China: China Monthly Antitrust Update - March 2016

Last Updated: 21 March 2016
Article by Jet Deng and Ken Dai

Legislation

Legislative Affairs Office of the State Council Publishes the Revised Draft of AUCL for Soliciting Public Opinion

On 25 February, Legislative Affairs Office of the State Council ("Legislative Affairs Office") published the Anti-Unfair Competition Law of the People's Republic of China (Revised Draft for Examination and Approval) ("Revised Draft of AUCL") on its official website to solicit public opinion. With a view to achieving the CPC Central Committee‟s and the State Council‟s objects of letting the market decide the allocation of resources, establishing a set of fair, open and transparent market rules, and building an open and unified market system with orderly competition, as well as to better protecting the legitimate interest of customers, the State Administration for Industry and Commerce ("SAIC"), on the basis of compositing opinions from various parties, revised the AUCL and thereafter submitted the Revised Draft of AUCL to the State Council. In order to better understand the comments and suggestions from all aspects of society, improve the legislation quality, Legislative Affairs Office published the full text of the Revised Draft of AUCL to solicit public opinion. Relevant organizations and people from all walks of life can put forward their revision suggestions before 25 March 2016.1

SAIC Publishes the Seventh Version of IPR Guidelines for Soliciting Opinion

On 4 February, Anti-Monopoly and Anti-Unfair Competition Enforcement Bureau ("CEB") published the Antitrust Law Enforcement Guidelines for Abuse of Intellectual Property Rights (the Seventh Version of SAIC) on its official website to solicit public opinion. The period of soliciting public opinion ends on 23 January 2016. Earlier on 6 January, CEB convened many domestic and overseas undertakings to attend the symposium for soliciting comments on the Guidelines on Prohibition of Abuse of Intellectual Property Rights to Eliminate or Restrict Competition (the Sixth Version).CEB also solicited comments from various parties through written comments, symposiums, seminars, etc. Up to 3 February, more than 800 comments and suggestions were received from relevant bureaus or departments, provincial administrations for industry and commerce, law firms, relevant enterprises and experts in antitrust law and economy fields. Such comments and suggestions showed great appreciation to the Sixth Version. After repeated research, SAIC adopted many comments to the greatest extent, and formulated the Antitrust Law Enforcement Guidelines for Abuse of Intellectual Property Rights (the Seventh Version of SAIC).2

NDRC Publishes the Drafts for Comments of Leniency Guidelines and Commitment Guidelines

On 2 February, National Development and Reform Commission ("NDRC") published the Guidelines for Applying Leniency Program to Horizontal Monopoly Agreements (Draft for Comments)("Leniency Guidelines") and Guidelines on Commitment of Undertakings in Antitrust Cases (Draft for Comments)("Commitment Guidelines")on its official website, for soliciting public comments. The period of soliciting public comments is from 3 February, 2016 to 22 February, 2016. Relevant organizations and people from all walks of life may log on NDRC‟s website to put forward suggestions. 3

Authorities

Herbert Fung, Director of Business and Economics Division under Competition Commission of Singapore, Visits SAIC

On 25February, CEB under SAIC held a symposium with a delegation lead by Herbert Fung, Director of Business and Economics Division under Competition Commission of Singapore. Both parties shared recent developments in regard to their respective antitrust law enforcement and stressed that they will further strengthen the cooperation on antitrust law enforcement. 4

Herbert Fung, Director of Business and Economics Division under Competition Commission of Singapore, Visits AMB of MOFCOM

On 24 February, Mr. Han Chunlin, Deputy Director-General of Anti-Monopoly Bureau ("AMB") of Ministry of Commerce ("MOFCOM"), met with a delegation lead by Herbert Fung, Director of Business and Economics Division under Competition Commission of Singapore. Both parties shared opinions on competition policies, situation of antitrust law enforcement and certain concerned issues. 5

NDRC: China Will Establish a Review System of Fair Competition Targeting Administrative Monopoly Conduct

