09 January 2019

2018 in Review – the Beginning of a New Era of AML Enforcement

By:Cheng Liu[1], Audrey Li

In the past year, the enforcement of China’s Anti-Monopoly Law (“AML”) was characterised by continued activism and a number of new developments.  In summary[2] 

China consolidated the functions of previous three antitrust agencies, i.e. merger review under the Ministry of Commerce (“MOFCOM”), price-related antitrust investigations under the National Development and Reform Commission (“NDRC”), and non-price related investigations under the State Administration for Industry and Commerce (“SAIC”) into a newly established government agency, the State Administration for Market Regulation (“SAMR”).  It is expected that antitrust enforcement in the coming year will be more frequent, efficient and consistent.  

On the merger control front, to deal with an increased number of notified transactions, MOFCOM/SAMR continued to increase case reviewing efficiency and shorten the reviewing time under its simplified procedure. In contrast, complex transactions faced close scrutiny, and during the review of such transactions the regulator in China was not afraid to show its particular areas of concerns in comparison to other jurisdictions.  In 2018, the regulator also demonstrated a hard stance against failures to notify and gun-jumping by punishing relevant parties in a record high of 15 cases.  

Whilst the enforcement approach towards traditionally focused anti-competitive conduct (including cartels, concerted practice, resale price maintenance and abuse of dominance) continued to be active, the regulator also widened its enforcement scope to other types of conducts (such as joint procurement) last year.  Sector-wise, industries related to people’s daily lives and the national economy still remained high-risk targets in 2018.  

The development and importance of antitrust litigation in China continued its momentum and provided more clarity for the interpretation of the AML.  Some of the milestone cases in 2018 include the final trial of Gree and WeChat case decided by the Supreme People’s Court.  

The authorities in China have also drafted/promulgated a number of new legislative initiatives, seeking to provide further substantive guidance and improve procedural transparency in the anti-trust space. 

Institutional Reform 

In 2018, China consolidated the previous three antitrust agencies into a newly formed governmental agency, i.e. SAMR. [3]SAMR is organized into 27 internal departments that each perform specific functions,  [4]including the following departments relating to the administration of the AML: 

The Anti-Monopoly Bureau enforces the AML and is responsible for merger review and investigating anti-competitive agreements, abuse of dominance and administrative monopolies. 

There are ten divisions within the Anti-Monopoly Bureau: Merger review responsibilities are divided by three divisions, each focusing on certain industries. Supervision and Enforcement division is responsible for enforcement towards failure to notify and remedies imposed in transactions cleared with conditions.  Three other divisions of the Anti-Monopoly Bureau are responsible for handling monopolistic agreements, abuse of dominance and administrative monopoly respectively, without distinction between price and non-price related conduct.  The Anti-Monopoly Bureau also includes three general divisions, namely the general office, competition policy and international cooperation division, and anti-monopoly committee coordination division.  

In addition, local counterparts of SAMR (“local AMRs”) at provincial level have all been set up in 2018, with detailed institutional reform expected to be completed in March 2019[5]

The Price Supervision and Anti-Unfair Competition Bureau is responsible for enforcing the Price Law and the Anti-Unfair Competition Law, for instance, investigating conduct including commercial bribery and other potential anti-competitive behaviours under the Anti-Unfair Competition Law.  The Fair Competition Review System Office is also placed under this Bureau. 

This is the most significant institutional change since the AML was effective in 2008, and is likely to lead to a new period of antitrust enforcement in China, which hopefully will be more frequent, efficient, and consistent.  

Merger Control 

Shortened reviewing time and improved efficiency for simplified case procedure  

Notwithstanding the organizational transition that occurred during 2018, SAMR has functioned as usual and has maintained, if not increased, its enforcement activity during the process. MOFCOM/SAMR closed merger control review relating to 441 concentrations in 2018, amounting to a 36% year-to-year increase compared to 2017.  [6]In the third quarter of 2018 (i.e. after the consolidation of merger control review into SAMR’s jurisdiction), for filings made under the simplified procedure, it only took 15.5 days on an average for SAMR to review after formal acceptance of a merger filing case[7].  SAMR is aiming to issue supplemental requests for information within 5 days after the party(ies) have submitted the filing[8],  and based on our recent experience, it may only take 1-2 days to receive the request for some very straightforward cases.  Without doubt, such a shortened reviewing time will help to reduce timing concerns for companies involved in M&A / joint venture transactions and make the timeline planning for a transaction much more predictable.    

