Competition Law/ Anti-Monopoly Law

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Authored by Michael Gu (michaelgu@anjielaw.com) from AnJie Law Firm

Introduction

On March 21, 2014, the PRC Ministry of Commerce (“MOFCOM”) announced that it decided to publicize the decisions of administrative penalties of undertakings which did not submit a notification prior to the implementation of their concentration. These decisions involved undeclared concentrations formally investigated after May 1, 2014 in accordance with the Anti-Monopoly Law (“AML”) of the PRC and the Interim Measures on Investigation of Failure to File Concentration of Undertakings (“Interim Measures”). As for those formally investigated before May 1, 2014, MOFCOM will still impose administrative penalties if necessary but may choose not to announce such decisions. In order to facilitate the implementation of this policy, MOFCOM had set up a hotline phone number (+86 10 65198998) for whistleblower complaints. Continue Reading Non-filers Beware: MOFCOM Takes More Strict Approach

Authored by Dr. Zhan Hao and Dr. Song Ying

Following the antitrust watchdog in Germany, Japan, Taiwan and the United States, the Ministry of Commerce of the People’s Republic of China (MOFCOM) conditionally cleared Merck KGaA’s (Merck) acquisition of AZ Electronic Materials S.A. (AZ Electronics) on April 30, 2014. It means that Merck has won the last pass it needed to wrap up the takeover.

As the world’s oldest chemical and pharmaceutical company, Merck was founded in Darmstadt in 1668. The company was privately owned until going public in 1995. The Merck family, however, still controls a majority (roughly 70%) of the company’s shares. Continue Reading Last Hurdle for Merck’s Acquisition of AZ Electronics Removed: MOFCOM’s 23rd Conditional Clearance

Authored by Dr. Zhan Hao and Dr. Annie Xue

clevel play ground, optimizing industry structure, promoting competitiveness, and enriching the risk management tool kit of the insurance institutes”, quoting a statement of CIRC posted on its website. [1]

Promotion of Competition

CIRC’s partially relaxed mergers and acquisition rules in the insurance sector are expected to help facilitate market entry and expand the footprint of private capital, including the domestic and China-based foreign-funded insurance firms.Continue Reading China Issues New Insurance Merger Rules

Authored by Dr. Zhan Hao and Dr. Annie Xue

China has seen another far-reaching step towards deregulating the strictly regulated telecommunication sector.

On May 9, 2014, the Ministry of Industry and Information Technology of the P.R.C. (MIIT) and the National Development and Reform Commission (NDRC) jointly issued a notice announcing liberalizing pricing of the telecommunication services (Notice). [1] This policy has come into force on May 10, 2014.

Backdrop

The price liberalization in the telecommunication sector comes when the ruling party vows to comprehensively deepen the reform and looks to the market as the essential price-setting mechanism. And the Notice is an execution of the State Council’s Decision on Removing and Delegating Some Items Requiring Administrative Approval, [2] which was promulgated on January 28, 2014.Continue Reading China Deregulates Pricing in Telecommunication Sector

Authored by Zhan Hao (zhanhao@anjielaw.com)      
 

On August 1 2013, Shanghai People’s High Court (the Court) handed down judgment on the first private antitrust action involving vertical agreements under the minimum resale price maintenance (RPM) clause of China’s Anti-monopoly Law (AML). The Court rescinded the judgment of the first instance court and ordered the US-headquartered health care giant Johnson & Johnson Medical (China) Ltd. and its Shanghai branch (collectively J&J) to pay their Beijing-based former distributor Rainbow Medical Equipment & Supply Co. (Rainbow) RMB 530,000.

This judicial decision was made against the backdrop that the recent high-profile luxury liquors case and baby formula case handled by antitrust implementing agencies of China have demonstrated a new trend of striking both horizontal and vertical monopolies, but the agencies used to invest much more efforts in investigating horizontal monopolies. The Court’s judgment marks the first official deliberation of the Chinese judicial bodies over vertical monopoly agreements. Meanwhile, the judgment has also helped to mitigate the lack of transparency of how to deal with vertical monopoly agreements by the government bodies, as the ruling has clarified the Court’s attitudes towards vertical monopolies, in particular vertical price agreements, and the analytical approach. In this sense, the judgment is of great importance.

Continue Reading Chinese Court’s Roadmap on Vertical Monopoly Analysis: Some Comments on the Final Judgment on Rainbow vs. Johnson & Johnson Case

Authored by Michael Gu (michaelgu@anjielaw.com)

Late June of this year, it was reported that the National Development and Reform Commission (“NDRC”) had been conducting antitrust probes against several major baby formula brands, including both foreign and domestic brands such as Mead Johnson, Dumex, Wyeth, Abbotts, Friesland Campina, Biostime, and Beingmate, for suspected price monopoly behavior. Shortly after that, NDRC confirmed that the investigations were underway, which immediately attracted extensive attention. In response to the NDRC’s investigation, the baby formula manufacturers have, one after another, taken rectification steps, such as cutting formula prices directly or indirectly. At the beginning of August, NDRC closed their investigations into the manufacturers. According to the NDRC news release, six of the nine investigated brands were fined various amounts while the other three did not receive administrative penalties.Continue Reading Chinese Antitrust Agency Imposed Record Fines on Baby Formula Brands – An Analysis on the Application of the Leniency Program under the PRC Anti-Monopoly Law

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), 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