This document summarizes key aspects of competition law and enforcement in China under the Anti-Monopoly Law (AML). It discusses the AML's provisions on monopolistic conduct, the government agencies that enforce it, and its provisions for private civil actions. It also analyzes examples of private cases that have been brought under the AML and notes increasing filings in recent years. While some critique aspects of AML enforcement, the document argues the law is still developing and agencies and courts are gaining experience in clarifying its provisions through decisions and guidelines.

1. Making, Enforcing and
Accessing the Law
ECLS 2014 Conference
CUHK, Hong Kong
Nov. 15 – 16, 2014
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2. Resolving Competition Related
Disputes Under the AML
Theory & Practice
Prof. Beth Farmer
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3. Presentation Theme
- Effective enforcement of competition laws and
regulations
- Benefits society, consumers and market
participants, and
- Promotes a competition culture.
- Private civil actions can contribute to
- Healthy economic development (AML Art. 1)
- Consumer welfare, and
- Efficient enforcement
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4. The Anti-Monopoly Law
• The “Economic Constitution,”
• A “fundamental law” to prohibit monopolies,
promote competition and maintain market order
• Establishes a dual enforcement system (private and
government)
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5. 12th Five Year Plan
• Scientific development
• Improvement of the socialist market economy
mechanism
• Development of democracy and comprehensive
improvement of the legal system
– National People’s Congress
– 12th Five Year Plan for the National Economic and Social Development of the
People’s Republic of China (NPC, 16 March 2011)
– 7 China Comp. Bull. 2 (March 2011)
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6. Outline
• The Anti-Monopoly Law (2008)
• Supreme People’s Court
– Regulation on Relevant issues Concerning the Application
of Law in the Trial of Civil Monopoly Dispute Cases (Draft
for Comments, April 25, 2011)
• Agency investigations and actions
• Private civil actions
• Conclusion: experience and challenges
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7. Development of the AML
• Ancestors of the AML
– Anti-Unfair Competition Law (1993)
– SAIC Regulations (1992, 1998)
• AML (2008)
– Purpose: “presenting and prohibiting monopolistic
conduct, protecting fair market competition, improving
economic operating efficiency, safeguarding the
legitimate interests of consumers and societal and public
interests, and enhancing the healthy development of the
socialist market economy”
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8. The AML
• Categories of business conduct covered:
– Horizontal cartels
– Anticompetitive mergers (concentrations)
– Abuse of dominant positions (monopolization)
– Unreasonable restraints on distribution
– Abuse of administrative powers
• Mainstream competition law with Chinese
characteristics
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9. AML Substance
• Significant convergence in the European direction
• Like all competition law, the guidelines, regulations
and decisions tell more than the statutes
• Unique provisions:
– Purpose (Art. 1)
– Regulations (Art. 4)
– State owned enterprises (Art. 7)
– Administrative monopolies (Art. 8)
– Role of trade associations (Art. 11)
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10. Enforcing the AML
• 3 enforcement authorities:
– NDRC (National Development And Reform Commission)
– MOFCOM (Ministry of Commerce)
– SAIC (State Administration for Industry and Commerce)
• Private right of action
– Art. 50
– “If an undertaking engages in monopoly conduct and
causes losses to others, it shall assume civil liability in
accordance with the law.”
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11. The 3 Agencies:
MOFCOMM
NDRC
SAIC
Scientific Development of Regulations
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12. Regulations Facilitate Civil Cases
• Clarify some substantive AML provisions
• Describe burdens of proof
• Identify relevant factors for decision, including
– Anti-Pricing Monopoly Regulation (NDRC, 2011)
– Anti-Price Monopoly Administrative Enforcement
Procedure Regulations (NDRC 2011)
– Provisions Regarding the Abuse of Dominant Market
Position (SAIC 2011)
– Provisions Regarding the Prohibition of Monopoly
Agreements (SAIC 2011)
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13. Supreme People’s Court
Harmonizing Civil Litigation
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14. Competition Causes of Action
Under the AML
• Horizontal monopoly
agreement
• Vertical monopoly
agreement
• Monopoly pricing
• Predatory pricing
• Refusals to deal
• Designated transactions
• Bundling transactions
• Discriminatory
treatment
• Concentrations of
undertakings
Supreme People’s Court, Amendments to the
Provisions on Causes of Actions in Civil Cases
(effective 1/04/11)7 China Comp. Bull 2 (March
2011)
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15. Supreme People’s Court Rules
Address Civil Cases
• Provisions of the Supreme People’s Court on Several
Issues Concerning the Application of the Law in
Hearing Civil Cases Caused by Monopolistic Conduct
(May 3, 2012)
• Rules were needed:
– AML permits private cases
– Competition cases are complex
– The AML leaves room for interpretation
– The Civil Law and Civil Procedure Law principles must mesh
with the AML
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16. The Court’s Approach
• Follow the law
– AML, Civil Law, Civil Procedure Law, etc.
