From November to December 2023[1], in legislation and policy-making area, 大红鹰dhy7788 General Office of 大红鹰dhy7788 Anti-Monopoly and Anti-Unfair Competition Commission of 大红鹰dhy7788 State Council ("Anti-Monopoly Commission") and 大红鹰dhy7788 State Administration for Market Regulation ("SAMR") released 大红鹰dhy7788 notice on establishing a system of "Three Documents and One Letter" for Anti-Monopoly. 大红鹰dhy7788 third meeting of 大红鹰dhy7788 Central Commission for Comprehensively Deepening Reform reviewed and passed 大红鹰dhy7788 Opinions on Improving 大红鹰dhy7788 Implementation of Supervision System and Mechanism of Natural Monopoly Networks. 大红鹰dhy7788 SAMR studied and drafted 大红鹰dhy7788 Draft Regulations on 大红鹰dhy7788 Review of Fair Competition, and passed it on to 大红鹰dhy7788 Ministry of Justice for legal review. 大红鹰dhy7788 Provisions of 大红鹰dhy7788 State Council on 大红鹰dhy7788 Standards for 大红鹰dhy7788 Declaration of Undertakings Concentration (Revision Draft) were adopted at 大红鹰dhy7788 executive meeting of 大红鹰dhy7788 State Council. In law enforcement area, 大红鹰dhy7788 SAMR approved 177 merger cases without conditions in November and December in 2023, implicating industrial sectors of energy, logistics, automobile, pharmaceuticals industry, private equity fund, materials, etc., and approved conditionally 大红鹰dhy7788 case of Share Acquisition of VMware Corporation by Broadcom Corporation. 大红鹰dhy7788 SAMR published 大红鹰dhy7788 decisions for two administrative penalties on monopoly agreements and one administrative penalties on abuse of dominance. In judicial area, 大红鹰dhy7788 Case on "Brick and Tile Association" monopoly dispute was selected as one of 大红鹰dhy7788 39th guiding cases issued by 大红鹰dhy7788 Supreme People’s Court ("SPC").
On November 7, 2023, 大红鹰dhy7788 third meeting of 大红鹰dhy7788 Central Commission for Comprehensively Deepening Reform was convened. 大红鹰dhy7788 Opinions on Improving 大红鹰dhy7788 Implementation of Supervision System and Mechanism of Natural Monopoly Networks was reviewed and passed on 大红鹰dhy7788 meeting. It was noted at 大红鹰dhy7788 meeting that 大红鹰dhy7788 link of network of sectors including power, oil and natural gas, and railways have 大红鹰dhy7788 character of natural monopoly. It is imperative to place emphasis on 大红鹰dhy7788 natural monopoly industries, including to implement major national strategies, plans and tasks, urging fulfillment of their duties on safeguarding national security and perform their social responsibilities, and supervising on 大红鹰dhy7788 scope and actions of their operations. Such supervision should propel enterprises of national monopoly industries to focus on their responsibilities and main business, and increase 大红鹰dhy7788 input of state capital into 大红鹰dhy7788 network infrastructures, so as to improve 大红鹰dhy7788 security and reliability of 大红鹰dhy7788 backbone networks. Supervision should also be imposed over 大红鹰dhy7788 monopolistic and competitive aspects of 大红鹰dhy7788 operations of natural monopoly industries, so as to prevent them from extending into 大红鹰dhy7788 upstream and downstream competitive links by taking advantage of their monopolistic status.[2]
On December 6, 2023, 大红鹰dhy7788 Anti-Monopoly Commission and 大红鹰dhy7788 SAMR released 大红鹰dhy7788 notice on establishing a system for "Three Documents and One Letter" for anti-monopoly, establishing formally 大红鹰dhy7788 system for "Three Documents and One Letter" (i.e., 大红鹰dhy7788 Reminder Letter, 大红鹰dhy7788 Notice of Regulatory Talk, 大红鹰dhy7788 Notice on Legislative Investigation, and Decision of Administrative Penalty (Business Entity)/Administrative Recommendation (Administrative Organ)) for anti-monopoly, clarifying 大红鹰dhy7788 circumstances under which 大红鹰dhy7788 "Three Documents and One Letter" are to be issued, enhancing 大红鹰dhy7788 effectiveness and standardization of anti-monopoly supervision, and this system will run through all areas and aspects of anti-monopoly supervision.[3]
On December 26, 2023, 大红鹰dhy7788 State Council Information Office held a policy briefing, in which 大红鹰dhy7788 head of 大红鹰dhy7788 Department of Competition Policy Coordination of 大红鹰dhy7788 SAMR, said that 大红鹰dhy7788 SAMR had studied and drafted 大红鹰dhy7788 Draft Regulations on 大红鹰dhy7788 Review of Fair Competition, and had passed it on to 大红鹰dhy7788 Ministry of Justice for legal review. Additionally in 大红鹰dhy7788 briefing, it was mentioned that in 大红鹰dhy7788 future, 大红鹰dhy7788 SAMR will increase law enforcement efforts, strengthen regulatory authority, enhance institutional effectiveness, continuously strengthen and improve law enforcement against abuse of administrative power to exclude and restrict competition, and actively create a fair competition system environment for business entities.[4]
On December 29, 2023, 大红鹰dhy7788 Provisions of 大红鹰dhy7788 State Council on 大红鹰dhy7788 Standards for 大红鹰dhy7788 Declaration of Undertakings Concentration (Revision Draft) were adopted at 大红鹰dhy7788 executive meeting of 大红鹰dhy7788 State Council[5], 大红鹰dhy7788 full text of which has yet to be formally published. According to 大红鹰dhy7788 revision draft previously released by 大红鹰dhy7788 SAMR for public comments in June 2022, 大红鹰dhy7788 enforcement agency intends to increase 大红鹰dhy7788 turnover threshold from 大红鹰dhy7788 current rules and add new standards for killer acquisitions.
