10 February 2015) <https://centreforaviation.com/analysis/airline-leader/for-northeast-asias-airlines-previously-slow-to-adapt-2015-spells-opportunity-209070> accessed 14 March 2020. 36 CAPA, ‘Chinese Airlines: Rapid International Growth Impacts Foreign Airlines’ (CAPA, 20 March 2019) <https://centreforaviation.com/analysis/reports/chinese-airlines-rapid-international-growth-impacts-foreign-airlines-460504> accessed 14 March 2020. 37 AML, cc II, III and IV. 38 State Council, Several Opinions Issued by State Council for Developing Airline Industry (Cm 24, 2012) art 7 <http://www.gov.cn/zwgk/2012-07/12/content_2181497.htm> accessed 16 March 2020 (Opinions for Developing Airline Industry). 39 Jun Zhang, ‘Monopoly Behaviors and Legal Regulation over Aviation Transport’ (2016) 11 Guangxi Social Science 121, 123. 40 MofCom, Undertakings Concentration for Approval without Conditions 2008.8.1-2012.9.30 (Cm) items 78 and 124 <http://images.mofcom.gov.cn/fldj/accessory/201211/1353031118730.pdf> accessed 14 March 2020. 41 Lufang Xu, ‘Xiamen Airlines Acquired Hebei Airlines’ 99.23% Shares with 749 million RMB’ Beijing Daily News (Beijing, 15 October 2014) <http://finance.ce.cn/rolling/201410/15/t20141015_3703008.shtml> accessed 14 March 2020. 42 IFNEWS, ‘China Eastern Airlines Swallowed Xibei Airlines and Yunan Airlines’ IFNEWS (Shanghai, 24 May 2005) <http://www.ce.cn/ceph/home/sbqyxw/200505/24/t20050524_3900528.shtml> accessed 14 March 2020. 43 Jae Woon Lee, ‘Should the Government Control the Number of Airlines in Korea?’ in Jae Woon Lee (ed), Aviation Law and Policy in Asia: Smart Regulation in Liberalized Markets (Brill 2020) (forthcoming). 44 CAAC, Notice on Regulating the Total Number of Flights, Market Entry and Transport Capacity Growth (Cm 101, 2007) <http://www.caac.gov.cn/website/dev/yshs/gztz/200707/t20070726_6932.html> accessed 14 March 2020. 45 ibid. 46 2006 Provisions on Air Routes Operation in Domestic Market of PRC, c 3. <http://www.gov.cn/gongbao/content/2007/content_494441.htm> accessed 14 March 2020. 47 Zhang (n 39) 123. 48 The MofCom uses the HHI index and the CRn index (the combined market share of the top companies in the industry) to measure the degree of market concentration, which is a description about the structure of the relevant market. After April 2018, SAMR replaced MofCom to review business concentration. In Cargotec/Dirise Electric Decision, the SAMR hold that when the HHI increases from 2038 to 3429, a market was from moderately concentrated to highly concentrated. As well, when the HHI increases from 1556 to 2848, the agency decided the market was from moderately concentrated to highly concentrated. See also SAMR, Decisions of Imposing conditions on Cargotec/Dirise Electric Concentration (Cm, 2019) <http://www.samr.gov.cn/fldj/tzgg/ftjpz/201907/t20190712_303428.html> accessed 14 March 2020; 2011 Interim Provisions on Assessing the Impact of Concentration of Business Operators on Competition, art 6 <http://www.lawinfochina.com/display.aspx?lib=law&id=8929&CGid=> accessed 14 March 2020. 49 See Opinions for Developing Airline Industry (n 38). 50 AML, art 7. 51 Civil Aviation Law of the People's Republic of China (2018 Amendment) art 97. 52 Jianghong Li and Xiaosong Zhang, ‘Reform of Regulation on Airline Fares’ Xinhua News (Beijing, 14 July 2003) <http://news.carnoc.com/list/27/27934.html> accessed 15 March 2020. 53 ibid. 54 See also Bochun Xiao and Jie Peng, ‘A study of Passenger Transport Pricing Strategy for China’s Civil Aviation Industry’ (2000) 6 Journal of Sichuan University 10, 10. 55 NDRC and CACC, Notice on Reinforce Prices Regulation and Prohibiting Low Prices Competition in Domestic Aviation Industry (annulled on 2011, Cm 74, 1999). 56 CAAC, Opinions of Improving the Reform of Airline Transport Pricing and Charging Mechanism (Cm 132, 2015). 57 CAAC, Notice of Rules on Pricing in Domestic Civil Aviation Transport (Cm 145, 2017). 58 See also Chunyu Chen, ‘1030 Routes are Market-Oriented Prices: Fares Increasing? The CAAC’s Reply’ China News (Beijing, 18 April 2018) <http://www.chinanews.com/cj/2018/04-18/8493941.shtml> accessed 15 March 2020. 59 Hongbin Wu and Jun Wang, ‘Price Bureau Claims ChunQiu Airlines Violating Limited Discounts Giving Order, Agency in Jinan Bans ‘One-Yuan’ Tickets’ Dazhong News (Jinan, 17 December 2006) <http://news.carnoc.com/list/78/78982.html> accessed 15 March 2020. 