• Summarize mature justice experience
• Stick to the national conditions and reality
• Coordinate the relationship between administrative
agency enforcement and civil litigation
• Reflect a global vision and international perspective
– Responses to Reporters’ Requests, from a Superintendent of the IP Tribunal of the
Supreme People’s Court (2011)
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17. 2012 Rules
• Address important questions
– Jurisdiction
– Standing to sue
– Collective actions
– Burdens of proof
– Presumptions
– Evidence
– Limitation of actions
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18. Jurisdiction
• Intermediate Courts in
– capital cities of provinces and autonomous
regions,
– Municipalities at provincial level (Beijing,
Chongqing, Shanghai, Tianjin),
– Cities listed in the State Plan (currently, Shenzhen,
Dalian, Qingdao, Ningbo, Xiamen) (King & Wood, China
Law Insight,29/04/11)
– As designated by the Supreme People’s Court
• Specialist courts, also hear IP cases
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19. Comparative Perspective
• European Union
– The Court of First Instance
– Appealed to the ECJ
• United States
– Federal District Courts
– Not specialists in competition law or economic
issues
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20. Standing
• Any “natural persons, legal entities or other
organizations that suffer losses by
monopolistic conduct …” (Art. 1)
– Includes consumers and undertakings
– Direct purchasers, indirect purchasers not
excluded
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21. Comparative Perspective
• European Union
– Private right of action available since 2013
• United States
– Private civil damages actions permitted
– Natural persons, undertaking and state
Attorneys General as parens patriae on behalf of
consumers
– Indirect purchasers generally not permitted to
sue for damages
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22. Collective Actions
• “The aggrieved parties of monopolistic
conduct may choose to bring an individual
action or a joint action.” Art. 5 of draft for
comments, not included in final JI
• Individual cases may be consolidated by the
court
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23. Comparative Perspective
• European Union
– Private right of action and some form of
collective action adopted in 2013
• United States
– Class actions permitted as allowed under
the Federal Rules of Civil Procedure
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24. Burdens of Proof
• The aggrieved parties (plaintiffs) have the
burden of proving the violation,
– agreement, anticompetitive effects presumed
• Vertical agreements – JI is silent
• consensus view: burden on plaintiff
– Relevant market, dominant position, abuse
– Damages, causation
• Civil Procedure Law and Arts. 7, 8
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25. Burden Shifting
• Self admission – plaintiff may rely on
information publicly released by defendant
Art. 10
• Burden of proof shifted to defendants in some
circumstances
– Art. 7 – no anticompetitive or procompetitive
effects in agreement cases
– Art. 8 – justification in dominance cases
– Art. 9 – to rebut a presumption of dominance
based on market structure
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26. Types of actions
• The AML created a parallel enforcement system
• Plaintiffs may file direct stand-alone actions or
follow-on actions to agency enforcement actions
– Art. 2
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27. Discovery
• Parties may request the Court to appoint 1 or
2 experts
– Art. 12
• Parties may request the Court to direct
specialist agencies or experts to do market
research or economic analysis. If the parties
cannot agree on the experts, the Court shall
appoint them
– Art. 13
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28. Comparative Perspective
• United States civil litigation
– Plaintiff’s complaint must show that the claim is
plausible and not mere speculation,
– Bell Atlantic Corp. v. Twombly (2007)
– Ashcroft v. Iqbal (2009)
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29. Confidentiality
• On party application or sua sponte, the Court
may protect confidential information:
– Closed trial
– prohibition of copying , limited distribution of
materials
– Confidentiality agreements
– Art. 11
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30. Remedies
• Injunctions
– Prohibitory or
– Mandatory
• Civil damages
• Costs
– Arts. 17, 18, 19, AML, Civil Procedure Law, Tort
Liability Law, Contract Law
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31. Civil Litigation
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32. Private Cases
• Supreme People’s Court report
– 43 antimonopoly cases accepted and heard
– 29 cases concluded
– Between 01/08/08 and 31/12/10
• Claims based on
– Monopoly agreements
– Abuse of a dominant position
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33. Recent Statistics Show Increase
of AML Filings
• Between 2008 and 2011, 43 cases were
accepted and heard by local courts
– Responses to Reporters’ Requests re the Draft for Comments of the
Judicial Interpretations of the AML from a Superintendent of the IP
Tribunal of the Supreme People’s Court (2011)
• A further 18 cases were accepted in 2011 and
46 by the first half of 2012
– (Wang and Hughes 2012, quoting Mr. Jin Kesheng, Vice President,
Intellectual Property Tribunal under the Supreme People’s Court)
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34. Enforcement actions by 2012
• SAIC
– 10 provincial agencies opened 18 investigations
– 8 infringement decisions
– Majority subject: anticompetitive agreements
• NDRC
– NDRC and provincial agencies
– 49 investigations
– 20 infringement decisions
• MOFCOM
– Reviewed 586 mergers
– 18 conditional approvals, 1 disapproved
(Hou 2013)
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35. Private civil actions: art. 14
• Renren v. Baidu (2009)
– Claim: abuse of dominance, exclusive dealing
– Market: search engines
– Outcome: dismissed
• Li Fangping v. China Netcom (2009)
– Claim: abuse of a dominant position
– Market: telecommunications services
– Outcome: dismissed
– (Emch 2011)
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36. • Liu Dahua v. Dongfeng Nissan (2011)
– Claim: abuse of dominant position
– Market: spare parts for Nissan passenger vehicles
– 9 China Comp. Bull 2 (May 2011)
• Sursen v. Shanda (2009)
– Claim: abuse of dominant position
– Market: online literature
– Outcome: dismissed (Emch 2011)
• Huzhou Yiting Termite v. Huzhou City Termite (2010)
– Administrative complaint to Planning & Const. Bureau for
preferences, resolved
– Abuse of dominance claim dismissed for failure of proof
– (Lu & Tan 2013) 36

37. Art. 32, 33
• Shanxi Joint Transport Group Co, Ltd. V.