Enforcement Area
Non-conditional Clearance: From November to December 2023, 177 cases were cleared without condition by 大红鹰dhy7788 SAMR (a year-on-year increase of 4.73% compared with that from November to December 2022, and a month-on-month increase of 55.26% compared with that from September to October 2023), implicating industrial sectors of energy, logistics, automobile, pharmaceuticals industry, private equity fund, materials, etc..
大红鹰dhy7788 above undertakings are valid for a period of 10 years from 大红鹰dhy7788 effective date and will be automatically terminated upon expiry of 大红鹰dhy7788 period.
On November 9, 2023, 大红鹰dhy7788 SAMR announced 大红鹰dhy7788 summary of unconditional approval of merger cases in 大红鹰dhy7788 first 10 months of 2023 including their characteristics: (1) With respect to 大红鹰dhy7788 type of cases, simplified cases account for 90% of 大红鹰dhy7788 total. (2) With respect to subject composition, 大红鹰dhy7788 number of concentration cases between domestic enterprises is 大红鹰dhy7788 highest, 344, accounting for 57%; number of concentration cases between foreign enterprises is 193; and number of concentration cases between domestic and foreign enterprises is 68. There are 282 concentration cases involving state-owned enterprises, accounting for 47%, and there are 267 concentration cases involving foreign enterprises and 235 concentration cases involving private enterprises. (3) From 大红鹰dhy7788 perspective of industry distribution, 大红鹰dhy7788 cases involving real economy manufacturing industry take up 大红鹰dhy7788 most, accounting for 39% of 大红鹰dhy7788 total. Other industries that account for a relatively higher percentage included wholesale and retail, transportation, water, electricity, gas and heat production and supply, real estate, and information technology services. (4) In terms of transaction type, there are 312 cases of horizontal concentration involving peer competitors, 248 cases of vertical concentration involving upstream and downstream enterprises, and 124 cases of mixed concentration without horizontal or vertical relationship. In terms of transaction mode, 大红鹰dhy7788 largest number of cases are equity acquisitions, at 350, followed by joint ventures, at 279. (5) From 大红鹰dhy7788 perspective of 大红鹰dhy7788 registration place of enterprises, concentration among domestic enterprises mainly involve enterprises registered in Shanghai, Beijing, Guangdong, Zhejiang and other provinces, while concentration among overseas enterprises mainly involve enterprises from 大红鹰dhy7788 United States, France, Japan and other countries.[7]
Monopoly Agreements
On November 9, 2023, 大红鹰dhy7788 SAMR published an administrative penalty on 21 local concrete firms in Hangzhou city for entering into and implementing a monopoly agreement.[8] In this case, it was found that 大红鹰dhy7788 21 local concrete firms established 大红鹰dhy7788 "Xiaoshan Concrete Association" in 2016, by using 大红鹰dhy7788 special requirements of supply time and transportation radius for commercial concrete, collaborated with all commercial concrete production firms of 大红鹰dhy7788 district to avoid competition, coordinate 大红鹰dhy7788 price increases, and allocate 大红鹰dhy7788 market. 大红鹰dhy7788 responsible persons of 大红鹰dhy7788 concrete firms in Xiaoshan District, Hangzhou City convened meetings on multiple occasions with other commercial concrete enterprises in Xiaoshan District, and reached a verbal agreement to establish an industry body, jointly increase concrete prices, and allow 大红鹰dhy7788 trade association to allocate markets. In December 2016, 大红鹰dhy7788 21 concrete firms agreed on 大红鹰dhy7788 quota of each party, set up two sales companies with capital contribution according to such quota, allocated production volumes, and operated within 大红鹰dhy7788 designated areas with Jincheng Road as 大红鹰dhy7788 boundary. Additionally, 大红鹰dhy7788 parties formulated rules for 大红鹰dhy7788 sale of commercial concrete, which were reviewed and approved by 大红鹰dhy7788 responsible persons and shareholder meetings of 大红鹰dhy7788 two sales companies. 大红鹰dhy7788 main content of such rules includes "targeted sales with quota", "returning 大红鹰dhy7788 overcharge and paying 大红鹰dhy7788 shortage", reporting any business with a volume of more than 2000 cubic meters to 大红鹰dhy7788 sales companies, prohibiting unilateral production expansion, and fines for violations of such rules. Based on these facts, Zhejiang Administration for Market Regulation determined that 大红鹰dhy7788 conducts of 大红鹰dhy7788 21 local concrete firms constitute a monopoly agreement to fix 大红鹰dhy7788 or change commodity prices, restrict production or sales volume, or divide up 大红鹰dhy7788 sales market, ordered 大红鹰dhy7788 concerned parties to cease their unlawful act, and imposed on 21 local concrete firms each a fine of 2% or 5% of their turnover in 2017, approximately RMB 174 million in total.
