Authored by He Jing (hejing@anjielaw.com)

The Standing Committee of China’s National People’s Congress finally approved the China Trademark Law Amendment on August 30, 2013, after more than 7 years of deliberation and discussions.  The amendments will come into effect as of May 1, 2014.

To those who have closely followed the China trademark law amendment process, the final version is very similar to the version that the NPC reviewed during the second reading back in July.  The latest version does not have many surprises: the amendment increases the cap on statutory damages to RMB 3 million and re-adjusts the time limits within which the Trademark Office and Trademark Re-Examination Board (TRAB) must complete the trademark examination, opposition, cancellation, and appeals.  

Continue Reading How Will the Trademark Law Amendment Change China Trademark Practice?

Authored by Michael Gu (michaelgu@anjielaw.com)

On 8 August 2013, China’s Ministry of Commerce (“MOFCOM”) granted a clearance on the proposed acquisition of the Swedish dialysis equipment manufacturer Gambro AB (“Gambro”) by its US rival healthcare company Baxter (“Baxter”) in accordance with the Anti-monopoly law. The approval is subject to the conditions of the divestment of Baxter’s continuous renal replacement therapy business and the termination of an outsourcing production agreement with Niplo Corporation (“Niplo”) in China. After the acquisition Gambro will become a wholly owned subsidiary of Baxter.

MOFCOM received the notification on 31 December 2012 and officially decided to entertain the case on 12 March 2013 after receiving supplementary submissions made by the parties. MOFCOM proceeded into Phase II review on 10 April 2013 and subsequently an extension of deadline of the review was awarded on July 9. Although the MOFCOM clearance for Gambro/Baxter was granted less than one month after the approval by the European Commission (the “Commission”), which was also subject to similar conditions, the review process of MOFCOM was significantly prolonged as against the review of the Commission who received the filing of the transaction on 3 June 2013 and approved the same on 22 July 2013.

Continue Reading Chinese MOFCOM grants a clearance on the proposed acquisition of a Swedish equipment manufacturer by an American healthcare company (Gambro & Baxter)

Authored by Michael Gu (michaelgu@anjielaw.com), Moon Wang (wanglingling@anjielaw.com)

1.   Overview 

On July 29, 2013, the 5th anniversary since the Anti-Monopoly Law (“AML”) came into effect, the State Administration for Industry and Commerce (“SAIC”) announced that the antitrust case publishing platform was officially opened. This platform publishes, for the first time since the implementation of the AML, all 12 anti-monopoly administrative penalty decisions that the SAIC has investigated and concluded. The AML and related regulations does not necessarily require that the SAIC publicly release the results of its antitrust case investigations. Therefore, the fact that the SAIC has, on its own initiative, decided to use this online platform to publish antitrust cases for the public to view illustrates the SAIC’s laudable openness and progress on law enforcement transparency.

 

In the July 29th afternoon press conference, Ren Airong, the director of the SAIC Anti-Monopoly and Anti-Unfair Competition Law Enforcement, said that since the AML came into effect on August 1, 2008, the SAIC has received a number of complaints in regards to alleged monopolistic behavior in the past 5 years. After combing through, the cases were classified into different categories. For some cases where there are signs of monopoly or minor monopoly issues, the parties are supervised and required to timely rectify the matter. For some major cases, the SAIC organizes a task force or commissions the local Administration for Industry and Commerce (“AIC”) to conduct an investigation for verification. For cases that meet the terms of authorization, the provincial AICs are authorized to file and conduct an investigation.

