On 4 November 2014, the State Administrative for Industry and Commerce (“SAIC”) published a decision in which it found that the Pizhou branch of the Xuzhou City Tobacco Corporation (the “Pizhou Tobacco Branch”) had abused its dominant position in the tobacco wholesale distribution market by treating customers of equal standing in a discriminatory manner.  The SAIC found that the Pizhou Tobacco Branch had violated Article 17 of the PRC Anti-Monopoly Law (the “AML”), which prohibits business operators in a dominant market position from engaging in abusive conduct that eliminates or restricts competition, and it imposed a fine of RMB 1.7 million.

We set out in this article some points that are of particular relevance to undertakings subject to the jurisdiction of the AML in evaluating the legal risks of conduct which may constitute an abuse of a dominant market position.
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By Susan Ning, Peng Heyue, Yang Yang, Qiu Weiqing, Sarah Eder, and Guo Shaoyi

Introduction

On 15 November 2011, Qihoo issued proceedings against Tencent in the Guangdong Higher Court, asserting that Tencent had abused its dominant position, marking the beginning of the first anti-monopoly case in the internet arena. Qihoo lost the first trial and appealed. On 16 October 2014, the Supreme Court handed down its final decision, rejecting Qihoo’s appeal and upholding the first-instance court judgment. This was the first anti-monopoly case heard by the Supreme Court. The Supreme Court’s judgment elaborates detailed fundamental principles of anti-monopoly law, in particular in the context of abuse of dominance, which offers guidance and rules for future anti-monopoly litigation, especially those concerning abuse of dominance.
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By Susan Ning and Hazel Yin

August 1, 2012 marks the fourth anniversary of China’s Anti-Monopoly Law (“AML”). 1 With only 57 articles, the AML introduces a series of new regimes governing not only transactions but also day-to-day operations of domestic and foreign companies.  This article presents an overview of how the AML has been implemented so far, with particular focus on the latest development, and where it may go in the near future.   

Merger Control

The Ministry of Commerce (“MOFCOM”) is responsible for reviewing concentration of undertakings that trigger a certain turnover thresholds. 
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作者:宁宣凤   尹冉冉    金杜律师事务所反垄断组

至2012年8月1日,《中华人民共和国反垄断法》(以下简称《反垄断法》)实施已满四年。1虽然仅有57条,但《反垄断法》确立了一系列崭新的制度,其适用对象不仅包括国内公司,也包括境外企业,适用范围不仅涵盖公司的日常运营,也包括公司间的交易行为。本文简要回顾《反垄断法》四年的实施情况,并对其实施趋势予以展望。

一、合并控制

经营者集中在达到一定营业额标准后,需提交商务部进行经营者集中的反垄断审查。自2008年8月1 日以来,商务部累计审查逾450起交易,其中95%以上的交易获得无条件批准。截至2012年8月1日,商务部已附条件批准14起交易,禁止1起(可口可乐收购汇源)。


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By Susan Ning and Hazel Yin

On April 18, the Guangdong Higher People’s Court held the first court hearing for the abuse of dominance action filed by Qihoo(the operator of 360 safety software)against Tencent(the operator of QQ instant messaging software)under the Anti-Monopoly Law ("AML"). Qihoo accused Tencent for abusing its dominance in the market of online instant communications services and claimed damages of RMB 150,000,000. The court hearing lasted for more than 8 hours, and attracted an audience of almost 400 people. 

As requested by the court, the hearing was divided into four sessions, dedicated to each of the four issues: market definition, dominant position, abusive conducts and legal liabilities.  The hearing focused on the first three issues and both sides called in expert witnesses and had fierce debates over each of these issues.


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By Susan Ning, Wu Han, and Sun Yiming

On 13 March, Mr. Zhang Guangyuan, Deputy Director of the Anti-monopoly Bureau of the National Development and Reform Commission (NDRC) spoke on the latest development of NDRC’s antitrust investigation on China Telecom and China Unicom. Mr.Zhang said that the two companies have so far completed a 100G bandwidth expansion and committed to further reduce the internet access service charges. The Anti-monopoly Bureau of the NDRC will continue to press for rectification and reform of the two companies.

This investigation was initiated last April, targeting at China Telecom and China Unicom for their alleged abuse of market dominance in the Internet access market by administering price discrimination against different Internet service providers (ISPs)1. On December 2, 2011, the two companies publicized statement on their websites saying they have submitted applications to the NRDC for suspension of the antitrust investigation and decided to correct their misconduct, but NDRC demanded more concrete pledges.


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By Susan Ning, Sun Yiming and Hazel Yin

It was reported 1 that on December 15, 2011, the Intermediate Court of Changsha, Hunan Province dismissed a consumer’s complaint that automobile producer Dongfeng Nissan and its 4S store 2 abused their dominant position in violation of China’s Anti-monopoly Law ("AML") by reaping exorbitant profits and expelling their competitors.  The case was originally filed in November 2010 and the court hearing was held in May 4, 2011.  It is the first antitrust lawsuit in the automobile industry and yet another defeated attempt by Chinese consumers in bringing AML private actions.

The plaintiff, Mr. Liu Dahua, is a Nissan car owner.  In October 2009, He had his car repaired at a local 4S store of Nissan.  Finding that the 4S store charged much higher price for repair services than other local auto repair factories, Mr. Liu asked the 4S store to sell the spare parts separately so he could do the repairs elsewhere.  However, the 4S store turned down his request saying that Dongfeng Nissan did not allow its 4S stores to sell spare parts alone, meaning that customers could only purchase the spare parts as well as the repair services together from Dongfeng Nissan’s 4S stores.


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By Susan Ning and Ding Liang

On November 14, the National Development and Reform Commission ("NDRC") announced its decision to fine two private pharmaceutical companies nearly RMB 7 million for violating the Anti-monopoly Law (AML) (please see our previous article entitled NDRC Fined Two Pharmaceutical Companies for Abusive Conducts).  The NDRC’s news release did not clearly indicate which article(s) of the AML the two companies have violated and the method the NDRC adopted to calculate the fine. 

On December 16, Mr. Zhou Zhigao, an official from the NDRC’s Price Supervision, Inspection and Anti-monopoly Bureau discussed the reasoning behind this case in a seminar.  According to Mr. Zhou, the two pharmaceutical companies were fined under Article 17(3) of the AML because they abused their dominance by refusing to deal with reserpine manufacturers.  He also discussed the method used in that case to calculate the fine.


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By Susan Ning, Sun Yiming, Liu Jia and Yin Ranran

On December 13, it was reported that the National Development and Reform Commission (NDRC) asked China Telecom to submit more detailed "rectification proposal" in relation to its pledge for suspension of antitrust probe1.   Earlier on December 2, China Telecom and China Unicom announced that they have applied to the NDRC for suspension of its antitrust investigation into their internet access pricing practices, by promising to adjust the internet access prices and overhaul their broadband services (see our article entitled "China Telecom and China Unicom Seek to Settle Antitrust Probe").


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