Continued close scrutiny for complex cases

Notwithstanding the continued predictability for the majority of transactions subject to Chinese merger control review, there remains a degree of uncertainty and much longer reviewing time when it comes to complex transactions which may give rise to plausible competition concerns, especially for those involving strategically important and sensitive sectors.  

Since late December 2017, MOFCOM/SAMR has imposed conditional clearance on 5 merger cases, namely Becton-Dickinson/Bard[9] , Bayer/Monsanto [10], Essilor/Luxottica [11], Linde/Praxair  [12]and United Technologies Corporation (“UTC”)/Rockwell Collins [13] , with tailored remedies in each transaction to address competition concerns (a behavior remedy only in Essilor/Luxottica, while a combination of structural and behavior remedies were imposed in the other cases).   For these transactions, MOFCOM/SAMR has carried out in-depth review, with an average reviewing time of 373 days.  The competition structures were examined not only through indicators such as market share or concentration ratio – unique features of the relevant markets, for instance high entrance barriers and lack of new competitors [14], were also carefully looked at.  During the review of complex transactions, it is also a usual practice that the regulator would solicit feedback from relevant government departments, industry associations, downstream enterprises/customers and even competitors.  In some cases, such as during review of Becton-Dickinson/Bard and Bayer/Monsanto, the regulator also held several hearings/seminars to discuss relevant market definitions, the market structure and industry features with industry experts.

When assessing potential competition issues, it is very important to watch out for SAMR’s particular areas of concern.  Based on our observations, compared to competition authorities in other jurisdictions, SAMR tends to take a more interventionist approach in the following circumstances: 

Cases which may affect innovation

We noticed the trend of the regulator using the “innovation-based” theory of harm continued in 2018. In Bayer/Monsanto, MOFCOM (acting in the pre-SAMR period) emphasized that the level of innovation and R&D capacities of a party were important factors to take into account when assessing its market position.  In Becton-Dickinson/Bard, considering that Becton-Dickinson was performing R&D (known as “Project A”) for a core needle biopsy device, which could be in direct competition with the existing technology used by Bard, MOFCOM was of the view that the merged entity would have an incentive to reduce inputs for Project A and delay the commercialization of the new product under Project A, and consequently decided that the relevant R&D project line, including certain IP rights and employees, must be divested.  Similarly, in UTC/Rockwell Collins, SAMR explicitly pointed out that the scope of divestiture would include all of UTC’s research projects on oxygen systems.  

Although there remains some controversy regarding this “innovation-based” theory of harm, we expect that SAMR will continue to pursue this theory when reviewing complex transactions if necessary. In circumstances where the R&D project involved can contribute to the development of a new product which could be in competition with an existing leading product of the other merger party, it is possible that SAMR may request divestiture or some other remedy (for instance, commitment not to cut R&D spend) to ensure the viability of such R&D project.  

Vertical mergers or conglomerate mergers which have a foreclosure effect 

In 2018, as one of the few competition regulators around the globe to have imposed remedies in  Essilor/Luxottica, SAMR’s heightened scrutiny of conglomerate mergers was evident [15].  In this case, SAMR considered that the merged entity would have market power in Chinese wholesale markets for optical lenses (mid-high end and low end), optical frames (low end) and sunglasses (mid-high end), and the merged entity would have the incentive and ability to bundle-sell optical lenses with optical frames, or lenses with sunglasses, and to impose unreasonable trading conditions on competing retailers in the downstream market for retail sale of glasses.  To address these concerns, SAMR required the merged entity to refrain from the following when dealing with a Chinese retailer: (a) engaged in any form of tie-in sales, (b) imposing exclusivity requirements on the downstream retailer to prohibit them from selling products of competing brands, (c) refusing to supply products or grant trademark licenses on fair, reasonable and non-discriminatory terms, and (d) supplying glasses products at below-cost prices.  SAMR also required Luxottica’s STARS plan to be provided to Chinese retailers, and the merged entity to report any future acquisitions of any Chinese target.  

