Authored by Michael Gu (michaelgu@anjielaw.com)

Just at the beginning of 2013, the National Development and Reform Commission of the People’s Republic of China (“NDRC”), the Chinese Price-Monopoly Regulator, has announced a breakthrough penalty against six leading international liquid crystal display (“LCD”) panel manufacturers, including two leading South Korean-based multinationals (i.e. Samsung and LG) and four Taiwanese companies (i.e. Chi Mei, AU Optronics, Chunghwa Picture Tubes, and HannStar). The total value of the penalty amounts to RMB 353 millions. This is the largest price-related monopoly case that the Chinese competition authority has ever investigated and penalized in terms of the total fines.

The breakdown of penalties is illustrated in the diagram below. (Unit: RMB Million)

Continue Reading Most Severe Price Penalty Decision Rendered by NDRC

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

At the right beginning of 2013, the National Development and Reform Commission of China (“NDRC”), one of three main anti-monopoly regulatory authorities in PRC, imposed fines in a total amount of RMB 353 million (approximately USD 56 million) on 6 LCD panel manufacturers, which is the harshest penalty that NDRC has ever imposed and also the first time NDRC pointed the gun at multinational companies in its anti-trust enforcement history.

The parties fined include two Korean giants Samsung and LG of as well as Chimei, AU Optronics, Chunghwa Picture Tubes and HannStar from Taiwan. According to NDRC’ notice on its official website, the 6 LCD manufacturers have convened 53 meetings during the timeframe of 2001 to 2006 either in Taiwan or in South Korea to exchange market-sensitive information and further collude the product price.

As people may have noticed, the NDRC’s action against the 6 LCD panel manufacturers actually is an investigation following up probe of EU and U.S. antitrust authority several years ago. Nevertheless, it is noteworthy that the sanction of NDRC is relatively low compared to the gesture of their counterparts in EU and U.S., although it is already the highest fine ticket ever from Chinese antitrust enforcement authorities.

Continue Reading The Price Law or the Anti-Monopoly Law: Observation of NDRC’s Antitrust Enforcement in China

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

"We will disclose the approved cases without any condition by quarterly summary hereafter. In the current stage, disclosed information is only limited to case name and concentration parties. Whether additional information would be disclosed later is still under discussion.” This statement is from briefing of Mr. Shang Ming, the Director General of MOFCOM on “anti-monopoly work progress in 2012” on the press conference held on 27th Dec, 2012.

Indeed, MOFCOM kept its promise. In the very beginning of 2013, MOFCOM just disclosed all unconditional approved concentration cases in the fourth quarter of 2012, which signifies to some extent that MOFCOM’s work on information disclose in antitrust enforcement has being continuously shaped.

According to the first disclosure of MOFCOM Anti-monopoly Bureau in 2013, 59 unconditional approvals on concentration cases have been issued by MOFCOM in the fourth quarter of 2012. Besides, the following information could be observed:

      i.        Apart from the case name and concentration parties, MOFCOM additionally disclosed the closing time for each case, which is a development from the disclosure on 16th Nov, 2012;

     ii.        Among the 59 unconditional approvals in the fourth quarter of 2012, MOFCOM closed 10 concentration cases in October, 15 concentration cases in November and 34 concentration cases in December;

    iii.        24 out of 59 concentration cases took the concentration method of establishing Joint Venture, which accounted for more than 40% of all unconditional approvals in the last quarter of 2012.

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

China’s National Development and Reform Commission (“NDRC”) has imposed a heavy penalty of total RMB 353 million yuan against six companies for the monopolistic behavior of price-fixing on liquid crystal display (“LCD”) panel in mainland China as announced on January 4, 2013. The six companies include Samsung, LG, as well as four firms from Taiwan——Chi Mei Optoelectronics, AU Optronics, Chunghwa Picture Tubes and HannStar Display. What worth noting is that it is the first time for NDRC to issue a penalty against foreign firms for monopolistic behavior which is also the heaviest penalty ever on price-related violations by Chinese antitrust enforcement authority until now.

NDRC has received multiple complains on the price-related monopolistic behavior of above companies from domestic enterprises since December 2006. As found by NDRC through the investigation, Samsung, LG and other four Taiwanese companies "conspired" in a price fixing scheme through monthly meetings (“crystal meetings”) from 2001 to 2006. During the period, the six companies held 53 crystal meetings in Taiwan and South Korea to exchange information related to price and make agreements on LCD panel pricing which caused huge damage on other undertakings and customers.

Continue Reading NDRC Imposed the Penalty against LCD Panel Companies for Their Monopolistic Behavior

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

With the year of 2013 approaching, MOFCOM held a press conference specific on “anti-monopoly work progress in 2012” on December 27, 2012. Shang Ming, the Director General of MOFCOM Anti-monopoly Bureau and Anti-monopoly Committee of the State Council gave a briefing on the legislation and enforcement progress of antitrust review on concentrations and answered questions from reporters.

In this occurrence, four issues are mainly involved and they are: (1) supporting legislation of antitrust review on concentrations; (2) law enforcement of antitrust review on concentrations; (3) international cooperation carried out by MOFCOM; and (4) propaganda and training carried out by MOFCOM.

Supporting Legislation

According to Mr. Shang’s introduction, 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 in 2012

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

Walmart surprisingly merged with Niuhai Holdings Ltd before the concentration received approval from MOFCOM.

The concentrated entity Store No.1, controlled by Niuhai, was established in 2008, after which it experienced ups and downs in China’s e-commerce market. The founders, Mr. Yu Gang and Liu Junling, made large capital investment to rapidly increase market share. However, the money-consuming feature of e-operators seemed to trap Store No.1 permanently into capital shortage. On May 2010, Ping An Group, a leading integrated financial services group in Chinese insurance market, purchased 80% equities of Store No.1 at the price of RMB 80 million, enabling Store No. 1 to grow rapidly.

