Antitrust and Competition in China

By David Fleming, Michelle Gon, Stephen Crosswell, Eva Crook-Santner and Donald Pan (Baker McKenzie Shanghai and Hong Kong) The Anti-Monopoly Law of the People’s Republic of China (Anti-Monopoly Law) was adopted by the Standing Committee of the National People’s Congress (NPC) on 30 August 2007 and came into effect on 1 August 2008. It applies throughout the PRC with the exception of the two Special Administrative Regions of Hong Kong and Macau.

1.           Overview of competition laws

The Anti-Monopoly Law is China’s first comprehensive competition law and codifies the existing body of competition related laws and regulations. The Anti-Monopoly Law prohibits monopolistic conduct, which can be divided into the following broad headings:

  • anti-competitive agreements between undertakings;
  • abuse of a dominant position; and
  • mergers that may have the effect of eliminating or restricting competition.

In addition to the Anti-Monopoly Law itself, implementing rules and guidelines assist in the application and interpretation of the Anti-Monopoly Law (refer to the next section). Lastly, existing legislation such as, the Anti-Unfair Competition Law, Price Law, Bidding Law, Contract Law and Foreign Trade Law remain in force.

2.           Enforcement and administration

Under the Anti-Monopoly Law, the State Council established two regulatory bodies to regulate monopolistic activity: (i) the Anti-Monopoly Committee (AMC), which is responsible for developing competition legislation and policy, publishing guidelines and coordinating the administrative enforcement work and (ii) the Anti-Monopoly Enforcement Agency (AEA), which is responsible for enforcing the Anti-Monopoly Law. The enforcement powers of the AEA are divided between three agencies namely:

  • the National Development & Reform Commission (NDRC) – responsible for price related offences;
  • the State Administration for Industry & Commerce (SAIC) – responsible for enforcing monopoly agreements, abuses of dominant market position and abuses of administrative powers to eliminate and restrict competition (other than price related offences); and
  • the Ministry of Commerce (MOFCOM) – responsible for merger control.

Other than merger control, administrative enforcement is conducted by the NDRC and SAIC both at national and provincial level, depending on the matter.

2.1         Private action

Under the Anti-Monopoly Law, individuals and companies are entitled to bring private actions against undertakings that have engaged in monopolistic conduct.[1] Each major court has an existing intellectual property division which has been tasked with hearing Anti-Monopoly Law claims. In recent years, there has been a significant increase in the number of private competition actions. The majority of cases pertain to allegations of abuse of a dominant market position, though there has also been a number of claims alleging horizontal and vertical anti-competitive agreements. There have been private actions in a wide range of sectors, ranging from seafood wholesaling to electricity supply. A large number of the early private actions commenced under the Anti-Monopoly Law were unsuccessful. However, several claims have recently been successful in winning damages (see further below). In May 2012, the PRC Supreme People’s Court published its Rules on Certain Issues relating to Application of Laws for Hearing Civil Disputes Caused by Monopolistic Conducts (SPC Rules). The SPC Rules address various issues related to the conduct of Antimonopoly cases, including the burden of proof for a plaintiff. Within this they appear to create a presumption of dominance for state owned companies and public utilities. Expert testimony may be presented in evidence in proceedings before the courts. The SPC Rules make it clear that a company or individual may bring a private action directly to the court or after a decision on the alleged monopolistic conduct by one of the Antimonopoly Law enforcement authorities (i.e. both stand-alone and follow-on actions are permitted). It is expected that the number of private enforcement actions will continue to increase in the future and to become an increasingly important avenue for parties seeking redress for competition complaints.

3.           Anti-competitive agreements and other conduct

Rules and regulations

The Anti-Monopoly Law prohibits “monopoly agreements”. These are defined as agreements, decisions or other concerted practices between business operators that have the purpose or effect of eliminating or restricting competition. Monopoly agreements are divided into two categories: horizontal monopoly agreements and vertical monopoly agreements. The following monopoly agreements are presumed to be illegal:

  • agreements to fix or change the price of goods;
  • agreements to restrict the quantity of goods produced or sold;
  • agreements to divide a sales market or a raw materials procurement market;
  • agreements to restrict the purchase of new technology or new equipment, or to restrict the development of new technology or new products;
  • concerted refusals to deal; and
  • resale price maintenance (RPM).

This list is non-exhaustive and may be added to by the AEA at any time.

