By Susan Ning, Hazel Yin, Yangdi Zhao King & Wood Mallesons’ Commercial & Regulatory Group
T
h
e 12th Five-Year-Plan period (2011-2015) has witnessed intense antitrust enforcement efforts by the Chinese antitrust regulators. Recently, the National Development and Reform Commission (“NDRC”), the price-related antitrust regulator in China released a summary report on its achievements during the past five years. In particular, a total of 97 price-related antitrust cases were concluded, and the fines imposed and illegal gains confiscated amount to approximately RMB 10.4 billion yuan. Among the 97 cases, 29 were handled by NDRC directly and 68 by its local counterparts. 76 cases related to monopoly agreements, 13 concern abuses of market dominance, and 8 involve administrative monopolies.
High profile cases regarding international cartels handled by NDRC
Cartel enforcement has been the top priority of NDRC. It conducted investigations against several international cartels in a row involving sectors of LCD panels, auto parts, bearings and cargo shipping. In December 2012, 6 international LCD panel producers were investigated and penalized by NDRC as a result of price-fixing cartel. The fines concerned in this case reached RMB 350 million yuan. The companies concerned also committed to extend the warranty period to Chinese TV manufacturers from 18 months to 36 months. In August 2014, NDRC imposed fines on 8 Japanese auto parts companies and 4 auto bearings companies in a total amount of RMB 1.24 billion yuan. In December 2015, 8 international shipping companies were penalized by NDRC for concluding and implementing price monopoly agreements with fines totaling RMB 407 million yuan.
Cases related to abuse of IPRs investigated by NDRC
In the meantime, a number of cases relating to abuse of IPRs were also investigated by NDRC, ranging from areas of smart terminals, digital interface and audio decoder to copper smelting. The high-profile Qualcomm case was the first ever antitrust case involving enforcement against abuse of IPRs in China. In February 2015, NDRC decided to order Qualcomm to stop its practices in connection with abuse of dominance and to impose fines on Qualcomm in the amount of RMB 6.09 billion yuan.
Strengthened enforcement in sectors of important consumer goods and industrial products
The NDRC paid particular attention on regulating competition in the markets of important consumer goods such as wine, milk powder, insurance, automobile, and pharmaceutical, and industrial products such as cement.
Battle against administrative monopoly
Besides, NDRC continued to intensify its enforcement efforts against administrative monopolies with cases in relation to, notably, differential treatment and exclusive dealing.
Establishing fair competition review mechanism
The Chinese government is endeavoring to incorporate competition policy into the fundamental economic policies and to promote the establishment of fair competition review mechanism. Moreover, a series of antitrust guidelines are being drafted by NDRC, including guidelines on abuse of IPRs, antitrust issues in the auto sector, leniency program, commitments, calculation of illegal gains and fines, and the exemption procedures.
Fostering closer cooperation with antitrust regulators in other jurisdictions
Chinese regulators are also constantly making efforts to foster closer cooperation relationships with regulators in other jurisdictions. NDRC has signed cooperation MOUs with its counterparts in other jurisdictions such as the US, the EU, UK, South Korea, Japan, Australia, Canada and Germany, with a view to facilitating information exchange and enforcement trainings. It also participated in negotiations of competition policies included in free trade agreements between China and South Korea, China and Australia, etc. Regular seminars and meetings have been held with authorities in other jurisdictions to facilitate mutual understanding.
Priorities of antitrust enforcement by NDRC in 2016
Recently, NDRC has also outlined its antitrust enforcement priorities for 2016, targeting sectors ranging from pharmaceuticals to medical devices, autos, IPRs, shipping, telecom, finance and industrial raw materials. The regulator also encourages consumers and businesses to report antitrust violations that they are aware of, in an effort to gather case leads through diversified channels.