 

Continue Reading Five Years On: SAIC’s Anti-Monopoly Law Enforcement Review

Authored by Michael Gu(michaelgu@anjielaw.com), Moon Wang (wanglingling@anjielaw.com)

Background                

Following a sweep on baby formula manufacturers and the packaging giant (i.e. Tetra Pak), the young but powerful Chinese antitrust watchdogs have probed gold jewelers in Shanghai and the Shanghai Gold & Jewelry Industry Association (the “Industry Association”). The National Development and Reform Commission (“NDRC”) and the Shanghai Development and Reform Commission (“SDRC”) allege that the Industry Association and its major members have been manipulating the retail prices of gold jewelry in the Shanghai area. It is reported that 13 major members of the Industry Association, including Shanghai-based gold companies Lao Feng Xiang, Lao Miao Jewelry, Shanghai Yuyuan, world’s biggest jewelry retailer-Hong Kong’s Chow Tai Fook, and Chow Sang Sang, were among those probed. It’s said several jewelers have submitted reports to the antitrust agency admitting their wrongdoings. In contrast, Chow Tai Fook has officially denied their involvement in the alleged manipulation of gold retail prices in Shanghai, claiming that they have their own gold pricing mechanism. They further explained that their mechanism determines the gold price in accordance with international bullion price and the prices of their gold products are uniform across China with no regional differences.

Continue Reading Jewelers among the Antitrust Storm

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com); Tong Kun (tongkun@anjielaw.com); Cheng Yanan (chengyanan@anjielaw.com)

On July 25, 2013, China Insurance Regulatory Commission (“CIRC”) revealed on its official website a notice related to the establishment of the Chinese Insurance Entities Access Examination Committee (the “Committee”).

According to this notice, CIRC has set up the Committee as its internal committee for the purpose of improving the insurance market’s entry and exit mechanisms and enhancing the quality and transparence of the examination process. The CIRC has also stipulated the working rules of the Committee.

The Committee is considered a mechanism of collective deliberation among the departments of CIRC, and is responsible for approving the establishment of Chinese insurance entities. Except for those applications not accepted, suspended or withdrawn by applicants, all of the valid applications for establishing a Chinese insurance entity shall go through the Committee’s deliberation process. The Committee will decide on the fate of the application through a vote, which will express an opinion on whether to approve the application or not.

Continue Reading China Insurance Regulatory Commission Sets up a New Internal Committee Responsible for Approving the Establishment of Chinese Insurance Entities

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com), Dr. Song Ying (songying@anjielaw.com)

Even though the National Development and Reform Commission (NDRC)’s investigation into milk powder producers has not yet concluded, it has been recently reported that a number of gold shops in Shanghai including Lao Fengxiang and Shanghai Yuyuan are also undergoing close inspection by the NDRC. Various sources have confirmed that this investigation relates to the practice of manipulating the retail price of gold through the Shanghai Gold Jewelry Industry Association. People who follow China’s growing antitrust enforcement are increasingly impressed with the NDRC’s accelerated pace of investigation in spite of its limited personnel resources.

Activities under the Roof of Industry Associations

In the short history of China’s antitrust enforcement, industry associations have long been implicated in antitrust violations. In 2011, the paper industry association of Fuyang in Zhejiang province was fined by the NDRC because it organized paper manufacturers to fix prices in violation of the Price Law of P.R.C.. Furthermore, a series of investigations conducted by the State Administration of Industry and Commerce (SAIC) in various regions of mainland China in 2012 focused on market partitioning agreements between insurance companies, which were organized by the insurance industry associations in the various regions. In this case, the insurance industry associations were fined for violating the Anti-Monopoly Law of P.R.C (AML).

Continue Reading NDRC Leaps Forward with Antitrust Enforcement

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com), Hong Min Taek 

Since China’s adoption of its first anti-monopoly laws in 2008, there has not been any major activity by enforcement agencies like NDRC and SAIC until recent months. One of the main reasons behind China’s reservation in implementing the new law was the fact that it could have lost foreign investment. Another reason behind China’s hesitance was its intention to vitalize state-owned corporations as national counterparts to compete against giant multinationals.

However, a new trend arose near the end of last year, as China finally determined to execute investigations on price cartels in the LCD industry and fined Samsung, LG, AUO, HannStar Display, Chunghwa Picture Tubes, and CMI for fixing the prices of LCD panels in Chinese market. The six LCD companies had to pay 353 million RMB in total, an amount that is considered to be one of the highest fines ever.  