Exceptions

The prohibitions on horizontal and vertical monopoly agreements do not apply to agreements entered into by business operators to safeguard legitimate interests in foreign trade and foreign economic cooperation. Other exceptions to the prohibitions may be specified by law or by the State Council. In addition, an exemption from the prohibition on agreements is available if undertakings can show that:

  • the agreements will not substantially restrict competition in the relevant market;
  • consumers will receive a fair share of the resulting benefits; and
  • the agreement had a qualifying purpose, such as, technological advancement and/or product development, improvement in product quality, increases in efficiency, and reduction in costs.

Under the Anti-Monopoly Law, these exceptions apply to all monopoly agreements and so strictly speaking there should be no per se prohibition of monopoly agreements. The parties must rely on self-assessment as there is no mechanism under the Anti-Monopoly Law to apply for an exemption.

Enforcement activities

In recent years, the AEA has significantly increased investigations of both Chinese and foreign companies for alleged violations of competition law. The NDRC has imposed significant fines on companies for breaches of competition law, in particular on participants found to have participated in hard-core cartel agreements (i.e. price-fixing agreements). For example:

  • In December 2012, the NDRC imposed a fine of RMB 353 million on six LCD manufacturers found to have held 53 meetings in a five-year period to exchange market information and discuss price fixing on LCD panels in the Chinese market.
  • In August 2014, the NDRC imposed a fine of RMB 832 million on seven automotive spare parts manufacturers found to have fixed the prices of spare parts covering 13 product categories, including starters, alternators, throttle bodies and wire harnesses. The companies were found to have held meetings during the period from January 2000 to February 2010 to discuss product prices and implemented agreements over quoted prices for order in the Chinese market.
  • In August 2014, the NDRC imposed a fine of RMB 403 million on three automotive bearing manufacturers found to have participated in conferences during the period from 2000 to June 2011.

Since 2013, the NDRC has also prioritised investigations concerning RPM and large fines have been imposed. For example:

  • In August 2013, the NDRC imposed a fine of RMB 670 million on six baby milk formula manufacturers found to have had agreements in place with their distributors to restrict the resale prices of their products.
  • In September 2014, the NDRC imposed a fine of RMB 249 million on an automotive joint venture found to have organised several meetings with ten of its dealers to sign and implement an agreement which restricted the resale price for automotive sales and repair services.
  • In September 2014, the NDRC imposed a fine of RMB 33.8 million on an international car maker found to have entered into dealership agreements with its dealers containing RPM clauses and imposed punitive measures such as fines for dealers which did not adhere to the RPM clauses.

To date, the NDRC has largely focused its investigations on consumer-oriented sectors such as the automotive, electronics, eyecare, milk powder, pharmaceutical, premium liquor and insurance sectors. The NDRC reportedly imposed record total fines of RMB 1.58 billion in 2014. The NDRC has delegated enforcement powers to local departments and to date the majority of enforcement activity has been at a local level. Previously, provincial level authorities have often prosecuted antitrust cases under pre Anti-Monopoly Law regulations and such decisions may not be reported. However, in recent years, antitrust enforcement actions have predominantly commenced under the Anti-Monopoly Law. Since 2014, the NDRC has also increased transparency by reporting and publishing selected decisions online.

Private actions

In recent years, there have been increasing number of claims alleging vertical and horizontal anti-competitive agreements. For example:

  • In August 2013, in the first reported case involving a vertical agreement, the Shanghai Higher People’s Court concluded that an international medical device manufacturer had infringed the Anti-Monopoly Law by imposing resale price maintenance conditions on its distributor. The company was ordered to pay damages of RMB 530,000 to the distributor. The distributor was able to provide sufficient and detailed evidence and analysis to establish to the court’s satisfaction that the resale price maintenance conditions had an anti-competitive effect and caused a loss in its profit.
  • In April 2014, the Beijing Higher People’s Court concluded that a seafood wholesale association had infringed the Anti-Monopoly Law by arranging seafood dealers to sell scallops at a fixed price and imposed fines for dealers which did not adhere to the price fixing agreement. The seafood wholesale association was ordered to cease the infringement.

It is currently unclear whether RPM is illegal ‘per se’ (automatically deemed illegal) in China. The NDRC appears to apply a ‘per se’ test and has not been inclined to accept ‘effects-based’ arguments that RPM does not have anti-competitive effects. In contrast, the Chinese courts appear to favour a ‘rule of reason’ analysis where positive and negative effects of RPM are considered. Given the NDRC’s stance, in terms of compliance with Chinese competition law, the cautious approach would be to regard RPM as ‘per se’ prohibited in China.

