Anti-Monopoly Law and Practice in China

593 Pages·2011·2.41 MB·English

by  H. Stephen Harris

Anti-Monopoly Law and
Practice in China
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Anti-Monopoly Law and
Practice in China
H. Stephen Harris, Jr.
Peter J. Wang
Yizhe Zhang
Mark A. Cohen
Sébastien J. Evrard
1
1

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Library of Congress Cataloging-in-Publication Data
Anti-monopoly law and practice in China / H. Stephen Harris, Jr., Peter J. Wang ... [et al.]
p. cm.
Includes bibliographical references and index.
ISBN 978-0-19-539478-8 (pbk. : alk. paper)
1. Antitrust law–China. I. Harris, H. Stephen, 1955-
KNQ3242.A95 2011
343.51'0721–dc22 2010045982
___________________________________________
1 3 5 7 9 8 6 4 2
Printed in the United States of America on acid-free paper
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Contents
ABOUT THE AUTHOR xi
FOREWORD xiii
P REFACE xv
INTRODUCTION 1
CHAPTER 1: Legislative History of the Anti-Monopoly Law 7
I. A Brief Overview of the Context and History Behind
the Drafting of the Anti-Monopoly Law 8
II. The Anti-Monopoly Law: Background and
Substantive Provisions 20
A. The Objectives of the Law 20
B. Extraterritorial Reach of the Law 23
C. Application of the Law to Regulated Sectors
of the Economy 24
D. Market Defi nition 27
E. Prohibition of Concerted Action 28
F. Abuse of Dominance 31
G. Merger Review 37
H. Administrative Abuses 41
I. The Anti-Monopoly Enforcement Authority 45
J. Legal Liability 51
K. Abuses of Intellectual Property Rights and
Other Supplementary Provisions 55
CHAPTER 2: Monopoly Agreements 57
I. Scope of Application of Chapter 2 of the AML 61
A. The Notion of an “Undertaking” 61
B. The Notion of “Agreement” 62
1. Tacit Collusion as an “Agreement” under the AML 63
2 . Tacit Acquiescence in Vertical Relationships 64
3. Intraenterprise Agreements 65
C. The Notion of a “Restriction of Competition” 66
D. The Element of Intent 67
v
vi Contents
II. Prohibited Monopoly Agreements Between Competitors 68
A. Price-Fixing Agreements 69
B. Agreements to Restrict Output 70
C. Market Allocation Agreements 71
D. Agreements to Restrict the Purchase or
Development of New Technology or New Facilities 72
E. Joint Boycotts 74
F. Other Monopoly Agreements as Recognized by the AMEA 75
G. Bid-Rigging 76
III. Prohibited Vertical Agreements 76
A. Resale Price Maintenance 76
B. Other Vertical Agreements 78
IV. Exemptions for Agreements with Benefi cial Purposes 78
A. R&D Agreements 81
B. Agreements Enhancing Effi ciency or
Unifying Specifi cations and Standards 82
C. Agreements Involving Small and Medium-Sized Enterprises 82
D. Agreements Maintaining the Public Welfare 83
E. Crisis Cartels 83
F. Export Cartels 84
G. Other Exemptions Stipulated by Law or the State Council 86
CHAPTER 3: Abuse of Dominance 89
I. Assessment of a Dominant Market Position 91
A. Market Defi nition 91
B. Defi nition of Dominance 94
C. Presumptions of Dominance Based on Market Shares 96
D. Factors to Be Considered in Determining
Whether a Firm Has a Dominant Market Position 99
II. Conduct that May Constitute Abuse of a
Dominant Market Position 106
A. Unfairly High Prices and Unfairly Low Prices 106
B. Selling at Prices Below Cost (Predatory Pricing) 109
C. Refusals to Deal 110
D. Exclusive Dealing 113
E. Tying and Imposing Other Unreasonable
Trading Conditions 115
F. Discriminatory Treatment, Including Price Discrimination 116
G . Abuses of a Dominant Market Position Involving
Intellectual Property 117
III. Court Decisions 117
CHAPTER 4: Merger Control 123
I. Introduction 125
II. The Scope and Reach of China’s Merger Control Scheme 127
A. Covered Transactions 127
Contents vii
B. Extraterritorial Jurisdiction and Nexus 131
C. Industry-Specifi c and National Security Review 133
III. Thresholds and Eligible Transactions 138
A. Mandatory Review Thresholds 138
B. Discretionary and Voluntary Reviews 142
C. Penalties for Failure to File 144
IV. Review Process 145
A. Filing 147
1. Who Files and When to File 147
2. Filing Attempts and Acceptance 148