It is recommended that parties involved vertical mergers and conglomerate mergers undertake thorough analysis beforehand to examine if SAMR is likely to have any concerns about foreclosure effects. We have also observed that the regulator in China inclines to impose behavior remedies to address competition concerns in such cases.  

Cases involving a ”strategic” sector and/or complaints from Chinese stakeholder  

SAMR’s review in Qualcomm/NXP also drew widespread attention – there was some speculation from the media about why the transaction did not receive clearance after 20 months elapsed since the deal announcement.[16]   Although factors such as the lengthy reviewing time overlapped with the China-U.S. trade war and the transaction-specific concerns about impacts on the semiconductor industry may have added some complications to this case review, we also saw that Chinese stakeholders consistently complained that the merger would expand Qualcomm’s patent licensing business into mobile payment and autonomous driving areas, and accordingly the remedies the parties offered to the European Commission would not be sufficient to address competition concerns in China[17].  Qualcomm/NXP may again underline the broader policy considerations of SAMR in China to ensure that domestic companies have access to intellectual property rights or other inputs on reasonable terms.  

Active enforcement towards failure to notify and gun-jumping 

SAMR continued to demonstrate its tough stance on failures to notify and the early implementation of transactions (“gun-jumping”) by imposing fines in a record high of 15 cases in 2018 (out of 35 cases in total since the AML was enacted [18]).  A wide range of companies, including multinational companies, Chinese SOEs and domestic firms have been penalized for such actions by MOFCOM/SAMR, indicating that no specific type of company is immune simply because of its identity.  Among these published decisions, we understand that some of the past failures to notify were found by MOFCOM/SAMR during its review of a subsequent transaction. In such circumstances, some delay in SAMR reviewing the subsequent transaction might be caused, especially if SAMR decides that an investigation into the previous failure to notify should be conducted and closed first.  

Competition authorities around the world are demonstrating greater intolerance of companies breaching merger control procedures, for instance, the European Commission also initiated proceedings against Canon/Toshiba Medial System Corporation after MOFCOM’s penalty for gun-jumping[19].  In 2019, we expect that SAMR will continue its active enforcement towards instances of failure to notify and gun-jumping. Companies involved in a merger should calibrate their integration planning carefully in light of the AML requirement to complete a merger control review and assess the appropriate timing for implementation of relevant business plans (including exchange of information). 

Enforcement against Anti-competitive Conduct

In 2018, SAMR and local AMRs (including its predecessor authorities) initiated 32 investigations into instances of anti-competitive conduct and among them, 15 cases have been closed[20] .  Some ongoing cases include investigations towards chip makers Micron, Samsung Electronics and SK Hynix (following dawn raids on their respective offices),[21]  and an investigation into Microsoft.   [22]The enforcement actions covered traditional areas of focus in relation to sales markets (i.e. cartels, concerted practice, resale price maintenance (“RPM”) and abuse of dominance) and also widened into some new areas such as joint procurement. Sector-wise, utilities, pharmaceuticals, construction and consumer businesses have remained high-risk areas[23] .  

Below we highlight the following trends for enforcement observed in 2018:

More cases directly investigated by local AMRs

A significant number of investigations were initiated and handled by local AMRs in 2018 – among the 15 cases closed, only 4 of them were directly punished by SAMR[24].   

On 28 December 2018, SAMR also issued a notice  to authorize provincial AMRs to carry out antitrust enforcement at the local level.  According to the notice[25], SAMR will only handle the following cases directly (and for such cases, SAMR can authorize provincial AMRs to handle them as well): (a) cases covering different provincial level administrations, or cases involving a provincial government’s abuse of administrative power; (b) complicated cases or cases with national impacts; and (c) other cases which SAMR deems necessary to handle directly.  For the other antitrust cases (involving monopoly agreements, abuse of market dominance and abuse of administrative power to restrict competition) which happen within an administrative area, a provincial AMR is entitled to work on them directly and handle the cases in its own name.   