It is revealed that the turnover of Store No.1 was RMB 4.17 million in January, 2008 under the great drive from Ping An Group. The number rose to RMB 46 million in 2009 and RMB 805 million in 2010. The trading volume in 2011 continued to increase rapidly throughout the four quarters. Public statistics show that its Q2, Q3 and Q4 increased by 336%, 609% and 268% compared with those in last quarter. Before the concentration, over 180,000 kinds of commodities were on sales online by Store No.1 and its working staff amounted to 5400. Its warehousing centers scattered around Beijing, Guangzhou, Wuhan, Chengdu and Shanghai, covering a total area of 220,000 square meters.

The merger was conducted by Walmart, a tycoon in retail market. However, the retail tycoon whose physical stores are booming in China did not go smoothly in e-commerce. Sam’s Club online stores were opened in China, but it did not expand with its services limited to Shenzhen and Beijing.

Continue Reading Antitrust Model used in Purchase of Store 1

Authored by Michael Gu (michaelgu@anjielaw.com)

I.       BACKGROUND

On 8 May 2012, the PRC Supreme People’s Court (“Supreme Court”) issued the long-awaited Provisions on Certain Issues Concerning the Application of Law in Hearing Cases Involving Civil Disputes Arising out of Monopolistic Behaviors (“Judicial Interpretation”), which will become effective on 1 June 2012.Being the first interpretation on antitrust litigations, it lays the foundations of the antitrust litigation legal framework in China. The Judicial Interpretation provides guidance to the courts’ precise application of the Anti-Monopoly Law (“AML”), the undertakings’ compliance and avoidance of the legal risks in their business operation, or consumers’ initiation of antitrust litigations.

The drafting and issuance of the Judicial Interpretation has gone through an extremely lengthy process. The Supreme Court started the drafting in 2009, at the beginning of the AML’s implementation. After numerous rounds of amendments, the Supreme Court released the draft of the Judicial Interpretation for public consultation on 25 April 2011. Although the Judicial Committee of the Supreme Court has approved the Judicial Interpretation on 30 January 2012, the text of the Judicial Interpretation was not publicly released until more than three month later. The extraordinary long process and delayed issuance might indicate that the Judicial Interpretation has raised exceptional disputes during its drafting process, and that the Supreme Court shows a prudent attitude towards the Judicial Interpretation in terms of the content and timing.

The AML contains only one article (i.e. Article 50) with respect to the civil litigation, which provides that “any undertaking who engages in monopolistic act resulting in losses to another person, it shall bear civil liabilities according to law”. The Judicial Interpretation not only supplements the AML and addresses many procedural issues regarding the civil litigations; it also throws light as to how the Tort Liability Law, the Contract Law and Civil Procedure Law may apply in dealing with the antitrust civil disputes. The Judicial Interpretation clarifies certain matters related to the antitrust litigations, such as the filing, acceptance, jurisdiction, evidence rules, civil liabilities and time limit of case filing. Compared with its consultation draft released earlier, the Judicial Interpretation is simplified to 16 articles with approximately 2,000 words in total. By dropping the controversial articles and stating only the general principles for some issues, the final version of the Judicial Interpretation is more aligned with existing laws while ensuring that it remains flexible to deal with unforeseen situation that may arise in the future.

Continue Reading Far-Reaching Impact of the First Judicial Interpretation on Antitrust Civil Litigations

Authored by Michael Gu (michaelgu@anjielaw.com)

I. OVERVIEW

It has taken 13 years for China to finally promulgate the Anti-monopoly Law of the People’s Republic of China ("AML") which was passed on 30 August 2007 and took effect on 1 August 2008. The AML aims to prevent and restrain monopolistic behaviors, protect fair market competition, improve economic efficiency and safeguard interests of consumers and the public. The AML regulates the following four types of monopolistic behavior: monopoly agreements, abuse of dominant market position, concentration of undertakings and administrative monopoly.

II. LAW ENFORCEMENT AND REGULATORY ANTHORITIES

The highest regulatory body of anti-monopoly law-enforcement is the State Council Anti-Monopoly Commission ("SCAC"), established in August 2008. The SCAC members include heads and relevant officials from the Ministry of Commerce ("MOFCOM"), the State Administration for Industry and Commerce ("SAIC"), and the National Development and Reform Commission ("NDRC"). SCAC, a coordinating body under the State Council, does not participate in specific anti-monopoly law enforcement, but is mainly responsible for drafting competition related policies, organizing investigations, assessing the overall market competition, publish assessment reports and anti-monopoly guidelines, and coordinating anti-monopoly law-enforcement. SCAC established an office in September 2011 and the office takes charge of SCAC’s day-to-day work which was previously assumed by the Anti-monopoly Bureau of MOFCOM.

According to relevant State Council regulations, the administrative law-enforcement authorities are MOFCOM, SAIC and NDRC.

(1) MOFCOM is the enforcement agency in charge of antitrust reviews and investigations in connection with concentration of undertakings. The specific law-enforcement department is the Anti-monopoly Bureau.

(2) SAIC mainly regulates abuses of dominant market positions and abuses of administrative powers to eliminate or restrict competition (excluding price-related conducts). The specific law-enforcement department is the Anti-monopoly and Anti-unfair Competition Enforcement Bureau.

(3) NDRC principally administers price monopolies, including price-related monopoly agreements, abuses of dominant market position and administrative monopoly. The specific law-enforcement department is the Price Supervision and Inspection Section.

Continue Reading An Introduction of the Anti-Monopoly Law in China