Continue Reading Chinese Antitrust Enforcement Marches Onwards

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com), Dr. Annie Ying Xue (xueying@anjielaw.com)

The hefty fines on LCD panel manufacturers and top distilleries may have served as a harbinger for the next step antitrust enforcement actions of NDRC which target multinationals and vertical price fixing. The recently unveiled anti-monopoly probes into vertical price fixing of infant milk formula (IMF) producers are cases to the point. The ten companies under investigation are suspected of having committed vertical price-fixing, and among them eight are leading international brands.

Antitrust dawn raid driven by soaring price of IMF products

It is reported that NDRC launched anti-monopoly investigation as early as in May of this year because of the increasingly high prices of IMF products. Since the 2008 melamine scandal, the cumulative price increase of the investigated companies has reached over 30%; moreover, it is said that the retail prices of some imported baby formula products are more than twice of the prices of the same-brand and equally packaged products sold outside China.

Unnamed NDRC officials claimed that there are three ways in which IMF producers can manipulate and raise the price of baby formula products:

Continue Reading NDRC Flexes Antitrust Muscles to Infant Formula Producers

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com), Hu Guangjian (huguangjian@anjielaw.com)

After fundamental amendments in 2009, the Insurance Law of the People’s Republic of China (“Insurance Law”) better regulates the promising and fast-developing Chinese insurance industry as the main legal framework, and plays a positive role in maintaining the stability of the financial order (protecting the interests of applicants, the insured and beneficiaries) while promoting the healthy development of the Chinese insurance business. Nevertheless, the internal structure and external environment of the insurance business have undergone many changes since the 2009 Insurance Law amendments. Some fresh problems have emerged, such as the inception of the insurance liability, performance standards for the duty of explicit explanation of the clause exempting the insurers’ liability, the scope and extent for the duty of disclosure of the applicant, etc. Given the complexity of these problems and the discrepancies in understanding the Insurance Law, the judgment criteria for the aforementioned issues vary from court to court. If such problems cannot be solved promptly, judicial authority could be undermined, and the development of the insurance business could be adversely affected.

Under such circumstances, the Interpretation II of the Supreme People’s Court on Several Issues Concerning the Application of the Insurance Law of the People’s Republic of China (“Interpretation II”) was enacted by the Supreme People’s Court (“Supreme Court”). It aims to lay down some definite and feasible rules concerning the application of the general provisions in the Insurance Law.

From my point of view, particular attention should be given to the following significant portions of the judicial interpretation:

Continue Reading Supreme Court Issues the Second Judicial Interpretation of PRC Insurance Law

Authored by Michael Gu (michaelgu@anjielaw.com), Moon Wang (wanglingling@anjielaw.com) 

Background

It has been reported that the National Development and Reform Commission (NDRC), China’s price monopoly regulator, has been conducting an antitrust probe against several major baby formula brands since May 2013. Although most are leading foreign brands – including Mead Johnson, Dumex (owned by Danone), Wyeth (owned by Nestlé), Abbotts and Friesland Campina – two Chinese firms, Biostime and Beignmate, are also involved in the probe. The companies in question have been accused of violating Article 14 of the Anti-monopoly Law (AML) by limiting the lowest resale prices offered by their distributors and retailers, which potentially eliminated market competition. All of these investigated companies recently confirmed that they are cooperating with the NDRC’s investigation.

The investigation was first made public by Biostime in an announcement filed to the Hong Kong Stock Exchange on 30 June 2013, which stated that the "NDRC initiated the investigation on the grounds of an alleged violation of Article 14 of the Anti-monopoly Law by Biostime Guangzhou in maintaining sales prices of its distributors and retailers". Shortly after Biostime’s announcement, the NDRC confirmed that it had already launched antitrust investigations against leading formula manufacturers for suspected price fixing and other illegal pricing practices.

Continue Reading Baby Formula Brands Face Antitrust Probe