China: A Further Look At The Draft Rules Governing AML Private Actions

Last Updated: 2 May 2011
Article by Susan Ning, Liu Jia, Ji Kailun and Shan Lining

On 25 April 2011, the Supreme People's Court (the Court) published draft rules which govern Anti-Monopoly Law private actions (Draft Rules).  These draft rules are entitled "Provisions on Issues Concerning the Application of Law in relation to Trials of Monopoly Civil Dispute Cases".

This article outlines the salent provisions of, and points to some interesting features of, these Draft Rules.

  1. Objective

    The objective of the Draft Rules is to "to ensure the proper judgment of civil antitrust disputes, prevent monopolistic conducts, protect fair competition in the market, and safeguard the interests of consumers and social public interest"

  2. Overview of the provisions

    The Draft Rules has 20 provisions in total, these cover the following matters:

    • Articles 1 to 3 deal with jurisdiction issues;
    • Articles 4 deals with the issue of standing;
    • Articles 5 to 6 provide outline the different forms of AML civil litigation;
    • Articles 7 to 14 outline the rules of evidence;
    • Articles 15 to 16 outline the link between AML investigations and litigation;
    • Articles 17 to 19 deal with remedies; and
    • Article 20 provides for a statute of limitations.


  3. Jurisdiction

    The Draft Rules provide that first instance AML cases will be heard by:

    • intermediate people's courts located in the capital cities of the provinces and autonomous regions;
    • intermediate people's courts in municipalities which fall under the purview of the State Council or in cities listed in the State Plan1 ; and
    • intermediate people's courts which have been designated by the Supreme People's Court.


    The Court was interviewed about the draft recently2 and during this interview, a spokesperson from the Court said that only certain intermediate people's courts were given jurisdiction to hear AML cases because their experience with AML cases are that these are highly complex and "technical" in nature. The spokesperson also said that China is still at its infancy re AML litigation and thus far the courts haven't had the opportunity to become experienced AML courts. It was also disclosed during the interview that AML cases (along with Anti-Unfair Competition Law cases) will be heard by the Intellectual Property Rights Tribunals within the courts possessing jurisdiction.

  4. Standing

    The Draft Rules echo Article 50 of the AML. Article 50 of the AML provides that business operators which implement monopoly acts and thereby causing others to suffer losses will bear civil liability. The Draft Rules state that "natural persons, legal persons and other organisations who have suffered harm as a result of monopolistic conduct, including business operators and consumers, may file a civil suit". From the relatively broad way in which the Draft Rules are phrased, it would appear that persons who are directly or indirectly harmed by a monopoly act may sue.

    During the interview mentioned above, the spokesperson from the Court explained that victims of monopoly acts often do not come into direct contact with entities who breach the AML – for instance consumers.

  5. Forms of AML civil litigation

    The Draft Rules provides for both stand alone and follow on rights of actions.

    The Draft Rules also provide that there are only follow on rights of actions in relation to breaches of the AML by administrative agencies 3.

  6. Rules of evidence

    Burden of proof on plaintiff. Pursuant to PRC Civil Procedure Law, the burden of proof always lies on the plaintiff. This is also the case in the Draft Rules. Specifically, the Draft Rules state that plaintiffs will bear the burden of proof in the following respects:

    • the existence of the alleged monopolistic conduct;
    • the existence of damages;
    • the causal link between the alleged monopolistic conduct and damages.

    Cartel cases. In relation to cartel cases, the plaintiff bears the burden in relation to proving how the cartel arrangement has eliminated or restricted competition (i.e. the effects test). However, in relation to specific conduct outlined pursuant to Articles 13(1) to (5) and 14(1)-(2) of the AML, the plaintiff does not have to prove effects. Article 13 of the AML prohibits cartel agreements and arrangements and parts (1) to (5) outlines examples of cartel agreements and arrangements such as price fixing, restricting supply and dividing markets. Article 14 of the AML prohibits anti-competitive vertical agreements and arrangements including resale price maintenance. The Draft Rules make it clear that one does not need to prove "effects" in relation to these examples of cartel agreements or anticompetitive vertical agreements.

    Abuse of dominance cases. In relation to abuse of dominance cases, the plaintiff bears the burden of proof in relation to proving: what the relevant market is, dominance of the defendant in the relevant market and the alleged abuse.

    Defences. The defendant would bear the burden of proof to prove the legitimacy of his actions, after the plaintiffs are able to prove the above mentioned elements.

    The Draft Rules also address "pass through" defences – in relation to pass through defences, the defendant would have the burden of proof that the plaintiffs have passed through all their damages or part of their damages to other entities.

    Special sectors. The Draft Rules also provide that so long as there is sufficient evidence, the courts would be able to provide a "preliminary" determination that dominance exists in respect of:

    • public enterprises including the suppliers of water, electricity, heat and gas;
    • business operators other than public enterprises, who are entitled by the relevant laws, regulations and rules to be the dominant operator in relation to specific commodities and services;
    • in markets which lack efficient competition and where business operators provide commodities or services to others who place great reliance on these business operators.

    Type of evidence. Evidence to prove dominance may include: economic analysis, statistical results put together by a qualified and independent third party and "confessions" by the alleged dominant entity.

    Court order to provide evidence. There is also a provision within the Draft Rules which give courts the power to instruct defendants to provide evidence. Specifically the Draft Rules state that plaintiffs may apply for a court order to instruct defendants to provide further evidence, provided the a number of elements are satisfied, including: that plaintiffs are able to prove the "probable existence" of damages due to the monopolistic conduct and plaintiffs have used "reasonable means" to obtain evidence but to no avail.

    Expert Evidence. The Draft Rules provide that plaintiffs and defendants may apply to the courts if they wish to submit expert evidence.

  7. Link between AML investigations and litigation

    The Draft Rules provide that there is a link between AML investigations and litigation. Specifically, in situations where monopolistic conduct has been investigated by but not yet determined by the antitrust authorities, the courts may still make determinations based on these investigations.

    The courts may also decide to grant a stay to cases in which investigations into alleged monopolistic conduct has not been concluded by the antitrust authorities.

  8. Remedies

    The Draft Rules state that business operators who commit monopolistic conduct should bear civil responsibilities pursuant to civil law, tort liability law and the AML.

    These remedies include: an order to stop the infringement; an order to eliminate the "danger" of causing losses to others and damages for loss caused to others.

  9. Statute of limitations

    The Draft Rules provide that the statutory limitations for civil antitrust actions are:

    • in relation to stand alone actions, two years commencing from the day when the aggrieved party is aware of or should be aware of the infringement;
    • in relation to follow on actions, the two year limit is calculated from the day when the aggrieved party either is aware of or should be aware of the determination by the antitrust authorities.
  10. Concluding remarks

    These Draft Rules are very comprehensive and cover many aspects of AML litigation. Going forward and especially after these rules are enacted, we expect to see a rise in terms of AML litigation as plaintiffs become familiar with and confident with what they can expect and need to prove to establish a breach of the AML.

  11. 1Currently, there are 5 cities separately listed on the State Plan. These are: Shenzhen, Dalian, Qingdao, Ningbo and Xiamen.

    2http://www.rmfyb.com.cn/paper/html/2011-04/26/content_26384.htm

    3The AML prohibits an abuse of administrative powers by administrative agencies which result in the elimination and restriction of competition (see Chapter 5, AML).

    The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions