Anti-monopoly Law and Practice in China

by Harris, H. Stephen; Wang, Peter J.; Cohen, Mark A.; Zhang, Yizhe; Evrard, Sebastien J

• ISBN13: 9780195394788
• ISBN10: 019539478X
• Format: Paperback
• Copyright: 2011-07-05
• Publisher: Oxford University Press

Summary

The China Anti-Monopoly Law (AML), which became effective August 1, 2008, is the first comprehensive competition law enacted by China. The AML prohibits a broad array of agreements between competitors and commercial counterparties, as well as competitive conduct by single firms that may harm the competitive process. In addition, it establishes a mandatory administrative review procedure for mergers and acquisitions between companies meeting certain sales thresholds, globally or in China. Beyond these fundamental provisions, the AML prohibits certain types of administrative abuses believed to be prevalent in China and establishes a complex set of administrative agencies with broad powers to enforce the law. Anti-Monopoly Law and Practice in China is the first comprehensive treatment of the AML and the practice of antitrust law under this new system. Each chapter on the substantive provisions of the law includes practical advice on approaches to meeting the challenge of complying with the law's requirements, including analysis of likely interpretations and applications of the AML based on precedents in related economic laws and actions by other administrative agencies. Where policy choices are uncertain, the text will explore probable developments in China based on comparable applications of competition laws in other jurisdictions.

Author Biography

H. Stephen Harris, Jr. is a partner in the Washington, DC office of Baker McKenzie, where he handles U.S. and international antitrust litigation, mergers and acquisitions, and cartel investigations. Peter J. Wang is a partner in the Shanghai and Beijing offices of Jones Day, where he handles complex disputes and antitrust matters in and relating to China, the United States, and worldwide. Yizhe Zhang is a senior associate in the Beijing office of Jones Day, where she specializes in competition law. Mark A. Cohen was formerly counsel to the Beijing office of Jones Day, where he specialized in intellectual property matters and technology transfer. He has over 25 years legal experience in China. Sbastein J. Evrard is a partner in the Beijing office of Jones Day, where he focuses its practice on competition law in China and the European Union.