On 19 February, Mr. Li Qing, Deputy Director-General of Price Supervision & Inspection and Anti-Monopoly Bureau("PSIAMB") under NDRC, expressed that one of the important work of antitrust authorities is to establish a review system of fair competition and strengthen antitrust law enforcement against the abuse of administrative power to eliminate or restrict competition. Such work will perform its role in defusing over capacity and stimulating innovation and entrepreneurship. From the perspective of reform requirement, regulating the conduct of the government is a task of top priority as well as a tough issue. NDRC, together with other relevant ministries and departments, in accordance with the requirement from CPC Central Committee, have put forward the suggestion of establishing a review system of fair competition and reported it to the State Council. 6

CEB under SAIC Shares Opinions with the Department of International Taxation under State Administration of Taxation

On 2 February, CEB under SAIC met a delegation from the Department of International Taxation under State Administration of Taxation. Both parties shared opinions on their respective work and experience on anti-tax evasion and antitrust law enforcement. Also, the future cooperation was discussed during the meeting. 77

Public Enforcement

Nanbei Vegetable Wholesale Market Receives Penalty Decision from Hainan AIC for Taking Advantage of Its Dominant Position to Compete Unfairly

On 27 February, Industrial & Commercial Administration Bureau of Hainan Province ("Hainan AIC") issued an administrative penalty decision against Haikou Nanbei Vegetable Wholesale Market Co., Ltd ("Nanbei Vegetable Wholesale Market"), who set up Haikou Nanbei vegetable wholesale market, with the confiscation of illegal income of RMB 2,424,500 and a fine of RMB 608,650. Nanbei Vegetable Wholesale Market had been investigated by Hainan AIC since 6 February 2016. It had been recognized as market bullying, commercial bribery, overcharging and other illegal conduct after the investigation. Taking advantage of its market dominance, Nanbei Vegetable Wholesale Market has stipulated that vehicles shall not enter the market for business operation unless they were registered and paid administration fees since June 2015. Besides, Nanbei Vegetable Wholesale Market allocated the market share, which seriously disrupted the normal market order. 8

SAIC Publishes Administrative Penalty Decisions against 17 Insurance Branches in Jiangxi Province over the Monopoly Agreements

On 3 February, SAIC published 2016 No.1 Competition Enforcement Notice, which was the administrative penalty decision against 17 insurance branches in Jiangxi Province. In June 2013, Jiangxi Administration for Industry & Commerce, under the authorization of SAIC, investigated the branches of 17 insurance companies, such as China Life Insurance Company and Taikang Life Insurance Company, etc. for their reaching and implementing sales market allocation agreements, and issued the penalty decision to the parties concerned on 28 December 2015. 9

NDRC Publishes Administrative Penalty Decisions on Monopoly Agreements Case of Allopurinol

On 2 February, NDRC published the administrative penalty decision of No. 1, No.2, No.3 and No.4 on its official website. These penalty decisions are respectively against Chongqing Qingyang Pharmaceutical, The Place Pharmaceutical Jiangsu, Shanghai Xinyi United Medicinal Herbs and Shangqiu Huajie Pharmaceutical for their reaching and implementing monopoly agreements on the sales of Allopurinol. This is the first antitrust administrative penalty decision imposed on pharmaceuticals by NDRC since NDRC transferred its pricing power to market players. NDRC has changed the price supervision emphasis from proactive drug pricing to regulation and supervision during and after the drug sales since the drug pricing power transferred. The antitrust investigation against Allopurinol manufacture and sales companies and the severe punishment imposed on these companies indicates NDRC‟s determination, which is punishing the monopolistic conduct in pharmaceutical industry and protecting the sound competition order of pharmaceutical market as well as warning the pharmaceuticals not to violate the Anti-Monopoly Law ("AML") and the Price Law by raising drug price. 10

Price Bureau of Hebei Province Focuses on Antitrust Investigations in Telecommunication and Banking Industries in 2016

