Since the enactment of the China’s Anti-Monopoly Law (“AML“), the State Administration of Industry and Commerce (“SAIC“) and the National Development and Reform Commission (“NDRC“) have investigated into a number of cases that raise competition concerns and have imposed penalties on some companies within their respective authorities. Please see our previously published articles including “First Public Enforcement Decision by SAIC against concrete manufacturers“, “Earlier Rumor Confirmed: China Telecom and China Unicom under Antitrust Investigation“, “NDRC Fined Two Pharmaceutical Companies for Abusive Conducts“, “Price Related Breaches of the AML and the Price Law -How Many Public Cases Have There Been?“, etc.
According to Article 46 and 47 of the AML, if a business operator reaches and executes a monopoly agreement or abuses its dominant market position, the anti-monopoly enforcement agencies can impose the following penalties:
(i) to order the operator to cease its illegal practice;
(ii) to confiscate the illegal gains; and
(iii) to levy a fine ranging from 1% to 10% of the operator’s revenue of the previous fiscal year (in case that a monopoly agreement is not implemented, the fine can be below RMB 500,000).
In addition, if an industry association organizes business operators to enter into a monopoly agreement, it can be fined not more than RMB500,000; where the breach is of a serious nature, the industry association can be deregistered.
We have received inquiries as to whether anti-monopoly penalty decisions are subject to administrative review and how the process works.
Briefly, decisions made by anti-monopoly enforcement agencies are administratively reviewable. The review process shall be conducted in accordance with the Administrative Review Law of the People’s Republic of China (“Administrative Review Law“) and the Regulations on Administrative Review issued by the State Council (“Administrative Review Regulations“). Besides, SAIC and NDRC have respectively promulgated the Procedural Rules on Administrative Review of the State Administration of Industry and Commerce and the Implementation Measures on Administrative Review of the National Development and Reform Commission” to regulate their acceptance and examination of administrative review cases.
Based on the provisions of the above laws, regulations and rules, we will give a brief answer to the frequently asked questions about administrative review of anti-monopoly penalty decisions.
Is administrative review a prerequisite to file for judicial review?
Administrative review is not a prerequisite to file for judicial review against an administrative penalty decision. A petitioner can choose to either initiate an administrative review within 60 days upon receipt of the written decision, or to directly bring an administrative lawsuit before a competent people’s court within three months upon receipt of the decision.
Shall the penalties be implemented during the administrative review proceedings?
During the administrative review process, the original penalty decision shall still be implemented, unless the agency that originally issues the decision or the administrative review organ deems it necessary to suspend the implementation.
Who are qualified to be a petitioner?
Most of the times, a petitioner is a party which receives anti-monopoly penalty. At the same time, it is also possible for a non-party to the decision to apply for administrative review, if it considers that its rights and interests are affected by the decision of a competition agency.1
Who should be listed as respondent?
In short, the anti-monopoly enforcement agency which issues the original penalty decision should be listed as the respondent.
In China’s anti-monopoly enforcement regime, SAIC is responsible for regulating monopoly conducts not involving price, and NDRC takes charge of price-related conducts. When dealing with specific matters, SAIC and NDRC may handle a case by themselves, and they may also grant the authorities to provincial level Administrations of Industry and Commerce and Development (“AIC“) and Reform Commissions (“DRC“)/Price Bureaux (“PB“) 2. In practice, many cases were handled by provincial level enforcement agencies with authorization from SAIC and NDRC.
Therefore, with regard to an administrative review case against a decision imposing anti-monopoly penalties, the respondent can be SAIC or NDRC, or a provincial level enforcement agency (AIC or DRC/PB).
Who is the competent administrative review organ?
It depends on which government agency issues the original decision.
If the decision is made by SAIC or NDRC, the petitioner should file an administrative review application with SAIC or NDRC respectively.
If the decision is made by an enforcement agency on the provincial level, the petitioner can choose to either file the application with the people’s government of the province to which the original enforcement agency belongs, or to file the application with SAIC or NDRC, where appropriate. For example, if the decision is made by the AIC of Guangdong province, the petitioner can either apply for administrative review with Guangdong People’.s Government, or with SAIC.
Will there be a hearing?
In principle, the administrative review organ will decide the case solely on documents. Where the case is complicated, the officials may also conduct on-site inspection, seek opinions from experts, hold a hearing or take other methods as appropriate. Therefore, the hearing procedure is only one of the methods that could be taken by the review organ, and the review organ has the discretion to decide whether to hold a hearing or not.
Will the petitioner be allowed to review relevant case materials?
The petitioner is allowed to get access to the written answer submitted by the respondent, as well as evidence, basis and other relevant materials based on which the original decision is made, unless the materials involve state secret, trade secret or personal privacy.
Can the case be settled or conciliated during the review process?
According to the Administrative Review Regulations, if the anti-monopoly enforcement agency exercises discretionary power according to relevant law and regulation when it makes the original decision, the petitioner and the respondent can reach a settlement in relation to the decision during the administrative review proceedings. The settlement agreement should be submitted to the review organ for approval.
Similarly, conciliation is also available with respect to a penalty decision where the enforcement agency exercises its discretionary power according to relevant law and regulation in imposing the penalty. If the parties enter into an agreement by conciliation, the administrative review organ will make a conciliation statement, which will take into effect upon signature by the parties and stamp by the review organ.
Article 46 and 47 of the AML grant the anti-monopoly enforcement agencies discretionary power to decide on the amount of fines within the stipulated range, and therefore, the petitioner and respondent are allowed to reach a settlement agreement over the amount of the fine, or accept conciliation by the administrative review organ.
How long does it take for the reviewing organ to issue a decision?
In general, an administrative review organ should make a decision within 60 days upon acceptance of the application. If the case is a complicated one and a decision cannot be made within the said period, an extension of no more than 30 days may be granted upon approval of the director of the review organ.
What decisions can be made by the administrative review organ?
Depending on the results of the case examination, the administrative review organ can make the following types of decisions:
(i) to maintain the original decision;
(ii) to revoke or modify the original decision or to confirm the original decision as a violation of law;
(iii) to order the respondent to take a new decision within a prescribed time limit, along with the decision on revoking the original decision or confirming the original decision as a violation of law; or
(iv) to reject the application.
If the respondent is ordered to make a new decision, it shall comply with the order with 60 days, and the new decision shall not be identical or similar to the original one if it is based on the same facts and reasons as was the original decision.
Whether the review organ can make a decision more unfavorable to the petitioner?
According to the Administrative Review Regulations, an administrative review organ shall not make a decision more unfavorable to a petitioner within the extent of the claims raised by the petitioner.
What remedies does a petitioner have if it dissatisfies with the result of the administrative review?
If a petitioner does not accept the decision made by the administrative review organ, it can choose to file an application for award with the State Council, or to initiate an administrative lawsuit before a competent people’s court. If the petitioner chooses the former, the award made by the State Council will be final.
1Article 9 of Administrative Review Law provides that citizens, legal entities or other organizations may apply for administrative review if it considers that specific administrative actions infringe upon their legal rights and interests.
2For instance, the price bureaux of the following provinces have been given the power to enforce price-related breaches of the AML: Jiangsu, Zhejiang, Heilongjiang, Liaoning, Hubei and Yunnan. On the other hand, in provinces such as Xinjiang, it is the provincial Development and Reform Commission who has been given the authority to enforce price-related breaches of the AML.