Table of Contents

About the Author	p. xi
Foreword	p. xiii
Preface	p. xv
Introduction	p. 1
Legislative History of the Anti-Monopoly Law	p. 7
A Brief Overview of the Context and History Behind the Drafting of the Anti-Monopoly Law	p. 8
The Anti-Monopoly Law: Background and Substantive Provisions	p. 20
The Objectives of the Law	p. 20
Extraterritorial Reach of the Law	p. 23
Application of the Law to Regulated Sectors of the Economy	p. 24
Market Definition	p. 27
Prohibition of Concerted Action	p. 28
Abuse of Dominance	p. 31
Merger Review	p. 37
Administrative Abuses	p. 41
The Anti-Monopoly Enforcement Authority	p. 45
Legal Liability	p. 51
Abuses of Intellectual Property Rights and Other Supplementary Provisions	p. 55
Monopoly Agreements	p. 57
Scope of Application of Chapter 2 of the AML	p. 61
The Notion of an "Undertaking"	p. 61
The Notion of "Agreement"	p. 62
Tacit Collusion as an "Agreement" under the AML	p. 63
Tacit Acquiescence in Vertical Relationships	p. 64
Intraenterprise Agreements	p. 65
The Notion of a "Restriction of Competition"	p. 66
The Element of Intent	p. 67
Prohibited Monopoly Agreements Between Competitors	p. 68
Price-Fixing Agreements	p. 69
Agreements to Restrict Output	p. 70
Market Allocation Agreements	p. 71
Agreements to Restrict the Purchase or Development of New Technology or New Facilities	p. 72
Joint Boycotts	p. 74
Other Monopoly Agreements as Recognized by the AMEA	p. 75
Bid-Rigging	p. 76
Prohibited Vertical Agreements	p. 76
Resale Price Maintenance	p. 76
Other Vertical Agreements	p. 78
Exemptions for Agreements with Beneficial Purposes	p. 78
R&D Agreements	p. 81
Agreements Enhancing Efficiency or Unifying Specifications and Standards	p. 82
Agreements Involving Small and Medium-Sized Enterprises	p. 82
Agreements Maintaining the Public Welfare	p. 83
Crisis Cartels	p. 83
Export Cartels	p. 84
Other Exemptions Stipulated by Law or the State Council	p. 86
Abuse of Dominance	p. 89
Assessment of a Dominant Market Position	p. 91
Market Definition	p. 91
Definition of Dominance	p. 94
Presumptions of Dominance Based on Market Shares	p. 96
Factors to Be Considered in Determining Whether a Firm Has a Dominant Market Position	p. 99
Conduct that May Constitute Abuse of a Dominant Market Position	p. 106
Unfairly High Prices and Unfairly Low Prices	p. 106
Selling at Prices Below Cost (Predatory Pricing)	p. 109
Refusals to Deal	p. 110
Exclusive Dealing	p. 113
Tying and Imposing Other Unreasonable Trading Conditions	p. 115
Discriminatory Treatment, Including Price Discrimination	p. 116
Abuses of a Dominant Market Position Involving Intellectual Property	p. 117
Court Decisions	p. 117
Merger Control	p. 123
Introduction	p. 125
The Scope and Reach of China's Merger Control Scheme	p. 127
Covered Transactions	p. 127
Extraterritorial Jurisdiction and Nexus	p. 131
Industry-Specific and National Security Review	p. 133
Thresholds and Eligible Transactions	p. 138
Mandatory Review Thresholds	p. 138
Discretionary and Voluntary Reviews	p. 142
Penalties for Failure to File	p. 144
Review Process	p. 145
Filing	p. 147
Who Files and When to File	p. 147
Filing Attempts and Acceptance	p. 148
Initial Review Period	p. 149
Further Review Periods	p. 150
Detailed Information Requirements	p. 151
Initial Merger Filing	p. 151
Investigation	p. 153
Third Parties	p. 154
Substantive Standards	p. 154
Overall Review Criteria	p. 154
Relevant Markets and Market Definition	p. 155
Theories of Anticompetitive Effects	p. 158
Procompetitive Effects and Efficiencies	p. 164
MOFCOM Decisions	p. 166
Approvals	p. 166
Denials	p. 167
Conditional Approvals	p. 167
Appeal	p. 171
Conclusion	p. 173
Cases Involving Government-Related Entities	p. 175
Administrative Monopolies	p. 177
The Treatment of Administrative Monopoly Under the AML	p. 181
Procedural Rules Addressing Administrative Monopoly	p. 183
Jurisdiction of SAIC and NDRC	p. 183
SAIC Procedural Rules	p. 184
NDRC Rules	p. 188
Jurisdiction in the Courts	p. 188
State-Owned Enterprises	p. 190
History and Regulation of SOEs	p. 191
The Role of SOEs in a "Socialist Market Economy"	p. 191
SASAC Oversight of SOEs	p. 193
Application of the AML to SOEs	p. 194
Actual AML Enforcement Against SOEs	p. 197
Merger Control	p. 198
Monopoly Agreements and Abuses of Dominance	p. 199
Litigation	p. 200
Trade Associations	p. 200
Intellectual Property Rights Under the AML	p. 209
China's Increased Focus on Intellectual Property Rights	p. 213
Abuses of IP Rights: Article 55 of the AML	p. 216
Rights Covered by Article 55 of the AML	p. 216
The Meaning of Article 55 of the AML	p. 217
A Safe Harbor for Some IP Exploitation	p. 219
Abuse/Misuse of IP Rights	p. 220
Technology Transfer Agreements	p. 222
Agreements Between Competitors (Article 13 of the AML)	p. 223
Agreements Between Noncompetitors (Article 14 of the AML)	p. 226
Refusals to License Intellectual Property Rights	p. 227
Technology Pools and Standards	p. 231
Technology Pools	p. 232
Standard-Settings Agreements	p. 235
Standards Setting Outside the AML Framework	p. 235
Standards Under the AML	p. 243
Abuse of Technological Protection Measures	p. 245
Anticompetitive IP Litigation	p. 250
Enforcement and Remedies	p. 255
The Enforcement Agencies: AMC and AMEA	p. 261
Enforcement Structure	p. 263
The Anti-Monopoly Commission	p. 266
The Anti-Monopoly Enforcement Authorities: MOFCOM, SAIC, and NDRC	p. 267
MOFCOM	p. 270
SAIC	p. 273
NDRC	p. 277
Other Relevant Government Agencies	p. 281
Powers and Duties of the AMEA	p. 282
Investigative Powers	p. 282
Commitments	p. 285
Decisions	p. 286
Penalties	p. 287
Leniency	p. 290
Malfeasance by Enforcement Personnel	p. 294
Rights of Persons Under Investigation	p. 295
The Right to Be Heard	p. 295
Confidentiality	p. 295
Attorney-Client Privilege	p. 296
Administrative Reconsideration of AMEAs' Decisions	p. 296
International Cooperation and Coordination of Anti-Monopoly Authorities	p. 297
Bilateral Cooperation and Exchanges	p. 297
Multilateral Cooperation and International Organizations	p. 299
The Role of the Courts in AML Enforcement	p. 301
The PRC Judicial System	p. 303
Overview	p. 303
The Structure of the Court System	p. 305
Procedural Issues	p. 307
Case Acceptance	p. 307
Jurisdictional Issues	p. 307
Limitations Period	p. 312
Evidence and Burdens of Proof	p. 313
Expert and Economic Evidence	p. 315
Basis for Judicial Enforcement of Anti-Monopoly Matters	p. 316
Private Civil Enforcement	p. 316
Civil AML Litigation	p. 316
Civil Litigation Under Competition-Related Laws	p. 320
Administrative Litigation	p. 322
Judicial Review of AMEA Enforcement	p. 322
Private Actions Against Administrative Monopolies	p. 325
Criminal Prosecution	p. 326
Competition-Related Laws Other than the AML	p. 329
The Anti-Unfair Competition Law	p. 331
Introduction	p. 331
Competition-Related Provisions of the AUCL	p. 333
General Provision	p. 333
Abuse of Monopoly Position to Restrict Competition by Public Utility Companies and Other Legal Monopolies	p. 335
Below-Cost Selling	p. 338
Tying	p. 339
Bid-Rigging	p. 342
Abuses of Administrative Monopoly	p. 342
Enforcement of the AUCL	p. 344
Burden of Proof	p. 345
Statistics	p. 345
Relationship Between the AUCL and Other Laws	p. 348
The Price Law and Regulations	p. 350
The Price Law	p. 351
Penalties for Violations of the Price Law	p. 352
Other Implementing Regulations and Rules Under the Price Law	p. 353
Administrative Enforcement of the Price Law	p. 355
Bidding Law	p. 357
Provisions of the Bidding Law	p. 358
Enforcement	p. 359
Contract Law	p. 361
Foreign Trade Law	p. 365
Foreign Trade Law	p. 365
Regulation on Administration of Import and Export of Technologies (RAIET)	p. 367
Patent Law	p. 368
Table of Annexes	p. 371
Table of Cases	p. 555
Index	p. 561
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