By Liu Cheng Swita Gan Yu Zhenzhen King&Wood Mallesons’ M&A Group

S001ince the Anti-monopoly Law of the People’s Republic of China[1] (“AML”) came into effect, there has been much debate about the circumstances in which minimum resale price maintenance (“RPM”) will constitute a vertical monopolistic agreement prohibited by Article 14 of the AML. In the debate, the most contentious issue is whether RPM should be regarded as per se illegal or if the “rule of reason” doctrine[2] should be adopted to assess on a case-by-case basis, whether the RPM is illegal.

In reviewing the AML, it can be seen that RPM is one kind of vertical monopolistic agreement, as categorized by Article 14 of the AML. Article 13 of the AML defines monopolistic agreements as “agreements, decisions or other concerted practices that eliminate or restrict competition”. This definition apparently covers vertical monopolistic agreements listed in Article 14. However, opinions differ when it comes to assessing the illegality of RPM. The different opinions can be simplified into two distinct lines of thought: (i) whether the act of RPM is a monopolistic agreement that eliminates or restricts competition definitely with no need to further decide its effect on competition (i.e. to adopt the per se illegal rule) or (ii) whether the act of RPM itself should not be deemed as illegal and a rule of reason approach should be adopted to comprehensively evaluate its effect on market competition, to determine whether or not it constitutes an illegal monopolistic agreement.
Continue Reading Still Unclear Path Forward – Resale Price Maintenance under the AML and Recommendations for Companies

By Susan Ning, Kate Peng, Huang Jing and Li Rui

In May 2013, the National Development and Reform Commission (“NDRC“) initiated the investigation against several infant formula companies for the alleged violation of Article 14 of the Antimonopoly Law (“AML“).

This is the second investigation by NDRC against resale price maintenance (“RPM“).  Early this year, NDRC fined China’s famous producers of premium liquor, Kweichow Moutai Co Ltd. (Maotai) and Wuliangye Group Co., Ltd. (Wuliangye) in the amount of RMB 247 million (about USD 39.8 million) for RPM behaviors (Maotai/Wuliangye Case)i .  The current investigation is still ongoing and no penalty against any companies has been made. 
Continue Reading The Second RPM Investigation by NDRC within this Year