On Nov. 21, 2013, the Beijing No. 2 Intermediate Court issued a ruling in favor of a plaintiff against Beijing Seafood Wholesale Industry Association (the Association) in a private action alleging that that certain rules of the Association are invalid under the Anti-Monopoly Law. The court ordered the Association to cease organizing its members to reach monopolistic agreements by adjusting and fixing the price of scallops produced by Dalian Zhangzi Island Group Company Limited (Zhangzi Island Company).
Certain rules of the Association prohibited its members from participating in unfair competition or refusing to sell scallops at the price fixed by the Association. Members also were prohibited from selling whole scallops to non-members in markets in which the Association's members participated. A member's violation of these rules would subject it to a fine of RMB 10,000 ($1,640) for each violation.
A seafood seller in Beijing, who also is a member of the Association, filed a lawsuit against the group, claiming that the rules setting prices for Zhangzi Island scallops and the rules prohibiting members from selling whole scallops to non-members violate the Anti-Monopoly Law. The seafood seller requested a ruling to confirm that the rules are invalid, to order the Association to cease engaging in the conduct, and also to receive economic compensation. The Association argued that it organized its members to fix and adjust the prices based on the requirements of Zhangzi Island Company, and that the Association's members could determine their prices based on the minimum price. It argued that the purpose of the prohibition on selling whole scallops to non-members was to prevent members from selling across different areas.
The Beijing No. 2 Intermediate Court ruled that: (1) the Association intended to control the market by organizing its members to reach agreements on fixing and adjusting the price of Zhangzi Island scallops; this prevented competition among the members of the Association and caused members to jointly resist competition from non-members; this impacted the normal fluctuation of prices, harmed consumers, and excluded and restricted competition; (2) by prohibiting members from selling whole scallops to non-members, the Association increased the operation costs of non-members and harmed consumers; (3) the Association's rules fixed commodity prices, which violates the Anti-Monopoly Law. The court reached a verdict in favor of the seafood seller, and a report on the decision is available here. The Association has filed an appeal.
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