NDRC

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By Susan Ning, Liu Jia and Hazel Yin

On 22 February, 2013, Guizhou Provincial Pricing Administration (“Guizhou Pricing Administration”) released the decision to impose a penalty of RMB 247 million (about USD 39.8 million) on Kweichow Moutai, the most famous Chinese state-owned producer of premium liquor, for administering resale price maintenance (“RPM”).  On the same day, Sichuan Provincial Development and Reform Commission (“Sichuan PDRC”) released its decision to penalize Wuliangye, another state-owned premium liquor producer, in an amount of RMB 202 million (about USD 32.6 million) for RPM as well.  Both agencies are local counterparts of the National Development and Reform Commission (“NDRC”), which is charged with the responsibility to enforce against price-related monopoly agreements, including RPM under the Anti-Monopoly Law (“AML”).

The news has made a huge stir, because this is the first time the Chinese AML enforcement agencies penalized RPM under the AML.  Besides, the two fines add up to RMB 449 million (about USD 72.4 million) in total, the largest penalty in China’s AML enforcement history so far.
Continue Reading Chinese Antitrust Authorities Imposed Large Fines on Kweichow Moutai and Wuliangye for Resale Price Maintenance

By Susan Ning, Hazel Yin and Yunlong Zhang

The year 2012 marks the fifth year of the enactment and implementation of China’s Anti-Monopoly Law (“AML”).  Over the past year, we have witnessed substantial progress of the merger control regime and antitrust administrative investigations, in particular in the area of cartel investigations.  With the promulgation of judicial interpretation of the Supreme People’s Court, antitrust civil litigations are also picking up.  As the Year of Dragon is coming to an end, we present this article with an overview of how the AML has been implemented in the past year, together with our observations.  

I. Merger Control

The Ministry of Commerce (“MOFCOM”), the authority in charge of merger control review, maintained a similar caseload in 2012 compared to 2011 and has been gradually establishing its international reputation as one of the most important antitrust authorities.  
Continue Reading The Anti-Monopoly Law of China: What We Have Seen in 2012?

By Susan Ning, Liu Jia and Kate Peng

China’s famous producers of premium liquor, Kweichow Moutai Co Ltd. (Maotai) and Wuliangye Group Co., Ltd. (Wuliangye) recently announced that they would correct their behaviors suspicious of AML violation.  The corrections were said to be made after the companies being “inspected” by the National Development and Reform Commission (“NDRC”) and the relevant provincial pricing administration. It has been the hottest topic on China’s Anti-monopoly Law (the “AML”) after the resounding LCD panel case closed by NDRC in early this month.

Maotai and Wuliangye are both famous Chinese premium liquor brands and the price of their products is relatively high in tradition.  In early January, the companies issued notices respectively announcing punishments on the distributors who sold their products at a price below the lowest resale price set by the companies.  Maotai also punished the distributors who made cross-regional sales. It is reported that the chairman of Maotai even stated in a recent countrywide distributor meeting that the retail price of Feitian Maotai can not be less than 1,519 yuan and the price of group-purchase can not be less than 1,400 yuan, and that Moutai would sternly punish those who breach the price “fortress”. 
Continue Reading NDRC Say No to Resale Price Maintenance – Company should be Cautious on Pricing Strategy

By Susan Ning and Kate Peng
 
On Jan 4th, the National Development and Reform Commission (“NDRC“) published that they had imposed fines in a total amount of RMB 353 million (approximately USD 56 million) on 6 LCD panel manufacturers, including Samsung and LG of Korea and ChiMei, AU Optronics, Chunghwa Picture Tubes and HannStar from Taiwan region.  This is China’s first antitrust enforcement action against international cartels.  It also imposes the highest penalties in China’s antitrust enforcement history.

According to the press releases of NDRC on its official website 1, during the period from 2001 to 2006, the 6 LCD manufacturers, which accounted for about 80% of the global LCD panel market, convened 53 meetings in Taiwan and Korea to exchange market information and negotiate the price of LCD panels.  NDRC received complaints on the cartel from major Chinese TV makers in December 2006.  The TV makers also reported non-price related misconducts of the panel manufacturers, including providing an 18-month warranty only and failing to provide high-end products in a timely manner.
Continue Reading NDRC Imposed Stiff Fines on Multinational LCD Manufacturers in China’s First Antitrust Enforcement Action against International Cartels

By Susan Ning, Kate Peng and Yunlong Zhang

 