60 ibid. 61 ibid. 62 ibid. 63 art 14 of the Price Law: Business operators must not engage in any of the following behaviours to cause abnormal prices: …(2) To engage in dumping sales (except in the cases of fresh and live merchandise, seasonal merchandise and stockpiled merchandise at a discount) below cost in order to squeeze out rivals or dominate the market and disrupt the normal order of production and operation to the great detriment of the interests of the State or the lawful rights and interests of other business operators … ; art 11 of AUCL (1993) prohibited businesses from selling commodities at prices below their costs in order to squeeze out competitors. 64 Wuhan Fengjing Cixuan Technology Ltd v Shanghai Ciying Mining Machinery Ltd, Shanghai Intellectual Property Court (2018 Hu 73 Minzhong No 160). 65 ibid. 66 eg the price departments of local governments at and above the country level are responsible for managing prices and implementing the Price Law. The SAMR enjoys the power to enforce the AML and can authorize competent departments at the provincial level to deal with anti-monopoly issues and cases. Moreover, the Price Law only regulates business operators, but the AML can be applied to business operators, trade associations and administrative organs. The AML provides severer penalties for violation than the Price Law. 67 See also Yong Huang and Yannan Liu, ‘Reconsidering the Relationship and Enforcement Coordination between the Price Law and Anti-Monopoly Law’ (2013) 4 Price: Theory & Practice 19. 68 See also Changqing Li and Jiang Wan, ‘A Study on the Convergence and Application of the Price Law and the Anti-Monopoly Law’ (2012) 12 Price Supervision and Anti-Monopoly in China 23. 69 Herbert Hovencamp, The Antitrust Enterprise: Principle and Execution (1st edn, Harvard University Press 2005) 159. 70 CAAC, Development Report of China’s Airline Industry (Cm, 2008) ch I, s 7, item 8 <http://www.caac.gov.cn/GYMH/MHGK/ZGMH/201509/t20150923_1952.html> accessed 15 March 2020. 71 ibid. 72 Xiaojuan Miao, ‘Express Flights Link Beijing to Shanghai’ China Daily (Shanghai, 7 August 2007) <http://www.chinadaily.com.cn/china/2007-08/07/content_5448751.htm> accessed 15 March 2020. 73 Jian Zhou, ‘Five Big Airlines Reach Price Ally, Fare Increase Between Beijing and Shanghai’ Shanghai Bus Daily (6 August 2007) <http://finance.people.com.cn/GB/1037/6073810.html> accessed 15 March 2020. 74 See also Price Supervision Bureau of NDRC, ‘Work Events of the Price Supervision and Anti-Monopoly Inspection Bureau (August to September 2007)’ (2007) 12 Price Supervision and Anti-Monopoly in China 22, 23. 75 ibid. 76 Canbang Liu, ‘Price Increasing Again for Beijing-Shanghai Air Routes, Opportunities Open for High-Speed Trains?’ Security Daily (20 December 2019) <http://www.zqrb.cn/finance/hangyedongtai/2019-12-20/A1576781622576.html> accessed 2 July 2020. 77 Jinajun Zou, ‘Several Major Trends of the Development of Airline Industry under the New Economic Era’ (CARNOC, 26 November 2014) <http://news.163.com/air/14/1126/15/AC05Q92000014P42.html> accessed 15 March 2020. 78 See Opinions for Developing Airline Industry (n 38), arts 4–5. 79 See also CAAC, Budget Plan of Subsidies for Regional Airlines in 2020 (Cm, 2019) <http://www.caac.gov.cn/XXGK/XXGK/TZTG/201909/t20190925_198795.html> accessed 15 March 2020. 80 ibid. 81 2015 Measure of Financial Subsidies for Encouraging the Development of Civil Airlines in Hainan Province PRC <http://www.hainan.gov.cn/data/zfgb/2015/03/3242/> accessed 17 March 2020. 82 ibid, arts 2, 5 and 6. 83 ibid, art 8. 84 AML, art 33. 85 Rong Zhao, Siming Zhang and Yuchao Yi, ‘Research on the Coordination of Central and Local Civil Aviation Subsidy Policies’ (2019) 2 Civil Aviation Management 160, 161. 86 AML, ch 5, arts 32–37. 87 AML, art 51. 88 Zhiquan Zhang, ‘Against Administrative Monopolies, Enforcers Should Grow Sharp Teeth’ Legal Daily (1 September 2017) <http://legal.qianlong.com/2017/0901/1994557.shtml> accessed 21 July 2020. 89 State Council, Opinions of the State Council on Establishing a Fair Competition Review System During the Development of Market-Oriented Systems (Cm 34, 2016) ch 3, art 2. 90 State Council, Opinions of the State Council on Establishing A Fair Competition Review System During the Development of Market-Oriented Systems (Cm 34, 2016) (Opinion). 91 NDRC and others, Notice of the National Development and Reform Commission, the Ministry of Finance, the Ministry of Commerce and Other Departments on Issuing the Detailed Regulations for the Implementation of the Fair Competition Review System (Interim) (Cm 1849, 2017) (Interim Regulation). 