B. Initial Review Period 149
C. Further Review Periods 150
V. Detailed Information Requirements 151
A. Initial Merger Filing 151
B. Investigation 153
C. Third Parties 154
VI. Substantive Standards 154
A. Overall Review Criteria 154
B. Relevant Markets and Market Defi nition 155
C. Theories of Anticompetitive Eff ects 158
D. Procompetitive Eff ects and Effi ciencies 164
VII. MOFCOM Decisions 166
A. Approvals 166
B. Denials 167
C. Conditional Approvals 167
D. Appeal 171
VIII. Conclusion 173
CHAPTER 5: Cases Involving Government-Related Entities 175
I. Administrative Monopolies 177
A. The Treatment of Administrative Monopoly
Under the AML 181
B. Procedural Rules Addressing Administrative Monopoly 183
1. Jurisdiction of SAIC and NDRC 183
2. SAIC Procedural Rules 184
3. NDRC Rules 188
C. Jurisdiction in the Courts 188
II. State-Owned Enterprises 190
A. History and Regulation of SOEs 191
1. The Role of SOEs in a “Socialist Market Economy” 191
2. SASAC Oversight of SOEs 193
B. Application of the AML to SOEs 194
C. Actual AML Enforcement Against SOEs 197
1. Merger Control 198
2. Monopoly Agreements and Abuses of Dominance 199
viii Contents
3. Litigation 200
III. Trade Associations 200
CHAPTER 6: Intellectual Property Rights Under the AML 209
I. China’s Increased Focus on Intellectual Property Rights 213
II. Abuses of IP Rights: Article 55 of the AML 216
A. Rights Covered by Article 55 of the AML 216
B. The Meaning of Article 55 of the AML 217
1. A Safe Harbor for Some IP Exploitation 219
2. Abuse/Misuse of IP Rights 220
III. Technology Transfer Agreements 222
A. Agreements Between Competitors
(Article 13 of the AML) 223
B. Agreements Between Noncompetitors
(Article 14 of the AML) 226
IV. Refusals to License Intellectual Property Rights 227
V. Technology Pools and Standards 231
A. Technology Pools 232
B. Standard-Settings Agreements 235
1. Standards Setting Outside the AML Framework 235
2. Standards Under the AML 243
VI. Abuse of Technological Protection Measures 245
VII. Anticompetitive IP Litigation 250
VIII. Enforcement and Remedies 255
CHAPTER 7: The Enforcement Agencies: AMC and AMEA 261
I. Enforcement Structure 263
A. The Anti-Monopoly Commission 266
B. The Anti-Monopoly Enforcement Authorities:
MOFCOM, SAIC, and NDRC 267
1. MOFCOM 270
2. SAIC 273
3. NDRC 277
C. Other Relevant Government Agencies 281
II. Powers and Duties of the AMEA 282
A. Investigative Powers 282
B. Commitments 285
C. Decisions 286
D. Penalties 287
E. Leniency 290
F. Malfeasance by Enforcement Personnel 294
III. Rights of Persons Under Investigation 295
A. The Right to Be Heard 295
Contents ix
B. Confi dentiality 295
C. Attorney-Client Privilege 296
IV. Administrative Reconsideration of AMEAs’ Decisions 296
V. International Cooperation and Coordination of
Anti-Monopoly Authorities 297
A. Bilateral Cooperation and Exchanges 297
B. Multilateral Cooperation and International Organizations 299
CHAPTER 8: The Role of the Courts in AML Enforcement 301
I. The PRC Judicial System 303
A. Overview 303
B. The Structure of the Court System 305
C. Procedural Issues 307
1. Case Acceptance 307
2. Jurisdictional Issues 307
3 . Limitations Period 312
4. Evidence and Burdens of Proof 313
5. Expert and Economic Evidence 315
II. Basis for Judicial Enforcement of Anti-Monopoly Matters 316
A. Private Civil Enforcement 316
1 . Civil AML Litigation 316
2. Civil Litigation Under Competition-Related Laws 320
B. Administrative Litigation 322
1. Judicial Review of AMEA Enforcement 322
2. Private Actions Against Administrative Monopolies 325
C. Criminal Prosecution 326
CHAPTER 9: Competition-Related Laws Other than the AML 329
I. The Anti–Unfair Competition Law 331
A. Introduction 331
B. Competition-Related Provisions of the AUCL 333
1. General Provision 333
2. Abuse of Monopoly Position to Restrict
Competition by Public Utility Companies
and Other Legal Monopolies 335
3 . Below-Cost Selling 338
4. Tying 339
5. Bid-Rigging 342
6. Abuses of Administrative Monopoly 342
C. Enforcement of the AUCL 344
1. Burden of Proof 345
2. Statistics 345
D. Relationship Between the AUCL and Other Laws 348