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 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

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 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 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

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

Just after the Chinese New Year, according to relevant source, the National Development and Reform Commission (‘NDRC’), one of the three main China’s anti-monopoly enforcement authorities may impose a new high penalty amount to CNY 449 million ( equal to 71.47 million USD) against two Chinese high-end liquor companies soon, 247 million for Kweichow Moutai and 202 million for Wuliangye respectively.

This action of NDRC actually is only around one and a half month following the LCD case’s 353 million-penalty in January, which can’t be denied that NDRC is becoming more and more aggressive regarding its steps of China’s antitrust enforcement.

As a matter of fact, Kweichow Moutai has issued a statement on its website as early as 15 January 2013 that it will cancel the marketing policies which may violate the Anti-Monopoly Law of China (AML) and conduct a complete rectification due to the investigation by the NDRC and the Price Bureau of Guizhou Province. On 18th of the same month, another top liquor company Wuliangye also published the announcement expressing its cooperation attitude to make rectification in compliance with the AML. Some people forecasted at that time that NDRC may suspend the case partly due to the Stated-owned Enterprise (ome ’) identity of the two and another ground may rest on that vertical agreements at the present time was not the priority of NDRC’s enforcement yet. Only one month later, however, people are surprised that a new record fine may be imposed on these two SOEs soon. Continue Reading NDRC May Fine Two Famous Liquor Companies RMB 449m