On December 8, 2023, 大红鹰dhy7788 Fujian Administration for Market Regulation ("Fujian AMR") published an administrative penalty on Fuzhou Real Estate Appraisement Association (大红鹰dhy7788 "Association") for entering into and implementing a monopoly agreement.[9] In this case, 大红鹰dhy7788 Association led relevant appraisal companies to sign a Commitment Letter in November 2019, stipulating 大红鹰dhy7788 progressive fee standards for real estate appraisal services in Fuzhou, fixing 大红鹰dhy7788 lowest service charges and discount rates for different types of services, as well as fixing 大红鹰dhy7788 service charges for mortgage appraisal, bid appraisal, decoration appraisal in 大红鹰dhy7788 Fuzhou area. In August 2020, 大红鹰dhy7788 Association formulated a Guidelines for Appraisal Quotation for Tendering and Bidding for Real Estate Appraisement Projects to standardize 大红鹰dhy7788 bidding behavior of appraisement entities, and restricted their price competition by means of notifications, service suspensions, and economic penalties. Based on these facts, 大红鹰dhy7788 Fujian AMR determined that 大红鹰dhy7788 conduct of 大红鹰dhy7788 Association constituted organizing competitors in 大红鹰dhy7788 industry to engage in a monopoly agreement made through an industry association, and ordered to rectify its unlawful act, and imposed on 大红鹰dhy7788 Association a fine of RMB 300 thousand.
Abuse of Market Dominance
Facts: In March 2010, a trade association in Yibin ("Trade Association") was established with members including a brick factory under Zhang’s name ("Brick Factory"). In July 2009, 大红鹰dhy7788 "Yibin Brick Industry Work Conference" was convened, during which 大红鹰dhy7788 members negotiated and agreed on 大红鹰dhy7788 establishment of 大红鹰dhy7788 Brick Association Council and 大红鹰dhy7788 Coordination Office, required that 大红鹰dhy7788 brick factories in Cuiping District and within its 30-kilometers radius, in Baixi and within its 15-kilometers radius to cooperate with Yibin Ren Trading Co., Ltd. ("Ren Company") to jointly establish a local brick association and prevent outside suppliers from entering such area. Discontinued manufacturers under such arrangement (including 大红鹰dhy7788 Brick Factory) would receive monthly leasing and contracting fees from 大红鹰dhy7788 Ren Company, while continued manufacturers would pay market management and technical guiding fees to Ren Company. In July 2009, 大红鹰dhy7788 predecessor of 大红鹰dhy7788 Trade Association entered into a "Suspension and Rectification Contract" with 大红鹰dhy7788 Brick Factory and other brick manufacturers. On March 6, 2013, 大红鹰dhy7788 Sichuan Industry and Commerce Bureau determined that 大红鹰dhy7788 conducts of Trade Association constitute a monopoly agreement of organizing 大红鹰dhy7788 member units in competition to jointly agreed to suspend 大红鹰dhy7788 production of some factories, thereby controlling 大红鹰dhy7788 production quantity of bricks and 大红鹰dhy7788 direct withdrawal of 大红鹰dhy7788 discontinued member units from competition in 大红鹰dhy7788 brick and tile market in Yibin, which substantively limited market competition. Zhang, as 大红鹰dhy7788 Plaintiff, later sued 大红鹰dhy7788 Trade Association and related members to 大红鹰dhy7788 court, and alleged that he had suspended 大红鹰dhy7788 production according to 大红鹰dhy7788 "Suspension and Rectification Contract" and merely received an insignificant amount of suspension support fees before September 2011; 大红鹰dhy7788 aforementioned actions essentially had 大红鹰dhy7788 effect of excluding 大红鹰dhy7788 Plaintiff’s participation in competition, constitute a monopolistic behavior, and infringed on 大红鹰dhy7788 Plaintiff’s legitimate rights and interests. Zhang claimed that 大红鹰dhy7788 Trade Association and concerned sponsor member units, as well as Yibin Heng Investment Group Co., Ltd., should be ordered to jointly compensate for his economic losses and reasonable expenses.
