By Susan Ning and Ding Liang
Since the enactment of the Anti-Monopoly Law (AML), the antitrust enforcement authorities in China (i.e. the National Development and Reform Commission (NDRC)) and the State Administration for Industry and Commerce (SAIC)) have issued procedural rules, detailing how they will go about an investigation and adjudication of an alleged breach of the Anti-Monopoly Law (AML).
- on 29 December 2010, the NDRC issued rules entitled Procedural Rules on Administrative Enforcement of Anti-price Monopoly (NDRC procedural rules). These rules provide further guidance as to how investigations in relation to price-related breaches of the AML will be conducted; and
- in May 2009, the SAIC issued rules entitled Administrative Authority of Industry and Commerce on Investigating and handling Cases of Monopoly Agreements and Abuse of Dominant Market Position (SAIC procedural rules). These rules provide further guidance as to how investigations in relation to non-price breaches of the AML will be conducted.
This article compares the procedural rules issued by each of the NDRC and SAIC and highlights the main differences.
The SAIC and NDRC are both enforcers of the AML – while the SAIC is responsible for non-price related monopoly conduct; the NDRC is responsible for price-related monopoly conduct. The following are the major differences in relation to the rules issued by each of the authorities:
1. Exemption from penalty pursuant to the leniency policy
The NDRC procedural rules allow for a company to seek an exemption from penalties for a breach of the prohibition against price-related monopoly agreement (e.g. price fixing) – generally if a company is "first in" and provides sufficient evidence that company "may" be exempt pursuant to these rules.
The SAIC procedural rules, on the other hand, uses the word "will" be exempt (as opposed to "may" – see above), in respect of the leniency provisions. There is an argument that the SAIC procedure rules are more definitive in terms of granting leniency to the "first in" applicant as opposed to the NDRC rules.
2. Range of mitigation under the leniency policy
The NDRC procedural rules expressly state that the "second in" or the second company to "dob in" on a price-related monopoly agreement (e.g. a price fixing cartel) may receive no less than 50% discount on penalties. Further the "third in" or the third company to "dob in" may receive less than 50% discount on penalties. The SAIC rules, on the other hand, do not provide any detailed discount ranges in relation to penalties.
3. Exemption or mitigation from penalty by voluntarily ceasing the monopoly acts
Pursuant to the SAIC procedural rules, when business operators voluntarily cease monopoly acts (e.g. cartels or conduct amounting to abuse of dominance), the SAIC may, at its own discretion, mitigate or exempt penalty for such business operators. The NDRC procedural rules do not contain an equivalent provision.
There are some distinctions between the wording of the SAIC and the NDRC procedural rules (as outlined above), especially in relation to the leniency provisions. However, whether these distinctions in the wording of the provisions will result in a distinction in application of these rules, remains to be seen. Much will be clearer over time as these rules are being used and enforced.