Given that the local AMRs have been staffed with more adequate levels of personnel, we expect that antitrust enforcement at the local level will be more frequent and intensified in year 2019.   

Intensive enforcement in sectors which are important for people’s lives

In 2018, the regulators carried out intensive enforcement in certain industries which are of importance for people’s lives and the national economy.  

Pharmaceuticals and medical devices have been targeted for a long period of time.  As early as 2014, the regulators have been conducting sector-wide inquiries into a wide range of pharmaceutical companies, and since 2015, the regulators have investigated several multinational medical device companies and consequently punished some of them for anti-competitive conduct, e.g. RPM practice [26].  Following promulgation of the Pricing Guideline on Active Pharmaceutical Ingredients (APIs) by the NDRC in 2017[27],  Chinese regulators further intensified antitrust enforcement towards API operators in 2018.  Three glacial acetic acid API manufacturers were ordered to pay fines of RMB 6.25 million for price-fixing (in addition to confiscating illegal gains)[28];  and two chlorpheniramine maleate API manufacturers were fined RMB 12.43 million for abuse of market dominance (including selling APIs to downstream operators at exorbitant prices and refusal to sell) [29]It has been reported that some other API related investigations are also currently being conducted by local AMRs[30].   

Shipping and ports was another industry which faced strict scrutiny last year.  Since 2017, a number of Chinese ports have committed to reducing terminal handling fees following large-scale abuse of dominance investigations by NDRC.  Yet 2018 witnessed SAMR (and its local counterparts) continuing to take intensified enforcement actions: In June, four Shenzhen tugboat companies were fined for price-fixing. [31]  In July, two ship tallying companies were sanctioned for market allocation and price-fixing[32].   In November, the Tianjin Municipal Development and Reform Commission (“Tianjin DRC”) imposed fines on 23 local yard operators for cartel conduct,  which was followed by Tianjin DRC releasing the Rules on Port Pricing in Tianjin, which specifically prohibited 34 types of price-related conduct[33], including prices exceeding the government-mandated prices, monopoly agreements and abuse of dominant market position[34].  

Sector-wise, utilities, pharmaceuticals (especially API), construction, daily consumer products, and other sectors which may affect people’s daily lives and are significant to the national economy remain high-risk areas, and SAMR has explicitly expressed its commitment to continue to actively target these sectors in year 2019[35]

Widened scope of enforcement 

In addition to the traditional hard-core violations such as price fixing, market allocation and RPM happened in sales markets, the regulators also investigated some new types of infringement in 2018.  For instance, the Shanghai Administration of Industry and Commerce (“Shanghai AIC”, as the local counterpart of SAIC, now Shanghai AMR) decided the first case regarding joint procurement under a group purchasing organization (“GPO”) arrangement in the pharmaceutical industry.  It was decided that the GPO itself was not illegal, especially considering the potential efficiency that a GPO could generate. Nevertheless, joint procurement may run the risk of constituting a monopoly agreement and “jointly boycotting transactions”, which are prohibited under Article 13 of the AML.  It is also worth mentioning that in this case, the potential effect of the agreement (if the agreement would eliminate or restrict competition) not only to the medicine manufacturing and distribution market, but also to the procurement market is carefully assessed[36].    

In 2019, we anticipate more new forms of infringement will be on the radar of SAMR – concurrently, the SAMR has drafted/launched a number of new legislative initiatives, through which we expect further substantive guidance will be provided and enforcement activities will be more unified.  

Antitrust Litigation 

Antitrust litigation continued to increase in 2018.  It has become common practice for enterprises to use the AML to protect their interests and sue for damage in private cases.  We have also noted in recent years there has been an emergence of court actions against antitrust enforcement authorities alleging improper enforcement[37].  

Some of the milestone cases in 2018 included the final trial of Gree and the WeChat case decided by the Supreme People’s Court. 