4.           Abuse of dominant position

Rules and regulations

The Anti-Monopoly Law defines a dominant market position as the ability of one or several business operators to control the price, or volume or other trading terms in the relevant market or to otherwise affect conditions of a transaction so as to hinder or influence the ability of other business operators to enter into the market. The dominance assessment is based on a number of factors including the relevant undertaking’s market shares, the ability of the undertaking to control the sale or input market, the financial and technical resources of the undertaking, competitiveness of the relevant market, the extent to which other undertakings rely on the relevant undertaking and barriers to market entry. Dominant market position is presumed where a undertaking’s market share is 10% or greater and:

  • the undertakings’ market share exceeds 50%;
  • the combined market share of the undertaking and one other undertaking exceeds 66.6%; or
  • the combined market share of the undertaking and two other undertakings exceeds 75%.

Thus, two or more undertakings may be found to hold a dominant market position even if there is no coordination of their conduct. Presumptions of dominance can be rebutted by evidence to the contrary. A dominant market position is not of itself unlawful, it is only the abuse of such a dominant market position that is prohibited. The Anti-Monopoly Law prohibits the following types of conduct as an abuse of dominant market position:

  • selling goods at prices that are unfairly high or purchasing goods at prices that are unfairly low;
  • without a legitimate reason, selling goods at below cost price;
  • without a legitimate reason, refusing to deal with a business operator;
  • without a legitimate reason, restricting a trading partner by requiring it to deal only with the dominant operator(s) or with other designated operators;
  • without a legitimate reason, tying goods or attaching other unreasonable conditions to a transaction; and
  • without a legitimate reason, treating equivalent trading partners in a discriminatory manner with respect to sale price or other trading conditions.

This is a non-exhaustive list and the AEA may add to it.

Enforcement activities

In recent years, the SAIC has actively investigated and fined business operators for abuses of dominance. Examples include:

  • investigating Tetra Pak for alleged abuse of its market dominant position by tying the sale of packaging materials to the purchase of packaging equipment and price discrimination in favour of large diary companies.
  • Microsoft has been under investigation by the SAIC in relation to the compatibility of its Windows operating system and Office software with some Chinese software.
  • In November 2014, the SAIC imposed a fine of RMB 1.7 million on a Chinese tobacco company based in Jiangsu. The company, being the only tobacco wholesaler licensed in Pizhou city, was found to have imposed discriminatory conditions on retailers by providing more frequent deliveries and a larger quantity of popular cigarettes to certain retailers only.

To date, the SAIC has investigated a wide range of sectors, including tobacco retail sales, software, product packaging, concrete, construction materials and energy. The SAIC reportedly imposed a record total of fines of RMB 14.5 million in 2014, almost triple the level of fines imposed in 2013.

Private actions

To date, the majority of private actions have concerned allegations of abuse of a dominant market position. Such private actions have taken place in a variety of sectors, but have been particularly prominent in the technology sector. Qihoo 360 v Tencent In a case involving Qihoo 360 Technology Co. Ltd. (Qihoo 360), a leading Chinese antivirus software company, and Tencent Holdings Limited (Tencent), a major Chinese Internet and social media company, Qihoo 360 alleged that Tencent had abused its dominant market position in the instant-messaging and service market by bundling its antivirus software with its instant-messaging software QQ messenger. On 16 October 2014, the Supreme People’s Court upheld the Guangdong High People’s Court decision in 2013 by rejecting Qihoo 360’s allegations. This was the first judgement of the Supreme People’s Court under the AML since it took effect in 2008 and is a landmark case in establishing the approach to market definition and assessment of what constitutes abuse of dominance under the AML. Market share was considered by the court to be only a rough and potentially misleading indicator when assessing the existence of a dominant market position. High market share does not, the court said, directly translate into the existence of a dominant market position. The court found that Tencent had limited power to control prices, quality, quantity or restrictions on trading terms. Although the restrictions it imposed might have inconvenienced consumers, the court said that this was a dynamic and highly competitive market and held that there was insufficient evidence to prove that Tencent held a dominant market position or that it had abused its position in the instant-messaging and service market. Huawei v InterDigital In another case, Huawei Technologies Co. Ltd. (Huawei), a leading Chinese telecommunications equipment manufacturer and service provider, alleged that InterDigital, Inc. (InterDigital), a leading US developer of fundamental mobile-phone technology, had abused its dominant market position in China and the United States in the market for the licensing of essential patents (i) through differentiated pricing, tying and refusal to deal; and (ii) refusal to license patents to Huawei on fair, reasonable and non-discriminatory (FRAND) terms. On 28 October 2013, the Guangdong Higher People’s Court upheld the Shenzhen Intermediate People’s Court’s decision by ruling that InterDigital had violated the AML by licensing standard essential patents to Huawei on unfairly high royalty rates. InterDigital was ordered to cease the alleged excessive pricing, alleged improper bundling of patents and pay Huawei approximately RMB 20 million in damages. This was the first case under the AML involving patent transfer and the first time a court has determined a FRAND royalty rate in China. This case sets a potentially important precedent for other complaints relating to standard essential patents.

