China: Comparison of the NDRC rules and the SAIC rules on monopoly agreements

1. How to determine whether a conduct amounts to a "concerted act" ?

Factors to be considered including:

whether there has been consistency between business operators in relation to their pricing conduct;

whether there is "communication of intention" between business operators;

the structure of the market; and any changes to the structure of the market, etc.

Factors to be considered including:

whether there has been consistency between business operators in relation to their market conduct;

whether there is"communication of intention" or information exchange between business operators;

whether business operators can justify their consistent conduct;

the structure of the market; competition on the market; any changes to the structure of the market; and the industry concerned, etc.

"Communication of intention" between business operators is an indispensible factor to find a "concerted act" under the NDRC rules; while under the SAIC rules, it seems that information exchange may lead to a finding of a "concerted act" and "communication of intention" is not necessarily required.

2. What horizontal conducts are prohibited?

Competing business operators are prohibited from eight types of price fixing conducts, such as fixing or altering the price level of commodities or services; fixing or altering a commission, discount or other charges; and agreeing to apply a standard formula as a basis to calculate prices.

Competing business operators are prohibited from non-price related conducts, such as restricting output and sales, dividing markets, restricting innovation and joint boycotts.

Whether there is a price component in the conduct is the watershed between the jurisdiction of the NDRC and the jurisdiction of the SAIC.

3. What vertical conducts are prohibited

Business operators and their trading partners are prohibited from fixing resale price or the minimum resale price.

No prohibitions expressly provided

Regarding vertical conducts, the AML only explicitly prohibits resale price maintenance which is price-related, falling into the exclusive jurisdiction of the NDRC.

4.What leniency whistleblowers are entitled to

the first whistleblower may be exempted from penalty;

The second whistleblower may be given penalty mitigated by over 50%;

Other business operators who are not 'first in' or the second may be given penalty mitigated by less than 50%.

the first whistleblower will be exempted from penalty;

Other whistleblowers will be given mitigated penalty based on the circumstance.

Only monetary fine can be exempted or mitigated; confiscation of illegal gains is not exemptible or mitigatible.

The first whistleblower will obtain exemption of penalty under the SAIC Rules; while, under the NDRC rules, the first whistleblower won't necessarily obtain immunity and NDRC has the discretion to decide the level of sanction to first whistleblower.

The SAIC rules give no indication on the extent of penalty mitigation regarding other whistleblowers.

It's not clear under the NDRC rules what penalty is exemptible or mitigatible, or whether all types of penalty stipulated by the AML are exemptible or mitigatible.

5. What are the penalties imposed for breach?

The NDRC rules refer back to the penalty provisions of the AML.

The SAIC rules reiterate the penalty provisions of the AML and add two details:

The mitigation or exemption of penalty referred to in the SAIC rules is only limited to monetary fine.

Business operators who stop breaching conducts on their own initiatives may be granted mitigation or exemption of penalty.

The discretion of the SAIC to mitigate or exempt penalty (monetary fine, to be specific) for business operators who stop breaching conducts on their own initiatives could be understood as an embodiment of the Article 49 of the AML, which provides that the enforcement agencies may decide the specific amount of monetary fine in light of the nature, severity or duration of the breaching conduct.