Final trail of Gree: divergence in administrative enforcement/litigation and private litigation for RPM

Civil litigation in the past few years was notable for the divergence in the approach to RPM between the administrative enforcement and the courts.  The administrative enforcement has been applying a “prohibition + exemption” approach, i.e. RPM is in principle prohibited, unless the company under investigation is able to demonstrate that is eligible for an exemption under Article 15 of the AML, which sets a very high bar and there has been no successful precedent to date for relying on this exemption.  In contrast, in Rainbow v. Johnson & Johnson (2013) and Gree (2016 first instance judgment), the court required the plaintiff to not only prove the existence of RPM conduct, but also that such conduct had restricted competition. 

In 2017, the Hainan High Court in the Yutai case provided long-awaited clarity – the Hainan High Court held that as administrative enforcement is for preventativepurpose, for cases of administrative enforcement, the authorities are not required to bear the burden to prove that the alleged RPM would cause actual harm or restrict competition[38].   

Notably, in 2018, during the final appeal of Gree, the Guangdong High Court further recognised the view taken in the Yutai case – while a plaintiff in private litigation needs to prove the anticompetitive effect of alleged RPM conduct and further prove the resulting losses, public enforcement authorities are not required to bear such evidentiary burdens[39].  

In light of the above, business operators are recommended not to engage in any RPM practice to mitigate risks from AML enforcement, as the close-to-per-se illegal approach is likely to be continually taken during instances of administrative enforcement in the near future.   

WeChat case: High evidential bar to prove dominance for an Internet company  

In December 2018, the Supreme People’s Court upheld the dismissal of Xu Shuqing’s (an individual) lawsuit alleging abuse of dominance against Tencent.  Xu Shuqing filed the lawsuit against the Chinese technology giant, alleging that WeChat’s refusal to use a set of emojis designed by him amounted to abuse of dominance.  

The court’s approach taken in the WeChat case is similar to that in Qihoo/Tencent in 2014:  The Supreme People’s Court found that the relevant market should be defined as “Internet emoji promotion service market”, in which there is no evidence to show Tencent has a dominant market position – the court considered that market share is only a rough indicator to decide market position, especially in the dynamic competition environment for Internet companies. The court also used effects-based analysis to examine if Tencent’s refusal caused anti-competitive effects – the impact on consumers, Tencent’s motive behind its refusal and the actual impact on competition were looked at[40].  

This case again highlights the difficulties in establishing dominance in the Internet market, which is seen to be relatively open and free in comparison to markets for other services. 

In addition, pursuant to the Decision on Several Issues concerning Judicial Procedures for Patent and Other Intellectual Property Cases[41],  from 1 January 2019, the appellate jurisdiction to hear antitrust civil and administrative litigation cases involving disputes on intellectual property rights has been changed to the Supreme People’s Court (previously jurisdiction remained at the High People’s Court level which is lower in the PRC judicial hierarchy).    

Legislative Initiatives  

Anti-Monopoly Law Amendments

According to the legislative schedule of China's 13th National People’s Congress, the AML will be reviewed and amended on a priority basis in the coming five years[42].  It is reported that the amendments are expected to solve the most pressing problems encountered in previous enforcement of the law – for instance, the interpretation of Article 14 on the determining factors of RPM and determination of non-pricing vertical monopoly agreements, and enhancing the penalty for failure to notify a notifiable concentration, currently capped at RMB 500,000.[43]  

New Antitrust Guidelines

By the end of December 2018, four antitrust guidelines had been approved by the Anti-Monopoly Committee [44]of the State Council, namely, the Antitrust Guidelines on Abuse of Intellectual Property Rights, Antitrust Guidelines for the Automotive Sector, Guidelines regarding Exemption of Monopoly Agreements and Guidelines regarding Leniency Application for Horizontal Monopoly Agreements.  These Guidelines together are expected to give more guidance to enterprises on the application of the AML, and provide more clarity on key procedural aspects of enforcement actions.  

The Guidelines are expected to be formally promulgated and become effective in 2019[45].   We have been closely involved in the legislative process and will continue to provide briefings on relevant implications for our clients after promulgation of these Guidelines. 