5.           Mergers and acquisitions

Rules and regulations

Under the Anti-Monopoly Law, notification is mandatory where the relevant thresholds are met in respect of ‘concentrations’ i.e.:

  • a merger between business operators;
  • a business operator’s acquisition, by way of equity or asset acquisition, of control over another business operator; or
  • a business operator’s acquisition, by way of contract or other means, of control over, or the ability to exert a decisive influence on, another business operator.

Joint ventures are also subject to notification if the thresholds are met. The Anti-Monopoly Law does not distinguish between foreign and domestic transactions. Foreign-to-foreign transactions are therefore subject to notification if there is a “concentration” and the thresholds are met. Merger filings are reviewed by the MOFCOM Anti-Monopoly Bureau. Where the relevant merger filing thresholds are met (refer to the next paragraph). The Anti-Monopoly Law expressly prohibits the consummation of a concentration prior to merger control clearance being obtained, and provides for penalties for non-compliance, including the ability for MOFCOM to reverse a transaction or have it declared void. Notification is required if either:

  • first threshold:
    • the combined worldwide turnover in the most recent completed accounting year of all parties to the transaction exceeds RMB 10 billion (approximately USD1.6 billion); and
    • each of at least two of the parties to the transaction had turnover in the PRC in the most recent completed accounting year exceeding RMB 400 million (approximately USD65.3 million); or
  • second threshold:
    • the combined turnover in the PRC in the most recent completed accounting year of all parties to the transaction exceeds RMB 2 billion (approximately USD326.5 million); and
    • each of at least two parties to the transaction had turnover in the PRC in the most recent completed accounting year exceeding RMB 400 million (approximately USD65.3 million).

For financial institutions (which include banking, securities, futures, fund management and insurance companies), the thresholds are higher (ten times the thresholds set out above for non-financial institutions). Also, special rules govern what items are to be included when calculating the turnover of financial institutions – for example, the turnover for insurance companies includes insurance premiums but not investment gains, unlike the treatment for banks. In addition, MOFCOM’s Anti-Monopoly Bureau has the discretion to investigate a merger not exceeding the turnover thresholds, if it considers that a concentration has or may have an effect of restricting or eliminating competition, as demonstrated by supporting facts and evidence obtained in accordance with prescribed procedures. To date no statutory procedures have been issued. MOFCOM has a two-track review procedure, namely (i) standard procedure; and (ii) simplified procedure. Under the standard procedure, upon accepting receipt of the notification, MOFCOM has 30 days in which to conduct an initial review (Phase I). However, it is important to note that Phase I will only commence when the filing is accepted. It is possible for MOFCOM to reject a filing as inadequate and request the addition of further information before it can be accepted. This ‘pre-acceptance’ period can take 4 to 12 weeks. Merger control clearance is given when MOFCOM either decides not to conduct a further review, or it does not render a decision by the end of this period. If however, MOFCOM decides to conduct a further review, it will have an additional 90 days in which to conduct that review (Phase II), and, under the following circumstances, it can extend this additional period for another 60 days where (i) the parties agree to do so; (ii) the documents or information submitted is inaccurate and requires further verification; or (iii) a major change in the relevant circumstances occurs post-notification. For qualified transactions, parties may apply for merger review under the simplified procedure. Subject to certain exceptions, the following transactions are qualified to be filed under the simplified procedure:

  • horizontal mergers when the parties’ combined market share in the overlap market is less than 15%;
  • vertical mergers when the parties’ market share in the relevant upstream and downstream market is less than 25%;
  • conglomerate mergers when the parties’ market share in their respective markets is less than 25%;
  • offshore joint ventures which do not engage in any economic activities in China;
  • the acquisition of equity or assets of an offshore target which does not engage in any economic activities in China; and
  • the reduction of the number of controlling shareholders in a joint venture which results in the joint venture being controlled by one or more of the remaining shareholders.