Taiyuan RY Bureau (2011)
– Claim: AML and Anti-Unfair Comp. Law,
– Allegation: refusal to approve plaintiff’s ticket
offices, anti-administrative monopoly complaint
(13 China Comp. Bull 3 (Sept. 2011))
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38. Art. 14
• Omege SA v. Taobao (2011)
– Claim: resale pricing
– Remedy sought: 2 million RMB, injunction
(11 China Comp. Bull. 3 (July 2011))
• Rainbow v. Johnson & Johnson (2013)
- claim: resale price maintenance in medical
equipment
- dismissed/ reversed/judgment for plaintiff
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39. Alternatives to Litigation
• Complaint to the alleged violator under the AML
• Complaint to the enforcement authority
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40. Private Complaints
• China Automobile Dealers Ass’n issues
notice to Beijing-Benz Automobile Co, Ltd.
(15/03/11)
– Claiming resale price maintenance, territorial
limits violate the AML
– 8 China Comp. Bull 4 (April 2011)
• Hudong.com requests SAIC to investigate
Baidu for abusing dominant position
(23/02/11)
– PRNewswire (30/5/11)
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41. Complaints
• Microsoft sues Tonecan Network for piracy.
Defendant and seeks an agency investigation
into Microsoft’s alleged abuse of dominance
excessive pricing
– Aug. 2010 China Comp. Bull 3 (2010)
• Beijing lawyers request the NDRC to
investigate price fixing in the banking sector
– Aug. 2010 China Comp. Bull 3 (2010)
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42. Conclusions
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43. Some commentators critique the
AML
• Agencies enforce too little, or too much, or against the
wrong defendants
• Private plaintiffs don’t use economic theory, don’t
understand the law
• Courts lack economic expertise
• Burden of proof: too high
• Regulated sectors & SOEs are untouchable
• AML remedies against administrative abuses are weak
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44. Some responses
• JI rationalizes burdens of proof and burden
shifting
– Mainstream standards
• Oct. 2014, NPC Standing Committee adopts
amendments to Administrative Litigation Law (or
Administrative Procedure Law) (effective May 1,
2015)
– Courts may accept actions against governments alleging
abuse of administrative powers restricting competition
– Includes decisions and also laws, regulations and rules
– AML Art. 51 appeared to limit remedies
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45. Impact of the AML?
• Like the French revolution, it’s too soon to tell
– (Probably misunderstood but irresistible)
• Compare early interpretation & enforcement of the
Sherman Act (1890), Clayton Act (1914), Treaty of
Rome (1957)
• International convergence: trending with some
exceptions
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46. Future of AML enforcement
• Courts and Agencies will continue to clarify the
AML
– Through published decisions, see Johnson & Johnson,
– Agency regulations and guidelines
– Explaining legal and economic theories
• See Deputy Chief Judge, Intellectual Property Tribunal Ding
Wenlian, Shanghai Higher People’s Court, Judicial
Evaluations of Minimum Resale Price Maintenance
Behavior, Aug. 2014 (2) CPI Antitrust Chronicle, discussing
minimum RPM and the Courts’ decision in Johnson &
Johnson
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47. Potential Follow-on cases?
• NDRC fines:
– Domestic and foreign firms, state-owned firms
– Property insurance and association
– Auto parts
– Vehicle manufacturers
– Domestic cement producers
– Building materials firms
– Chinese liquor producers
– Eyewear firms
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48. NDRC sectoral investigations
• Aerospace
• Vehicles
• Appliances
• Household chemicals
• Medicine
• Telecoms
• Oil
• Banking
– (South China Morning Post Nov. 2013)
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49. Resources
• Adrian Emch, Antitrust in China – the Brighter Spots, 2011 E.C.L.R. issue 3
(2011),
• Richean Li, Unraveling the Jurisdictional Riddle of China’s Antitrust
Regime, Feb-11(2) Comp. Policy Int’l (2011)
• Dennis Lu & Guofu Tan, Economics and Private Antitrust Litigation in
China, 9(1) CPI (2013)
• Liyang Hou, Evaluation of the Enforcement of China’s Anti-Monopoly Law
in 2008 - 2013 (2014)
• R. Ian McEwin & Corine Chew, China – the Baidu Decision, 6 Comp. Policy
Int’l J. 223 (2010)
• Lester Ross, Litigation Under China’s Anti-Monopoly Law, 11 Antitrust
Chronicle (2010)
• Margaret Wang & Richard Hughes, Recent Developments in Civil Litigation,
CPI (2012)
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