In addition, aiming to consolidate antitrust enforcement, the SAMR launched a consultation on the Provisions for Prohibiting Monopolistic Agreements on 3 January 2019[46].   The draft provisions provide a detailed explanation and guidance regarding determination of each type of monopoly agreement, investigation procedure and legal liabilities for anti-competitive conduct.   A highlighted development in the draft provisions is the adoption of a safe harbor rule – if no hardcore monopoly agreement is involved, horizontal agreements between competitors which have a combined market share of less than 15% in relevant markets, and vertical agreements between business operators with a combined market share of less than 25% in the upstream and downstream markets, are assumed to be exempted. 

Amendments of Procedural Rules  

In parallel with developing and refining substantial legal rules and guidance, China is also working on improving the procedural aspects of law enforcement. On 26 December 2018[47],  SAMR promulgated the Interim Provisions concerning the Procedure for Imposition of Administrative Punishment.  It was explicitly mentioned that a detailed provision in relation to AML punishment procedures will be drafted in the future, in which we expect that more specific guidance will be provided.[48] 

Implication for Businesses – a New Era of AML Enforcement 

Since the effectiveness of the AML, the antitrust regulators in China have accumulated significant experience (especially in reviewing complex and high-profile cases) – in these past ten years, more than 2,500 merger control cases with a total of transaction amount of more than RMB 40 trillion have been reviewed, in which 37 cases were cleared with conditions and 2 transactions were prohibited[49].  165 cases involving monopoly agreements and 55 cases of abuse of dominance have been investigated and concluded.  [50]   

During future investigations and case reviews, we hope and expect the following trends accompanying the consolidation of antitrust agencies: 

a more consistent and unified approach will be adopted; 

more sophisticated enforcement approaches will be demonstrated; 

more guidelines will be drafted and promulgated, which will give business more certainty; and 

more frequent AML enforcement will be taken and AML enforcement will indeed become a new norm. 

Accordingly, companies operating in the Chinese market are advised to closely follow the rapid developments and adapt to the fast-evolving landscape in this new era of AML enforcement.  


[1] Authors: Cheng Liu (刘成,partner), Audrey Li (李雨濛,associate) from King & Wood Mallesons (“KWM”).  Mr. Liu Cheng is a partner at corporate department of KWM.  His main areas of practice include antitrust and competition law, corporate investment and M&A. Mr. Liu has extensive experience in antitrust and competition law since 2005. He regularly advises clients on Chinese antitrust and competition matters and has represented numerous multinational companies and Chinese companies in their merger filings at Chinese authority, including a number of high profile transactions. He provides advice on antitrust compliance for the clients’ business model, and delivers antitrust trainings. He also advises clients in dealing with antitrust investigations by the authorities. Mr Liu has been recognized by many global media as one of the leading competition lawyers in China.  The authors also expressed sincere thanks to Tom Harrison, Lushen Hong (洪露申) and Yu Zhu (朱誉) (associates from KWM) for their contribution to this article.  

[2] This article focuses on the AML enforcement on market players, rather than the enforcement against abuse of administrative power in China.  However, we also note that significant progress was made in this respect in year 2018 – 54 cases regarding abuse of administrative power in traffic, construction and other areas were closed (see http://www.ccn.com.cn/html/news/xiaofeiyaowen/2018/1227/432255.html ).  In addition, the Chinese government is also actively promoting a fair competition review regime to inspect government legislationsthat may impede the market competition. 82,000 pieces of existing governmental legislations and 31,000 pieces of new legislations have been reviewed under this regime with 1,700 pieces have been amended by the end of 2018 (see https://www.yicai.com/news/100087903.html ).

[3]The institutional reform was announced by the National People’s Congress on 17 March 2018.  By publishing the Regulations on the Functions, Internal Agencies, and Personnel Arrangement for the State Administration for Market Regulation《国家市场监督管理总局职能配置、内设机构和人员编制规定》on 10 September 2018 (visited at http://www.gov.cn/zhengce/2018-09/10/content_5320813.htm), SAMR announced that the consolidation process is now complete. 

[4]For details please see the Regulations on the Functions, Internal Agencies, and Personnel Arrangement for the State Administration for Market Regulation. 

 

[5]See http://www.gov.cn/zhengce/2018-11/17/content_5341255.htm. 