The parties need to self-assess whether a transaction satisfies the criteria for submission under the simplified procedure. It is possible to request a pre-notification consultation with MOFCOM to seek clarification. If the parties decide to apply for the simplified procedure, the notifying party must file a simplified notification form, a public notice and relevant documents with MOFCOM. The public notice should include information about the transaction including the purpose and an overview of the transaction, a brief introduction of the parties and the reason for applying for the simplified procedure. Upon receipt of the application, MOFCOM will conduct a preliminary review and if the transaction satisfies the criteria for simple cases, MOFCOM will initiate the review of the transaction. Upon acceptance, MOFCOM will issue the public notice on its website for 10 days. During this period, any third party which thinks the transaction should not be considered as a simple case can submit comments and evidence to MOFCOM. Should MOFCOM conclude that the transaction does not meet the criteria of a simple case, MOFCOM can require the parties to re-notify the transaction under the standard procedure. Traditionally, the merger review process in China has taken a significantly longer period compared to other jurisdictions. This is due to various factors, including MOFCOM’s structural understaffing, several requests by MOFCOM for information and documents from the notifying parties, and the implementation of multiple third-party consultations involving industry associations, Chinese government authorities, competitors, customers and suppliers. MOFCOM officials have stated that the simplified procedure could see 60% of notified transactions cleared within 30 days. MOFCOM has indicated that it aims to clear transactions which qualify for the simplified procedure within Phase I. To date, all notified simplified transactions have been approved within Phase I. There is a separate system for national security review. MOFCOM has issued Guidelines for Implementation of Relevant Issues regarding National Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors. The Guidelines describe the process of the national security review and other relevant issues, such as, documents to be submitted and how review decisions are made. Concentrations involving related parties are exempt from the notification requirement where:

  • one of the participating business operators holds more than 50% of the voting shares in or assets of each of the other business operators; or
  • more than 50% of the voting shares in or assets of each of the participating business operators is owned by the same non-participating business operator.

Enforcement activities

Since 2008, MOFCOM has reviewed more than 800 transactions, comprising China-related transactions as well as global and regional foreign-to-foreign transactions. To date, MOFCOM has prohibited two transactions ((i) Coca-Cola’s proposed acquisition of Chinese juice-maker, HuiYuan; and (ii) proposed establishment of the P3 Network Shipping Alliance by Maersk, MSC and CMA) and conditionally approved 24 transactions. MOFCOM has issued guidance to govern how remedies should be negotiated, and the types of structural (including divestment of assets or business) and/or behavioural undertakings (including granting access to facilities, licensing critical intellectual property and terminating exclusive agreements) that can be considered to resolve competition concerns. Remedies implemented have included, for example divestments of production capacity (Mitsubishi Rayon-Lucite; Pfizer-Wyeth; Penelope-Savio; Glencore-Xstrata); re-branding (Panasonic-Sanyo); discontinuing an existing brand (Novartis-Alcon); terminating an exclusive distribution agreement (Novartis-Alcon); non-discrimination in supply (General Motors-Delphi; Uralkali-Silvinit; GE China-Shenhua; Henkel-Tiande Chemical); crown jewel remedy (Mitsubishi Rayon-Lucite); undertakings affecting further acquisition or plant expansion (Anheuser Busch-Inbev; Mitsubishi Rayon-Lucite); maintaining current business practices (Google-Motorola); ensuring the independence of the target business (Seagate-Samsung; WD-HGST); and conditions imposed on seller to license standard essential patents under fair, reasonable and non-discriminatory terms (Microsoft-Nokia). In December 2014, MOFCOM imposed a fine of RMB 300,000 on the state-controlled Tsinghua Unigroup for failure to report a notifiable transaction. MOFCOM found that the transaction had met the merger filing thresholds but was completed without obtaining clearance from MOFCOM. This was the first time MOFCOM has publicly named and fined a company for failure to report a notifiable transaction. This decision illustrates that MOFCOM is increasingly targeting unreported transactions. Recent remedy decisions also show that MOFCOM is increasingly willing to enforce, as well as modify existing restrictive conditions. In December 2014, MOFCOM published a fining decision on a US multinational company for violation of a merger clearance condition. This is the first fining decision published by MOFCOM for such violation. In another recent decision, for the first time, MOFCOM agreed to a request to remove a restrictive condition imposed on a transaction. MOFCOM’s decision was made on the basis that the affected party had sold the company acquired in the transaction in question.

