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Antitrust in Asia 2021

Digital sector in focus

A key target of increased global antitrust scrutiny in recent years has been the digital sector, particularly in an age where the influence and pervasiveness of ‘big tech’ has been driven to the forefront of public discourse

The EU has taken the lead with the introduction of the Digital Markets and Digital Services Acts, and regulators in Asia are in the process of stepping up enforcement.

While the measures taken by competition authorities in Asia vary across jurisdictions, it is clear that the digital sector falls squarely within the regulatory crosshair. 

Recent developments fall within the following broad trends:

  • new or upcoming regulations or guidelines for the digital sector;
  • increased antitrust enforcement against digital companies; and
  • merger notification threshold reforms targeting the digital sector.

New or upcoming regulations or guidelines

In November 2020, China’s competition authority, the State Administration for Market Regulation (SAMR), published draft antitrust guidelines for the platform economy, which indicated a shift in the authority’s attitude towards the increased enforcement in the digital sector.

The draft guidelines led to a strong market reaction, including a fall in the share price of key Chinese tech companies. In December 2020, SAMR announced its investigation into one of China’s leading digital platforms for purported anticompetitive behaviour. Other investigations are expected.

In contrast, Singapore’s Competition and Consumer Commission (CCCS) published in September 2020 its market study on e-commerce platforms, which did not identify competition concerns on the basis that the existing framework is sufficiently robust.

The CCCS plans to update its guidelines to clarify how they apply to the digital sector, with such clarifications covering the market definition for multiside platforms and how an innovative transaction party would be assessed for merger control purposes.

Other jurisdictions are still considering how best to handle potential issues arising in the digital sector. For example:

  • The Korea Fair Trade Commission (KFTC) announced in October 2020 its intention to draft rules targeting unfair trade practices by digital platforms.
  • The Taiwan Fair Trade Commission has established an ad hoc task force to develop policies ensuring healthy market competition under the digital economy and to research novel competition issues arising from the disruptive business models of major tech companies.

Increased antitrust enforcement

In light of the above developments, it will come as no surprise that antitrust enforcement in the digital sector is becoming increasingly common in Asia.

Besides the enforcement actions taken by ASEAN regulators against Grab, established competition regulators already have a strong enforcement track record against tech companies.

  • The KFTC has investigated Google in relation to its Android mobile operating system and, in October 2020, fined Naver, one of South Korea’s biggest search engines, around US$23m in an abuse of market dominance case.
  • The Japan Fair Trade Commission (JFTC) raided Amazon’s Japanese headquarters in March 2018 and, in October 2020, the JFTC’s chairman indicated an intention to tackle market abuses by major tech companies in conjunction with its US and European counterparts.
  • In December 2020, China’s SAMR announced a landmark antitrust probe into one of China’s leading digital platforms for suspected anticompetitive practices and summoned key Chinese tech companies to an administrative meeting to voice its competition concerns. In the same month, SAMR fined three digital platforms, Alibaba, Tencent and Hive-Box, for failing to notify acquisitions using the variable interest entity structure, continuing its pattern of increased scrutiny against tech companies.

Merger notification threshold reforms

Following in the footsteps of authorities elsewhere, such as in Austria and Germany, several Asian jurisdictions have also contemplated revising their rules to capture mergers in the digital sector falling short of existing jurisdictional thresholds.

  • In December 2019, Japan amended its merger assessment guidelines to recommend voluntary filings for consolidations in the digital sector that fail to meet the mandatory thresholds.
  • India is similarly contemplating the introduction of merger notification thresholds based on transaction value to target the acquisition of innovative companies with low existing revenue.
  • The December 2020 revision to South Korea’s Fair Trade Law will also introduce such a threshold.