92 Jian Wang, ‘Features of Fair Competition Review System and Suggestions for its Optimization’ (2016) Competition Law and Policy Review 27. 93 Interim Regulation (n 91), art 24. 94 The full text of the revisions can be found at SAMR’s official website <http://www.samr.gov.cn/hd/zjdc/202001/t20200102_310120.html> accessed 15 March 2020. 95 ibid, art 58. 96 See also Yanbei Meng, ‘Research on the Fair Competition Review of Industrial Policy’ (2018) 2 The Jurist 118; Maozhong Ding, ‘Study on Competition Evaluation of Industrial Policy’ (2016) 3 Legal Science Magazine 70; Xiaoye Wang, ‘Several Thoughts about the Fair Competition Review System’ (2017) 1 Economic Law Review 75; Jing Wan, ‘Major Revision of AML, the Fair Competition Review System incorporated into the Law for the First Time’ Legal Daily (14 January 2020) <http://www.xinhuanet.com/fortune/2020-01/14/c_1125457964.htm> accessed 21 July 2020. 97 Wan, ibid. 98 The Opinion provides four types of reviewing criteria, each of which is subdivided into four or five items. Generally speaking, administrative policies cannot be enacted or passed if they (i) limit or adversely affect market entry and exit; (ii) restrict the free distribution and circulation of merchandise and productive materials; (iii) affect the costs of production and business operation, such as granting preferential policies to certain market players; or (iv) impact companies’ behaviour in business operations, such as interfering with companies’ pricing or requiring the disclosure of confidential business information. See Opinion, ch 3, title 3, arts 1–4. 100 The Opinion details exceptions to applying the FCRS. If regulations or policies concern national safety, social security (such as disaster relief), the public interest (like environmental conservation), or other situations specified by law, they can still be enacted even if they harm competition. Such exceptions must be applied strictly to avoid abuse. First, policy makers are required to thoroughly explain the need for issuing such regulations to achieve certain administrative policies; second, there must not be any alternatives available that would cause less harm to competition; and third, the regulations’ enforcement period should be explicitly limited. 101 Liu (n 76). The news report states that within a mere year and a half, airline carriers operating Beijing–Shanghai routes have raised prices three times with a similar increase in the price range during the same period. 102 CAAC, Scheme for Adjusting Fees Charged by Civil Airports (Cm, 2017) <http://www.ccaonline.cn/zhengfu/gf-zhengfu/389722.html> accessed 4 July 2020. 103 ibid. 104 ibid, art 1.1. 105 ibid, art 5.1.1, para 84. 106 OECD, ‘Competition Policy, Industrial Policy and National Champions’ (DAF/COMP/GF(2009)9, OECD 2009) 11 <http://www.oecd.org/daf/competition/44548025.pdf> accessed 15 December 2020. 107 See Meng (n 96). In this article, Professor Meng raised a suggestion to set up a competition-friendly industrial policy, which could help to achieve the harmony or convergency between competition law and industrial policy. 108 See Meng (n 96) 121–24. 109 See Williams (n 29) 213. 110 Ruowei Chen and others, ‘Dominant Carrier Performance and International Liberalization – The case of Northeast Asia’ (2015) 43(C) Transport Policy 61, 66. 8 The SAMR is the market regulator in China, which has the authority for enforcing the AML. In a report, the SAMR disclosed that one of its major tasks at the present stage is to research specific industries to examine the impacts of administrative regulations and policy on competition. See also SAMR, Improving the Fair Competition Review System: Major Tasks of 2019 (Cm, 2019) <http://www.samr.gov.cn/fldj/tzgg/gpjzsc/201905/t20190517_293787.html> accessed 21 July 2020. 9 See also Zhuping Han, ‘China Became the Second Largest Aviation Market’ People’s Daily Overseas Edition (Shanghai, 17 November 2006). 99 Commission Guidelines 2014/C 99/03 of 4 April 2014 on State Aid to Airports and Airlines [2014] OJ C 99/3, art 1.3. © The Author(s) 2020. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model)

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Journal of Antitrust EnforcementOxford University Press

Published: Dec 6, 2020

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