Competition Law/ Anti-Monopoly Law

Authored by ZHAN Hao (zhanhao@anjielaw.com), SONG Ying (songying@anjielaw.com) & Stephanie WU (wuyuanyuan@anjielaw.com) at AnJie Law Firm.

On August 9 2018, the finalised China’s three-pronged plan for consolidating its antitrust agencies under the State Administration for Market Regulation (SAMR) is released. This initiative has been anticipated and speculated on since the central government’s release of its structural reform plan on 21 March 2018. According to the government’s plan, the three-pronged plan should have been released on 20 June 2018, but this was substantially delayed due to differences of opinion regarding the reform.

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Authored by Michael Gu (michaelgu@anjielaw.com) & Sun Sihui (sunsihui@anjielaw.com) at AnJie Law Firm.

In 2017 the National Development and Reform Commission (NDRC) undertook a number of legislative and antitrust enforcement activities. It launched more than 80 investigations into enterprises and administrative agencies and imposed more than Rmb500 million in fines – a steady increase compared with Rmb353.1 million in 2016.

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Authored by Zhan Hao (zhanhao@anjielaw.com) ,Stephanie Wu ( wuyuanyuan@anjielaw.com) and Song Ying (songying@anjielaw.com) at AnJie Law Firm.

The concept of “shifting alliances” is derived from EU competition law. According to paragraph 80 of the Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (2008/C 95/01) (the “Notice”), Where there is no stable majority in the decision-making procedure and the majority can on each occasion be any of the various combinations possible amongst the minority shareholders, it cannot be assumed that the minority shareholders (or a certain group thereof) will jointly control the undertaking . For example, in the case of an undertaking where three shareholders each own one-third of the share capital and each elect one-third of the members of the Board of Directors, the shareholders do not have joint control since decisions are required to be taken on the basis of a simple majority.

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Authored byZhan Hao (zhanhao@anjielaw.com) ,Stephanie Wu ( wuyuanyuan@anjielaw.com) and Song Ying (songying@anjielaw.com) at AnJie Law Firm.

In around ten years of China’s Anti-Monopoly Law (“AML”) enforcement history, there have seen a number of public enforcement cases associated with collective boycott among competitors (see Table 1).   Both the National Development and Reform Commission (NDRC) and the State Administration for Industry and Commerce (SAIC) and/or their competent subsidiaries investigated collective boycott among competitors and issued infringement decisions, and in one case, a commitment decision.

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Authored by Song Ying (songying@anjielaw.com) , Ma Chenghao (machenghao@anjielaw.com) ,Wei Fei ( weifei@anjielaw.com) and Sharif Hendry (sharifhendry@anjielaw.com) at AnJie Law Firm.

On January 11 2018, following the media report that certain mobile phone application software was infringing user privacy, the Ministry of Industry and Information Technology organised talks with three internet companies. The ministry pointed out that all three companies had collected and used users’ personal information, without fully disclosing to the users the purpose of its use in advance. The three companies must now conduct immediate rectifications to fully protect users’ rights to be informed and have a choice regarding the collection and use of their personal information.

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Authored by Zhan Hao (zhanhao@anjielaw.com) ,Stephanie Wu ( wuyuanyuan@anjielaw.com) and Song Ying (songying@anjielaw.com) at AnJie Law Firm.

 On March 13, 2018, Li Keqiang, Premier of the State Council of the People’s Republic of China submitted a proposal to the People’s Congress in session to review and consider the "Institutional Reform Program of the State Council" ("Program"), shedding light on plans to consolidate the antitrust enforcement powers under three agencies (the National Development and Reform Commission, the State Administration for Industry and Commerce, and the Ministry of Commerce) into one agency under the State Administration for Market Supervision ("SAMS"). Without suspension, the Program was passed by the People’s Congress and was announced officially on March 24, 2018.

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 Authored by Michael Gu (michaelgu@anjielaw.com) adn Sun Sihui(sunsihui@anjielaw.com) at AnJie Law Firm

Introduction

The year 2017 marked the 10th anniversary of the promulgation of China’s Anti-monopoly Law.

