China market regulator: will guide firms to compete on quality and value

China market regulator: will guide firms to compete on quality and value

The Chinese market regulator has recently announced its intention to shift the focus of competition from price and quantity to quality and value. This move, aimed at fostering a more sustainable and innovative business environment, is part of a broader strategy to modernize the country's anti-monopoly framework.

The regulator's new guidelines, which were issued in 2024, emphasize the importance of competition based on product quality, service innovation, and customer satisfaction. This shift is a departure from the traditional focus on market share and pricing strategies. The regulator believes that encouraging firms to compete on the basis of quality and value will lead to more robust and resilient markets, benefiting both consumers and businesses in the long run [1].

The new guidelines also aim to address the challenges posed by digital markets. China, which is the world's largest e-commerce market, has been grappling with how to regulate the behavior of large platform enterprises. The regulator has been working on establishing new ex ante rules for digital markets, but these have not yet been fully implemented. The guidelines also address the concerns surrounding the application of the essential-facility doctrine to non-standard essential patents (SEPs), a topic that has been the subject of much debate [1].

In a significant ruling, the Chinese Supreme Court overruled a first-instance judgment in a case involving Hitachi Metals, a patent holder that had been accused of abusing its dominant market position by refusing to license patents of sintered neodymium-iron-boron (NdFeB). The Supreme Court held that the plaintiffs had failed to prove that the patents were irreplaceable and constituted an independent relevant market. This decision highlights the court's cautious approach to the criteria for 'essential facilities' and its reluctance to apply the doctrine to non-SEPs [1].

The regulator's new guidelines also address the issue of criminal liability for anti-monopoly violations. While the Anti-Monopoly Law (AML) has provisions for potential criminal liability, these have not been enforced due to the lack of corresponding provisions in the Criminal Law. The regulator has been pushing for these amendments, but they have not yet been implemented [1].

In conclusion, China's market regulator is taking steps to modernize its competition policy by shifting the focus to quality and value. This move is part of a broader strategy to address the challenges posed by digital markets and to ensure that competition is fair and beneficial to all stakeholders. The regulator's new guidelines, while still in the early stages of implementation, signal a significant shift in the country's competition policy.

References:
[1] https://globalcompetitionreview.com/market-review/market-review-antimonopoly/2026/article/china-landmark-rulings-deep-dive-key-cases-and-the-implications-global-markets