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

It has recently been reported that the plaintiff in a private antitrust litigation, heard by the Xian Intermediate People’s Court, was successful in bringing a lawsuit involving abuse of dominant market position.  Given that there have been very few cases won by plaintiffs in China’s private antitrust enforcement since the Anti-Monopoly Law (“AML”) entered into force in 2008, a plaintiff victory is quite rare and encouraging. According to the statistics, there has not been a single plaintiff victory in civil antitrust litigations brought in China since June 2012. In this regard, the concerning case is full of significance and reflects to some extent the effect of the Judicial Interpretation on private antitrust litigation (“the Judicial Interpretation”) published in May of 2012.

Case Description

On June 4th, 2012, Wu Xiaoqin, a consumer located in Xianyang of the Shanxi province, sued Shanxi Broadcast & TV Network Intermediary (Group) Co., Ltd. (“the Company” or “the defendant”) in the Xian Intermediate People’s Court (“the Court”) claiming that the Company, as the only local cable service provider, has tied basic cable TV program services with value-added paying TV programs by taking advantage of its dominant market position. Through the court proceedings, involving further investigation and debate, the Court upheld the plaintiff’s suit, finding that the Company’s practice violated Article 17(5) of the AML regarding tying sales and imposition of unreasonable trading conditions.

Continue Reading Plaintiff Victory in China Private Antitrust Litigation

Authored by Michael Gu (michaelgu@anjielaw.com)

The week before the Chinese Qingming Festival, MOFCOM published two sets of draft rules regarding merger control for public consultation, namely, Provisions on Imposing Restrictive Conditions on Concentration of Undertakings (“Provisions on Imposing Restrictive Conditions”) and Interim Provisions on Standards Applied for Simple Cases of Concentration of Undertakings (“Provisions on Standards for Simple Cases”). These positive steps demonstrate MOFCOM’s continued effort to accelerate the rule-making process and improve the efficiency and transparency of the merger control review.

Provisions on Imposing Restrictive Conditions

The draft Provisions on Restrictive Conditions was published on 28 March and will be open to the public for comments until 26 April 2013. This new draft is intended to replace the currently effective 2010 version of Interim Provisions of the Ministry of Commerce on Implementing Assets or Business Divestment Related to Concentration of Undertakings.

Continue Reading MOFCOM Speeds Up the Rule-Making Process

Authored by Michael Gu (michaelgu@anjielaw.com), Zhan Hao (zhanhao@anjielaw.com)

The Ministry of Commerce (“MOFCOM”) continues to play an active role in reviewing merger cases, supervising the concentration applications, and drafting implementing rules and guidance for enforcing the Anti-Monopoly Law (“AML”). The year 2012 witnessed 6 conditionally approved concentration decisions. This has been the most conditional approvals rendered by MOFCOM in a single year since the implementation of the AML in 2008. As of this writing, there have been a total of 16 cases conditionally approved by MOFCOM.

This article will review the key developments of 2012 and provide an analysis of the future trends of merger control enforcement and relevant AML supporting legislation in 2013.

Overview of MOFCOM’s Merger Control Review

According to a press conference held by MOFCOM on 27 December 2012[1], during the period between 1 January 2012 and 26 December 2012, MOFCOM received a total of 201 concentration filings, officially accepted 186 of them, and concluded 154 cases. 142 of these cases were approved without any conditions, accounting for 92% of all concluded cases. The number of received, accepted, and concluded cases has had no significant changes as compared with the 2011 figures. In addition to six conditionally approved cases, another six cases were voluntarily withdrawn after being accepted by MOFCOM in 2012.

Continue Reading Key Developments of 2012 in Merger Control Enforcement

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

The simmering war between two Chinese giant internet companies Qihoo 360 Technology Co., Ltd. (Qihoo 360) and Tencent Inc. (Tencent) culminated in Qihoo 360 losing the first antitrust litigation involving instant messaging services (IM services) in the trial of first instance. On March 28, the Guangdong High People’s Court (Guangdong High Court) declared that Tencent did not commit the abuse of dominance as defined in the PRC Anti-Monopoly Law (AML). The Guangdong High Court further held Qihoo 360 responsible for the 790, 000 RMB litigation costs. Qihoo 360 expressed that it would retain the rights to appeal.

In November 2011, Qihoo 360 filed a lawsuit with the Guangdong High Court under the AML against Tencent’s two subsidiaries: Tencent Technology (Shenzhen) Co., Ltd. and Shenzhen Tencent Computer System Co., Ltd.. Qihoo 360 accused Tencent of abusive practices and claimed damages of 150 million RMB.

Given the current stage of the development in PRC private antitrust litigation, Qihoo 360 v. Tencent is a landmark case. The social influence of the plaintiff and the defendants, the claimed amount of damages, and long-term hostility between the two parties are unprecedented.

This article seeks to highlight the key issues presented by the recently issued decision. 

Continue Reading Tencent Defeats Qihoo 360 in First Antitrust Litigation Involving Instant Messaging Services

Authored by Gao Ping (gaoping@anjielaw.com)

The preservation of property is a very important step in civil actions. The timely and effective preservation of property plays a vital role in the smooth execution of the case in the future. In practice, the property of the defendant or the person subject to enforcement is often insufficient to meet the requirements of the preservation and enforcement, but at the same time, it is found that the defendant enjoys a large claims owed to it by an outside party. How should these claims be preserved and enforced?