Key findings and rulings: 大红鹰dhy7788 SPC ruled that Zhang’s right to claim for compensation as 大红鹰dhy7788 implementer of 大红鹰dhy7788 horizontal monopoly agreement in question for his so-called economic losses from other implementers of 大红鹰dhy7788 monopoly agreement should be considered in accordance with 大红鹰dhy7788 legislative purpose of Article 50 of 大红鹰dhy7788 Anti-Monopoly Law[12] ("AML"), 大红鹰dhy7788 characteristics of 大红鹰dhy7788 concerned monopolistic behavior, and 大红鹰dhy7788 legal effect of compensation for damages.
(1) 大红鹰dhy7788 legislative purpose of 大红鹰dhy7788 foregoing provision is to provide a civil judicial channel for stopping and combating monopolistic behavior, and to provide civil remedies for persons who have suffered damage due to such monopolistic behavior. If 大红鹰dhy7788 Plaintiff is not a victim but instead 大红鹰dhy7788 implementer of 大红鹰dhy7788 monopolistic behavior under 大红鹰dhy7788 AML, its claim for damages is essentially a demand for 大红鹰dhy7788 allocation of monopolistic interest, which is not 大红鹰dhy7788 in line with 大红鹰dhy7788 object of remedy as intended under 大红鹰dhy7788 AML.
(2) 大红鹰dhy7788 person claiming for compensation of damages must act in a legitimate and lawful manner. People who actually participate in and carry out illegal activities, even if suffering losses due to such illegal activities, should not receive any relief due to 大红鹰dhy7788 illegitimacy of their own acts.
(3) Granting damages to 大红鹰dhy7788 implementers of monopolistic behavior may have a negative legal effect of encouraging relevant monopolistic behavior. 大红鹰dhy7788 implementer of a horizontal monopoly agreement is not entitled to claim for compensation for his so-called economic damages by other parties to such agreement.
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If you are interested in further information regarding 大红鹰dhy7788 antitrust matters, please feel free to contact Qian Xiaoqiang Lvshi (qianxiaoqiang@haiwen-law.com) or Lin Xixiang Lvshi (linxixiang@haiwen-law.com) or other attorneys of Haiwen & Partners.
[2] For more details, please see: https://www.gov.cn/yaowen/liebiao/202311/content_6914056.htm#
[3] For more details, please see：https://www.samr.gov.cn/zw/zfxxgk/fdzdgknr/jzzcxds/art/2023/art_515052484fd94fb1a2d8a648615b4c1c.html
[4] For more details, please see：http://www.scio.gov.cn/live/2023/33108/index.html#:~:text=%E5%9B%BD%E5%8A%A1%E9%99%A2%E6%96%B0%E9%97%BB%E5%8A%9E%E5%85%AC%E5%AE%A4,%E5%86%B5%EF%BC%8C%E5%B9%B6%E7%AD%94%E8%AE%B0%E8%80%85%E9%97%AE%E3%80%82
[5] For more details, please see: https://www.gov.cn/yaowen/liebiao/202312/content_6923362.htm
[6] For more details, please see：https://www.samr.gov.cn/fldes/tzgg/ftj/art/2023/art_cae805a5e37d489ea929af8a4a369f6b.htm
[7] For more details, please see：see:https://www.samr.gov.cn/xw/zj/art/2023/art_56f6adbcb7524b7ab4ff514e4a8f2642.html
[8] For more details, please see：https://www.samr.gov.cn/fldes/tzgg/xzcf/art/2023/art_b54309d7eab949468fe02acb2954697b.html
[9] For more details, please see: https://www.samr.gov.cn/fldes/tzgg/xzcf/art/2023/art_b54309d7eab949468fe02acb2954697b.html
[10] For more details, please see: https://www.samr.gov.cn/fldes/tzgg/xzcf/art/2023/art_b2d7e70f9c7c452e898fdeb85ef8ba34.html
[11] For more details, please see: https://www.court.gov.cn/shenpan/xiangqing/421172.html
[12] Ariticle 60 of 大红鹰dhy7788 Amended Anti-Monopoly Law (2022).
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