On September 7th, 2011, an antitrust litigation against Taiyuan Railway Bureau was brought to Taiyuan Xinghualing Court on the ground that Taiyuan Railway Bureau violated Anti-monopoly Law and Unfair Competition Law of PRC by its administrative omission.

The trigger for this lawsuit lands on the claim that Taiyuan Railway Bureau (“A” hereinafter) has not responded to the application from Shanxi transport Group Co., Ltd, (“B” hereinafter) of additional tickets outlet, in spite that B has been applying for the authorization since 2007.

According to the case description presented by B in the Indictment, the key points decisive to the case analysis are summarized as follow by sequence number:

1) Party A is an administrative body, exercising administrative functions granted by laws and administrative regulations and in the connection to the said litigation, A is responsible and holds the power to authorize to set up ticket outlets within the its jurisdiction.

2) Party B owns 13 of 40 ticket outlets until May of 2006, hereafter while, a total of 74 new outlets authorized by Party A without exception are established by service-oriented enterprises owned by Party A themselves.

3) Party B has been applying for approval of setting up additional outlets for 4 years since 2007, but yet received reply from Party A.

4) Failing to get sufficient access to the essential facility of distribution (distribution right) has significantly affected Party B’s service quality and further consumers’ interests, as a consequence, a healthy competition process in the market for distribution service of rail tickets in Taiyuan is distorted and restricted in a large degree.

In view of the long history of antitrust enforcement in the States and its Atlantic counterpart, European Union, suing the public agency with administrative function on the ground of antitrust is not common in both U.S. and EU considering the reason that the main job of antitrust law is to regulate conducts of undertakings, instead of that of administrative bodies. Nevertheless, it has its own existence significance in China, which is classified to the concept of “administrative monopoly”.

Administrative monopoly is defined as the executive abuse of administrative power to eliminate or restrict market competition. Except for the general features of economic monopoly, it is caused in most cases by the pursuit of local or sector interests related to the administrative body, hence, could incur greater harm to competition. Given that the unique situation of China, Anti-monopoly Law of PRC (AML) specifically entrenched itself with the concept of “administrative monopoly” in Chapter 5. It enumerates the most frequent illegal act of this class, such as administrative forcing deal, regional blockage, and administrative force of anticompetitive conduct and so forth. Meanwhile, it also prohibits the abstract administrative act with anticompetitive elements. But it is worth noting that there are not specific provisions in relation to negative administrative monopoly existed, such as the circumstance discussed in this article.

For that reason, we have a lot of expectations to observe how the court will decide the case as well as correspondingly how the court will argue for its judgment, which shall play the role of guidance for the judicial practice afterwards with respect to administrative monopoly.