As provided in Article 105 of the "Opinions on Certain Issues Concerning the Application of the Civil Procedure Law of the People’s Republic of China by the Supreme People’s Court" the People’s Court may rule that in accordance with the creditor’s application, where the debtor’s property cannot fulfill the injunction but has debts owed to it by a third party, the third party may not settle with the debtor. When the third party is required to pay, the third party must hold the property or price in escrow. It can be seen that the credit due to the defendant may be preserved by ruling that the third party may not settle the debt to the defendant. This kind of "credit preservation" is different from the preservation of the defendant’s property, and its function is limited. It can only prevent the defendant from privately transferring the property after receiving payment from the third party. But it cannot prevent the third party from paying off other creditors, nor prevent the third party from disposing their own property. Therefore, the ruling cannot be deemed as the preservation of the third party’s property.

Continue Reading How to Exercise the Preservation and Enforcement of the Debts Owed to the Defendant

Interview with Zheng Xilin (zhengxilin@anjielaw.com), Chen Bin (chenbin@anjielaw.com)

Q: The general procedure for private equity (PE) investment in energy and mineral resource projects involves what?

A: All different PE organisations have their own particular investment methods and means, however, in my legal service experience, the great majority of PE investments in energy and mineral resource projects take the form of equity investments, and the general procedure is illustrated at the bottom of this page.

If, in the course of the investment process, the inspection or investigation results at the preliminary screening, basic inspection of the project or due diligence stages are unsatisfactory, investment in the project may be foregone.

Q: What are the legal risks involved in PE investments in energy and mineral resource projects?

A: The legal risks attending a PE investment in an energy or mineral resource project come from different quarters, and depending on the specific circumstances of different projects, the legal risks may also be different. However, generally speaking, there a six main kinds of legal risk:

Continue Reading PE Investment in Energy and Mineral Resources Projects

Interview with Cheng Bing (chengbing@anjielaw.com), He Jing (hejing@anjielaw.com)

Q: What is bad-faith registration of a trademark?

A: The term “bad faith registration of a trademark” means the act of using improper means to preemptively register the trademark of another that is already being used and has a significant influence in the relevant sector, for the purpose of profiting from it.

Article 31 of the Trademark Law specifies that, “An application for the registration of a trademark may not prejudice the existing prior right of any third party nor may improper means be used to preemptively register a third party’s trademark which is already in use and which has a certain degree of influence”

Q: What judicial remedies are available once the bad-faith registration of a trademark has occurred?

A: Pursuant to the current Trademark Law and related regulations, the main means of judicial remedies available to the rights holder are as follows:

Continue Reading Judicial Remedies from Bad-faith Registrations of Trademarks

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com)

With more than four years’ experience, the Ministry of Commerce of PRC (“MOFCOM”) is becoming an increasingly important and high-profile merger review jurisdiction in the globe. As of 30th December, 2012, MOFCOM has handled 533 cases in total, which is quite striking. With regard to both the legislation and law enforcement, MOFCOM have gained impressed progress.

Supporting Legislation

There are eight concentration-related supporting regulations or guidelines have been enacted between 2008 and 2011 in all. In the passing 2012, MOFCOM mainly focused on proceeding supporting legislation in two aspects.

One is rules on imposing conditions on concentrations, before which MOFCOM issued the Interim Provisions on Asset or Business Divestiture in Concentration between Undertakings in 2010. With the target to summarize experience in implementing this Interim Provisions and address discovered problems, MOFCOM decided to enact a new legislation to make a full range of regulation on the proposal, assessment, implementation, supervision, modification of conditions on the concentration as well as the liability issue.

Continue Reading Briefing on MOFCOM’s Antitrust Enforcement

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com), Huang Zaizai (huangzaizai@anjielaw.com), Xu Wei (xuwei@anjielaw.com), Han Rubing

The environment problem has been an important issue for Chinese government.  Surveys and conversations on China’s vibrant social-networking services show increasing public concerns over environmental pollution. Recently, the episodes related to PM 2.5 and Beijing Cough are the obvious instances. Under this backdrop, we discuss the development of environmental pollution liability insurance in China.

In 2007, the State Environmental Protection Administration (the name has been changed to Ministry of Environmental Protection of the People’s Republic of China(“MEP” since 2008),) and the China Insurance Regulatory Commission (“CIRC”) jointly issued a guide on environmental pollution liability insurance, Guidelines on Environmental Pollution Liability Insurance (MEP Issued [2007] No.189, “2007 No.189 Guidelines”). In 2007 No. 189 Guidelines, MEP and CIRC jointly encouraged local government to promote the environmental pollution liability insurance system in their own administrative regions.  It said an environmental pollution liability insurance system suitable for the national conditions of China should be preliminarily established during the period of the 11th Five-Year Plan, which is from 2006 to 2010.  Pilot and demonstration projects thereof should be carried out in major industries and regions to preliminarily establish the directory of covered enterprises or facilities of key industries based on the degree of environmental risks and the standard of compensation. 

Continue Reading Another Kind of Compulsory Insurance?

Authored by Michael Gu (michaelgu@anjielaw.com)

Background

Just one and half months following the breakthrough LCD cartel case, the Chinese price-monopoly watchdog, two provincial branches of National Development and Reform Commission of the People’s Republic of China (“NDRC”), rendered another harsh punishment against two luxury Chinese Liquor producers.

On 22 February 2013, the NDRC’s provincial branches (i.e. Guizhou Provincial Price Bureau and Sichuan Development and Reform Commission) officially announced that two most famous Chinese liquor producers were respectively fined RMB 247 million and RMB 202 million for their monopoly behaviors. The total penalties combined amount to RMB 449 million, overtaking the total penalty of RMB 353 million imposed on six internal LCD manufacturers early last months, reach a new record high since the China’s Anti-monopoly Law came into force in 2008.  

Continue Reading Rumors Come True:NDRC Imposes Record High Penalties on Luxury Chinese Liquors