On Sept. 29, 2014, under the authorization of the China State Administration of Industry and Commerce (SAIC), the Jiangsu Administration of Industry and Commerce imposed fines of 1.7 million RMB (US$276,000) on the Pizhou Branch of Xuzhou Tobacco Company (Pizhou Branch) for differential treatment under the Anti-Monopoly Law (AML).
The investigation, triggered by a complaint from Pizhou city local tobacco retailers, was initiated in August 2013. In accordance with China's Tobacco Monopoly Law, the State exercises administration over the production, sale, import and export of tobacco commodities, and implements a tobacco monopoly license system. Pizhou Branch was the sole company with the "license for tobacco monopoly wholesale enterprise" in Pizhou. Thus, all tobacco retailers in Pizhou could purchase tobacco products only from Pizhou Branch, as under the Regulations for the Implementation of the Tobacco Monopoly Law, a retailer with the "license for tobacco monopoly retail trade" shall lay in new stocks of tobacco products at the local tobacco monopoly wholesale enterprise. SAIC therefore found that Pizhou Branch holds a dominant position of the cigarette wholesale market in Pizhou.
SAIC also found that Pizhou Branch imposed differential treatment on similarly situated retailers. Pizhou Branch provided more frequent deliveries and greater supplies of popular cigarettes to three affiliated retailers compared to other retailers. Such differential treatment was found to have been made without justifiable reasons and impeded fair competition, which violated the provisions of the AML.
Pizhou Branch provided cooperation in the investigation. With this in mind, the SAIC fined it 1 percent of its sales revenue of popular cigarettes in 2013, around 1.7 million RMB (US$276,000).
The SAIC Decision is available here.
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