[6]See https://www.yicai.com/news/100087903.html    

[7]See PaRR Analysis: SAMR simple case review average 15.5 days in 3Q 18, visited at https://app.parr-global.com/intelligence/view/prime-2724718.

[8]See http://samr.saic.gov.cn/xw/yw/xwfb/201811/t20181116_277087.html.  

[9]MOFCOM granted conditional clearance regarding Becton-Dickinson/Bard on 27 December 2017; the decision is available at http://www.mofcom.gov.cn/article/b/c/201801/20180102692706.shtml.

[10]Decision available at http://www.mofcom.gov.cn/article/b/e/201803/20180302719125.shtml. 

[11]Decision available at http://samr.saic.gov.cn/gg/201807/t20180726_275250.html.

[12]Decision available at http://samr.saic.gov.cn/gg/201809/t20180930_276188.html

[13]Decision available at http://samr.saic.gov.cn/gg/201811/t20181123_277177.html

[14]High entrance barriers and lack of new competitors were factors that were carefully considered in Bayer/Monsanto.  

[15]Essilor/Luxottica received merger control clearances from European Commission and from Federal Trade Commission of the United States with no condition attached.   Apart from China, this transaction was imposed of remedy by competition authority in Turkey.

[16]For example, please see comments at https://app.parr-global.com/intelligence/view/prime-2647638; Qualcomm’s announcement is available at https://www.qualcomm.com/news/releases/2016/10/27/qualcomm-acquire-nxp; 

[17]For instance, see comments on the Qualcomm/NXP transaction at http://www.sohu.com/a/218815007_380059. 

[18]By the publish of this article,15 penalties which were decided in year 2018 have been disclosed. See http://samr.saic.gov.cn/xw/yw/zj/201808/t20180801_275354.html 

[19]For details please see http://ec.europa.eu/competition/mergers/cases/decisions/m8006_241_3.pdf. 

[20]See http://www.sohu.com/a/284889182_120044812 

[21]See PaRR analysis: China antitrust official says significant progress made in memory chip probe (available at https://app.parr-global.com/intelligence/view/prime-2740265)

 

[22]See PaRR analysis: China SAMR’s investigation into Microsoft ongoing (available at https://app.parr-global.com/intelligence/view/prime-2646301)

[23See http://www.sohu.com/a/284889182_120044812. 

[24]4 cases which were directly punished by SAMR were a price-fixing case involving four Shenzhen tugboat companies (decision available at http://samr.saic.gov.cn/gg/201806/t20180625_274741.html) , market allocation and price-fixing case involving two Shenzhen tally companies (decision available at http://samr.saic.gov.cn/gg/201807/t20180720_275163.html ), glacial acetic acid API case (decision available at  http://samr.saic.gov.cn/gg/201812/t20181224_278969.html), and an chlorpheniramine maleate API abuse of dominance case (decision not yet published, relevant report available at http://samr.saic.gov.cn/xw/yw/xwfb/201901/t20190102_279577.html ).

[25]Notice available at http://samr.saic.gov.cn/xw/yw/wjfb/201901/t20190103_279720.html. 

[26]For instance, the Medtronic resale price maintenance case (decision available at http://www.ndrc.gov.cn/zwfwzx/xzcf/201612/t20161209_829745.html  ), and Smith Nephew resale price maintenance case (decision available at http://www.shdrc.gov.cn/fzgggz/jggl/jghzcfjds/25365.htm). 

 

[27]《短缺药品和原料药经营者价格行为指南》,promulgated by NDRC on 16 November 2017.

 

[28]Decision available at http://samr.saic.gov.cn/gg/201812/t20181224_278969.html. 

[29]Decision not yet published, relevant report available at http://samr.saic.gov.cn/xw/yw/xwfb/201901/t20190102_279577.html.

 

[30]For instance, Hubei province’s AMR is probing calcium gluconate product price hikes, report available at https://app.parr-global.com/intelligence/view/prime-2735188. 

