Since the very beginning of 2014, China’s public antitrust enforcement has attracted increasing attention domestically and abroad. Apart from business people, antitrust scholars and lawyers, even common people in the mainland have gotten to be familiar with the terminology of “antitrust”. The enforcement of China’s two antitrust investigative authorities, the National Development and Reform Commission (“NDRC”) and the State Administration for Industry and Commerce (“SAIC”), has foreboded two tendencies recently, which will be elaborated in the following.
I NDRC’s counterparts in provincial level involve more in investigations
As we have noticed, most of price-related monopoly conducts have been investigated and punished by NDRC in the past years, for instance, the China Unicom/China Telecom case, the LCD case, the Liquor case and the milk powder case are all investigated by the lead of NDRC. What’s worth noting is that the price authorities in the provincial level started to play more parts in the antitrust investigations this year comparing to the past few years.
On 9th August 2014, it is reported that Tianjin Development and Reform Commission (“Tianjin DRC”) has triggered antitrust investigation on the suspected monopoly agreement between real-estate agencies in Tianjin.
At the end of July this year, a lot of residents in Xingtan reported to the price authority and local media in Xiangtan of Hunan province regarding the suspected monopoly agreement between four express delivery companies (including Shentong, Zhongtong Yuantong and Yunda) of simultaneous increase of price. Currently, the local price authority has commenced antitrust investigation thereon.
On 17th July 2014, the price authority in Hainan province issued an administrative penalty decision on five aerated brick for their monopoly agreement. According to the decision, three investigated are imposed fines equalling 1% of their relevant turnover, RMB 530,000 Yuan in aggregate. Two companies were exempted from fines because they voluntarily submitted significant evidence to the authority.
On top of that, NDRC’s provincial counterparts have played greater role in the united investigations on nationwide cases organized by the NDRC. Take the recent investigation on the automobile industry as an example that a lot of local price authorities have involved in the dawn raid on the investigated companies across China.
This tendency may implicate two things: firstly, the public antitrust enforcement in China becomes proactive with the number of investigations increased exponentially. Not only nationwide or worldwide monopolistic conducts are focus, but also the antenna of public antitrust enforcement started to reach conducts within smaller regions; secondly, NDRC and SAIC are still very understaffed considering their heavy work load, therefore, in significant investigation cases they usually mobilize the manpower in the local DRC or AIC.
II Dawn raid becomes common practice of the NDRC and SAIC
On 28th July of 2014, the SAIC organized around a hundred staffs in 9 provinces including Beijing, Shanghai, Guangdong, Sichuan, Fujian, Hubei, Jiangsu, Chongqing and Hebei, to simultaneously dawn raided Microsoft’s 4 business places in mainland China. This dawn raid was one of the most organized and adequately staffed in the history of China’s public antitrust enforcement, which implicated that dawn raid has become a common investigation measure that the NDRC and SAIC often employ.
From a company’s point of view, how to deal properly with the dawn raid once the antitrust enforcement agency knocks on the door out of a sudden with something that is of great importance might be a tricky job.
Several tips in the following may be referred to in dealing with the dawn raid:
to make sure that the receptionist or gatekeeper of the company treat the suspected down raid team in a polite and respectful way, or otherwise it may be deemed to be non-cooperative attitude of the company.
to timely inform the dawn raid with directors of legal department, public resource department, financial department, business department, and etc.
the investigators are obliged to show their law enforcement certificates; therefore, to record the accurate information of the investigators, including name, position, agency name, and etc.
to arrange highest-level personnel of the company to meet with the investigators so as to show that the company attaches sincerity to the investigation.
to make full recording on the documents or materials that the investigators reviewed, copied and took away.
to make full recording on the questions of the investigators and the responses of the company
Even with the abovementioned tips, the best way to cope with potential antitrust risks is to prepare in advance instead of being pushed into the panic situation by the dawn raid. In this connection, it is highly suggested that the legal department of the company make a comprehensive self-assessment by itself or with the aid of external counsel so as to mitigate the risks in the utmost degree.