The country’s three antitrust enforcement agencies – the Ministry of Commerce (MOFCOM), theNational Development and Reform Commission (NDRC) and the State Administration for Industryand Commerce (SAIC) – used their extensive experience to continuously reinforce their professionalcompetence and enforcement efficiency.

Generally, antitrust enforcement has become the norm. As regards antitrust investigations in 2017,both the number and influence of the concluded cases published by the NDRC and SAIC appeared todecrease compared with 2016. However, the two agencies maintained a steady rate of antitrustenforcement.

Meanwhile, MOFCOM registered an upsurge in the number of conditionally cleared cases duringconcentration reviews. In addition, it strengthened its antitrust enforcement efforts in relation tonon-filers that should have notified MOFCOM of their concentrations.

By reviewing MOFCOM’s major antitrust enforcement events in 2017, this update summarizes the characteristics and developments of merger control review and provides an outlook of the trends in2018.

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Authored by Michael Gu (michaelgu@anjielaw.com) and Sihui Sun(sunsihui@anjielaw.com) at AnJie Law Firm

Four months after seeking comments, the National Development and Reform Commission ("NDRC") released “Price Conduct Guidelines on Operators of Drugs prone to Shortages and APIs ” (“Guidelines”) on 16 November 2017. This is the first price-related anti-monopoly guidelines for a specific industry since the Anti-Monopoly Law was implemented. The Guidelines provide risk assessment warning and compliance guidance for pricing monopolistic behaviours involving both drugs prone to shortages and active pharmaceutical ingredients (“APIs”). For the first time, the Guidelines clarify that enforcement agencies use the "Prohibition plus Exemption" principle to identify pricing monopolistic agreements and refine the consideration of certain abusive activities (e.g. unfair pricing and refusal to deal). In addition, the Guidelines remove controversial provisions such as exclusive dealing that is included in the draft Guidelines. We recommend that the relevant pharmaceutical enterprises should conduct the anti-monopoly risk audit by reference to the Guidelines and adopt more strict compliance measures to identify and prevent the relevant legal risks.

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Authored by Michael Gu (michaelgu@anjielaw.com) and Charles Xiang (xiangwenlei@anjielaw.com) at AnJie Law Firm

Introduction

On 4 November 2017, the Standing Committee of the National People’s Congress of China finally passed the long-awaited amendments to the Anti-Unfair Competition Law (AUCL), which takes effect on 1 January 2018.This is the first time the AUCL has been amended since it came into effect in 1993, and it will have significant impact on business practice in China.

The revision of the AUCL covers various legal issues, such as acts of confusion (Article 6), commercial bribery (Article 7), false or misleading business promotion (Article 8), infringement upon trade secrets (Article 9), illegal prize-giving sales (Article 10), spread of rumors or misleading information (Article 11), and Internet-related unfair competition by technical means (Article 12).

In particular, the revised AUCL included a new section addressing the Internet-related unfair competition. Some of the unfair competition behaviour(e.g. false or misleading online business promotion)are more like an online version of the traditional acts of unfair competition. Other Internet-related unfair competition behaviour is unique in the digital age driven by information technical means.

This article mainly focuses on the latter, i.e. unique unfair completion in the digital world,and endeavors to illustrate some precedents and interpretations of Article 12 of the AUCL and analyze how Article 12 will be applied and enforced inpractice.

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  Authored by Zhan Hao (zhanhao@anjielaw.com), Sharif Hendry(sharifhendry@anjielaw.com), Song Ying(songying@anjielaw.com)at AnJie Law Firm.

At the China Competition Policy Forum in Shanghai on August 31, 2017, a high standing official of the Price Supervision and Antimonopoly Bureau (PSAB) gave comment on the potential enactment of regulations on Standard Essential Patent (SEP) licensing practice by China’s National Development and Reform Commission (NDRC). This proposal follows in the wake of forthcoming draft Intellectual Property Rights (IPR) related antitrust guidelines that are expected to provide an analytical framework and recommended approaches to SEP related issues in China. The new proposed SEP guidelines will advise on a more fixed approach to the pricing mechanism for SEP licenses, as they apply to products used or sold in China , since these would not be covered under the forthcoming IPR guidelines.

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