[31]Decision available at http://samr.saic.gov.cn/gg/201806/t20180625_274741.html 

[32]Decision available at http://samr.saic.gov.cn/gg/201807/t20180720_275163.html

[33]Decision available at http://samr.saic.gov.cn/gg/201812/t20181211_277378.html

 

[34]See Rules on Port Pricing in Tianjin, available at http://fzgg.tj.gov.cn/dtzx/tzgg/201807/t20180705_70667.shtml.

[35]See Optimize the business environment and stimulate consumption potential-Interview with Zhang Mao, Director of the State Administration for Market Regulation, available at http://samr.saic.gov.cn/xw/yw/zj/201812/t20181227_279356.html.

[36]Decision available at http://samr.saic.gov.cn/gg/201807/t20180713_275058.html


[37]For instance, Shanghai Haiji Yegao Technology Co. Ltd. further appealed to the Beijing Second Intermediate People’s Court regarding SAIC’s decision on market allocation and price-fixing, No. (2018) Jing 02 Xing Zhong 82, Judgment available at http://wenshu.court.gov.cn/content/content?DocID=50ca2a45-85dc-4cac-8f85-a8eb00109368&KeyWord=上海%7C海基业%7C国家工商行政管理总局.

[38]No. (2017) Qiong Xing Zhong 1180, Judgment available at http://wenshu.court.gov.cn/content/content?DocID=23889d51-88d8-4e87-aaa4-a85c01845f73&KeyWord=海南省物价局%7C海南裕泰科技饲料有限公司.

 

[39]No. (2016) Yue Min Zhong 1771, Judgment available at http://wenshu.court.gov.cn/content/content?DocID=c511ba00-956c-4d2c-ae2f-a97a00be5dbe&KeyWord=东莞市横沥国昌电器商店.

 

[40]No. (2017) Zui Gao Fa Min Shen 4955, Judgment available at http://www.ciplawyer.cn/html/cpwxfbz/20181217/140845.html?prid=170.

 

[41]《全国人民代表大会常务委员会关于专利等知识产权案件诉讼程序若干问题的决定》, available at http://www.npc.gov.cn/npc/xinwen/2018-10/26/content_2064473.htm?from=timeline

 

[42]See Legislation Plan of the Standing Committee of the Thirteenth National People's Congress, available at http://www.npc.gov.cn/npc/xinwen/2018-09/10/content_2061041.htm

 

[43]See: PaRR analysis:  China’s anti-monopoly Law amendments are expected to include FCRS, increased penalties, redefined monopoly agreement. During the 7th China Competition Policy Forum in Beijing, Xu Lefu, Deputy-General of the AML Bureau of SAMR, revealed the potential main amendments to AML (available at https://app.parr-global.com/intelligence/view/prime-2686426 ). 

 

[44]See The State Council Information Office’s press conference on the 10th anniversary of the implementation of China's Anti-Monopoly Law, available at http://www.gov.cn/xinwen/2018-11/16/content_5341034.htm#1

[45] See The State Council Information Office’s press conference on the 10th anniversary of the implementation of China's Anti-Monopoly Law, available at http://www.gov.cn/xinwen/2018-11/16/content_5341034.htm#1

[46]See http://samr.saic.gov.cn/gg/201901/t20190103_279729.html. 

 

[47]On the same day, SAMR also promulgated the Interim Measures concerning Administrative Punishment Hearings, which will take effect from 1 April 2019. Under the Measures, market regulation administrations shall inform a concerned operator of its right to request a hearing before making an administrative punishment decision that involves ordering suspension of production or business, rescission of a business permit or license, or imposition of a fine and disgorgement of illegal gains of more than RMB 100,000. 

[48]See Article 77 of  Interim Provisions concerning the Procedure for Imposition of Administrative Punishment

[49] See State Council Information Office’s press conference on the 10th anniversary of the implementation of China's Anti-Monopoly Law, available at http://www.gov.cn/xinwen/2018-11/16/content_5341034.htm#1

[50]See http://samr.saic.gov.cn/xw/yw/xwfb/201811/t20181116_277087.html 




A Guide to Doing Business in China

We explore the key issues being considered by clients looking to unlock investment opportunities in the People’s Republic of China.

Doing Business in China
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