On 4 January 2011, the National Development and Reform
Commission (NDRC) fined the Zhejiang Fuyang Paper
Making Industry Association (the Association) for
facilitating its members in relation to engaging in monopoly acts,
in breach of both the Anti-Monopoly Law (AML) and
the Price Law (PL)1.
This is the first enforcement action (in respect of
price-related breaches of the Anti-Monopoly Law) by the NDRC in
According to the NDRC, at least 5 meetings were held between the
Association's members (facilitated by the Association) with the
objective of coordinating prices in respect of a product called
"Class A white paperboard". Twenty directors from the
Association's member companies attended the meetings organized
by the Association.
The following is a brief description of the 5 meetings:
On 2 March 2010, members met to fix prices in relation to Class
A white paperboard. Subsequently, members increased their prices
for Class A white paperboard by 10%.
On 6 April 2010, members met and agreed that the price of Class
A white paperboard should be "stable"for the month of
April. However, if demand for Class A whitepaper board fell in May
2010, then it was agreed that the Association would organize for
members to restrict their output.
On 28 April 2010, members met and agreed to price Class A white
paper board for between 100 to 150 RMB per ton for the period 29
April 2010 to 15 May 2010.
On 3 August 2010, members met and agreed to raise the price of
the coating for white paperboard to 200RMB per ton.
On 31 August 2010, the Association organized for a special
meeting where members met and agreed to increase prices for their
Class A white paper board to between 200 and 300 RMB per ton from 1
September 2010 onwards.
The AML prohibits industry associations from facilitating
monopoly acts conducted by business operators (see Article 16,
AML). The PL prohibits industry associations from breaching other
price laws and regulations (see Article 17, PL); and regulations
accompanying the PL prohibits industry associations from
facilitating business operators from "coordinating and
manipulating market prices"2.
The NDRC found that the Association was in breach of both the
AML as well as the PL; and fined the Association a total of
500,000RMB. This is the maximum fine for industry associations
pursuant to both the AML as well as the PL.
The paper association case above is the first price-related
enforcement action by the NDRC in 2011 (pursuant to the AML and the
PL) and this decision was issued on 4 January 2011.
We note that on 29 December 2010, the NDRC published regulations
in relation to price-related breaches of the AML (the
"Regulations on Anti-Price Monopoly") (regulations).
These regulations provide further guidance to price-related
breaches of the AML. Of most relevance to the paper association
case, Article 9 of the regulations prohibits trade associations
Formulating rules, decisions, notices etc that result in
eliminating or restricting price competition;
Organising business operators to form price monopoly agreements
which are prohibited by the regulations; and
Undertaking any other conduct which amounts to organizing
business operators to form or implement price monopoly
Businesses should be aware of the above mentioned provisions and
prohibitions which regulate the conduct of trade associations (both
in the AML, the PL and in their accompanying regulations).
Anyone with standard form contracts who deals with small business must review the contracts for potential unfair terms.
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