On December 4th and 5th, 2012, the first China Competition Policy Forum (the “Forum“) was held in China University of  Political Science and Law.  The Forum was sponsored by the expert advisory group of the Anti-monopoly Commission of the State Council.   The Directors-General of the three enforcers under the Anti-Monopoly Law (the “AML“), i.e. the Ministry of Commerce (“MOFCOM“), the National Development and Reform Commission (“NDRC“) and the State Administration for Industry and Commerce (“SAIC“) attended the Forum and introduced the latest development of their AML enforcement activities.1

According to Director-General Shang Ming (尚明) of the Anti-Monopoly Bureau of MOFCOM, up to September 30, 2012, a total of 622 merger notification filings were received by MOFCOM, among which 562 were accepted and 510 were closed.  Amongst the cases having been closed, only 1 case was rejected (i.e., Coca Cola’s acquisition of Hui Yuan) and 15 cases were cleared with conditions.   Mr. Shang mentioned the publication of 458 unconditionally approved cases in November this year2,    and indicated that MOFCOM would regularly summarize and release the unconditionally cleared cases in the future.

 
Continue Reading Heads of the Three Antitrust Enforcement Agencies Attended the First China Competition Policy Forum

By Susan Ning, Kate Peng and Yunlong Zhang

The Price Bureau of Guangdong Province (“GDPB“) recently published an article about an investigation in a price-fixing cartel among sea sand dredging companies on its official website 1.  According to the article, the price of sea sand in Guangdong province rose from around RMB20 per cubic meter to over RMB40 per cubic meter since 2009, which seriously affected the progress of many major infrastructure projects of the State.  This unusual trend attracted the attention of the government of Guangdong province.  In order to find out the reason behind the price increase, GDPB initiated an investigation in February 2012 under the guidance of the Price Supervision and Anti-monopoly Bureau of the National Development and Reform Commission (“NDRC“).
Continue Reading Price Bureau Uncovered and Punished a Price-Fixing Cartel under the Leniency Program

By Liu Zhigang King & Wood Mallesons’ Finance Group

The history of Project Finance in China is not long, but it is rich. In the earliest days, Project Finance was used mainly in power plant deals, then later extended to water plant deals and petrochemical projects. At that time, Chinese sponsors were short of funds and experience, and Chinese banks were short of foreign exchange and caught up in bad loans. Furthermore, China’s infrastructure base was very weak, and the production capability of Chinese entities was also unreliable. Therefore, the lenders in the Project Finance market were mainly foreign banks, and the loans included commercial loans, export credit, and soft loans. The loans were used mainly to import the machinery and equipment produced by the foreign producers. As well as the collateral on all project assets, the lenders also requested and were able to obtain sponsors’ guaranties and even governmental guaranties for almost every project, although such arrangements are not typical under the project finance model.
Continue Reading Development of Project Finance Deals in China and with Chinese Banks

作者：刘志刚 金杜律师事务所融资组

项目融资在中国的历史不是很久，它是一个舶来品，但迄今已经积累了很多的实践。在最初始的阶段，项目融资模式主要用于火电厂的建设，之后才扩展至水厂、化工项目，等等。在那个时候，中国的发起人缺乏资金和经验，中国的银行机构缺少外汇，并且正在为大量的不良贷款所困扰。同时，国内的基础设施建设相当薄弱，而中国生产商的设备制造能力也是不可靠的。在种种因素的作用下，项目融资市场上的贷款人主要是外资银行，贷款品种包括商业贷款、出口信贷以及政府贷款，贷款中的大部分用来进口国外生产的机器设备。贷款人不但要求在项目的全部资产之上设置担保，而且往往要求并能够获得发起人的保证担保，甚至是项目所在地政府的担保，尽管这在项目融资的模式中并不是常见的安排。

经过20多年的发展，中国公司和银行进行的项目融资交易模式已经有了很大的变化。目前，具备中国因素的项目融资交易主要有两类：在中国境内进行的项目融资和在中国境外进行的项目融资。两种模式有各自不同的特点。Continue Reading 中国项目融资的发展

By Susan Ning, Sun Yiming and Kate Peng

On the International Symposium on Controversial Issues regarding Chinese AML Enforcement held in Hangzhou on Monday this week, both the National Development and Reform Commission (“NDRC”) and the State Administration for Industry and Commerce (“SAIC”) announced that they will increase the transparency of their enforcement actions under the AML. 

NDRC and SAIC are the regulators for anti-monopoly conducts in China. The powers are divided between the two authorities in the way that NDRC is responsible for price-related monopoly conducts, and SAIC is responsible for non-price related monopoly conducts.Continue Reading Chinese Antitrust Regulators Vow to Increase Transparency

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. 
Continue Reading China’s Anti-Monopoly Law: Retrospect and Prospect on the Fourth Anniversary