6.           Other prohibitions

6.1         Government-related entities

Rules and regulations

There was considerable debate in the early stages of enactment of the AML as to whether it would apply to State-Owned Enterprises (SOEs). Article 7 provides “[w]ith respect to sectors that are the life-blood of the national economy or have a bearing on national security and in which the state-owned economy occupies a controlling position and sectors that are legally monopolized, the state protects the lawful business activities of the Business Operators active therein and adjusts and controls according to law the business activities of the said Business Operators and the prices of their goods and services, in order to safeguard the interests of consumers and promote technical progress”. This suggests a degree of protection for SOEs from the AML. However, it goes on to say that business operators in those industries “shall not harm the consumer interests by taking advantage of their controlling or exclusive dealing position. This seems to suggest that SOEs are subject to the AML and other PRC laws. The ambiguity appears to have been resolved, to some degree at least, by recent cases which have been taken up against SOEs. The AML also regulates abuses by administrative monopolies, an expression used in China to refer to abuses of administrative power by government agencies to eliminate or restrict competition. Although the SAIC is the agency with primary responsibility for addressing abuse of administrative power, both the NDRC and the SAIC have published rules addressing the administrative monopoly provisions in the AML. The presumption of dominance for state owned companies and public utilities contained in the SPC Rules (see above) demonstrates that the courts are also willing to take cases in appropriate circumstances against SOEs and other businesses “conferred by law to possess a dominant position”.

Enforcement activities

Since 2011, the NDRC has been investigating alleged price discrimination and abuse of dominance by China Telecom and China Unicom in the broadband access and inter-network settlement sector. This is the first antitrust investigation involving large SOEs and indicates that the NDRC is willing to actively prosecute monopolistic conduct by them. The NDRC’s decision in this case is still pending. More recently in November 2014, the NDRC confirmed that it has launched an antitrust investigation into the state-owned China Railway Corporation for suspected anti-competitive behaviour.

Private actions

There has been a gradual increase of private competition enforcement actions against SOEs and governmental agencies in recent years. For example, in January 2014, the Shanghai First Intermediate Court accepted a complaint filed by a consumer against the stated-owned China Telecom alleging abuse of a dominant market position in the prices it charged for broadband Internet and fixed-line telephone services. This case is currently on-going. In May 2014, the Guangzhou Intermediate People’s Court accepted a complaint filed by a Chinese software company alleging the Guangdong Provincial Education Department was abusing its administrative power to restrict competition by handpicking another company as the exclusive software provider for a government-organised event. These recent cases show that the Chinese courts are not unwilling to accept cases against SOEs and governmental agencies. However to date, there has been limited success on the part of the complainants.

7.           Penalties and liabilities

The following penalties are available under the Anti-Monopoly Law:

  • for concluding and implementing monopoly agreements, or abuses of dominant position – fines of up to 10% of the total turnover in the preceding year;
  • confiscation of illegal income;
  • fines of up to RMB500,000 for violations of merger control provisions; and
  • the invalidation of agreements concluded in violation of the law, and cease and desist orders in respect of abuses of dominant position.

The Anti-Monopoly Law also allows private actions to be brought by parties who have suffered loss as a result of the contravention. There are no criminal penalties for monopolistic conduct under the Anti-Monopoly Law.

8.           Extraterritorial application

The Anti-Monopoly Law aims to safeguard China against anti-competitive activity. As such, it applies to conduct both within China, and conduct outside China which has the effect of eliminating or restricting competition in the Chinese market.

9.           Reform

Further implementing regulations, guidelines and measures are under consideration by the Chinese legislative bodies and enforcement agencies. Amongst other topics these may provide additional guidance on treatment of intellectual property abuses and how the Anti-Monopoly Law will interface with intellectual property law (in particular refusal to license). The SAIC has been drafting rules on antitrust enforcement with regards to intellectual property rights since 2009. The latest 8th version of the draft rules was issued in June 2014 for public consultation. There has been numerous delays, though the rules are anticipated to be finalised in 2015. [1] On its face, it appears that the AML allows private enforcement against not just anticompetitive agreements and abuse of dominance, but also against mergers and other concentrations falling within the scope of the merger control provisions in the AML. The position on this remains uncertain. There has been some very limited commentary supporting this view. However, it is notable that no reference is made to the prospect of private action against mergers and other concentrations in the Provisions of the Supreme People’s Court on the Application of Laws in the Trial of Civil Disputes arising from Monopolistic Practices (SPC Provisions), which regulate private actions under the AML. [wpdm_package id=’4258′]