The Price Bureau of Hebei Province expressed that, the price supervision and anti-monopoly work of this year will focus on serving economic development and solving hot issues of livelihood, especially initiating investigations against monopoly in telecommunication and banking industries, so as to provide a good price environment to the social and economic development of Hebei Province. Hebei Province will initiate anti-monopoly investigation against telecommunication services, especially targeting at the price fixing conduct and arbitrary charge on the basis of abusing dominant market position by basic telecommunication operators. Besides, Price Bureau of Hebei will also investigate rate fixing conduct and loan interest rising conduct on small and medium-sized enterprises in banking industry in order to lessen the financing burden of small and medium-sized enterprises and promote the development of real economy. 11

Merger Control

MOFCOM Releases 17 Streamlined Cases in February

Up to 29 February 2016, MOFCOM has released 17 streamlined cases in February on its website, with total amount reaching 364 so far. 12

Private Actions

The Court Refuses to Accept the Lawsuit against CFDA for Its Administrative Monopoly Conduct Filed by Hunan Yangtianhe Pharmacy On 25 January, Hunan Yangtianhe Pharmacy ("Yangtianhe") filed a lawsuit before the Beijing First Intermediate People's Court against China Food and Drug Administration ("CFDA"), for the latter‟s violation of AML and the Anti-Unfair Competition Law. On 14 February, Yangtianhe received the administrative verdict from the Beijing First Intermediate People's Court, which reveals that the reason for not filing the case is that the litigation claims were not within the acceptance scope of administrative litigation. Yangtianhe expressed that it intended to appeal the verdict. 13

Academia

Establishment of Shanghai Zhangjiang Competition Policy and Antitrust Research and Consulting Center

On 19 February 2016, the Shanghai Zhangjiang Competition Policy and Antitrust Research and Consulting Center was co-established by PSIAMB under NDRC and Shanghai Zhangjiang Hi-Tech Park Management Committee, in order to deeply carry out the requirement put forward by Decision of the CPC Central Committee on Some Major Issues concerning Comprehensively Deepening the Reform adopted by the Third Plenary Session of the 18th CPC Central Committee and provide a better competitive environment for the development of undertakings in Zhangjiang National Innovation Demonstration Zone. Mr. Zhang Handong, Director-General of PSIAMB, and Mr. Li Qing, Deputy Director-General of PSIAMB, both attended the opening ceremony and the seminar on competition policy and anti-monopoly. 14

Dentons Team

Brief Introduction of Dentons' Antitrust Practice in Russia

With vast experience resolving complex antitrust issues in Russia, the CIS and the Caucasus, Dentons provides one of the largest and most reputable antitrust and competition law practices in the region. Our lawyers have represented clients in antitrust and competition law matters in Russia, Kazakhstan, Azerbaijan, Uzbekistan, Belarus, Ukraine and other CIS countries. Dentons‟ Russia and CIS Antitrust and Competition law practice is headed by the Firm‟s partner, Marat Mouradov, who has been practicing competition law almost from its inception and who focuses on complex merger control filing projects and antimonopoly investigations into various forms of market behavior. According to Chambers Europe's 2015 edition, "Clients highlight Dentons: it is proficient and of very high quality‟ Marat Mouradov, as the team head, is credited by one source for building the practice‟, with another commending him as a strong specialist‟". Marat Mouradov is ranked in Band 1 Chambers Global. Among the practice‟s clients are both domestic and international businesses operating in various industry sectors, including, in particular, life sciences, IT, mineral resources, retail, FMCG and others.

Dentons China Awarded "Global Awards 2016 in Competition" by Corporate LiveWire

Recently, Dentons China was awarded the "Global Awards 2016 in Competition" by a renowned consulting company Corporate LiveWire. This is the second time that Dentons China Antitrust Team, which was headed by Jet Deng and Ken Dai, won this international award since it was awarded in 2015. Also, this is the third time that Dentons China Antitrust Team won international awards in 2016 since it has been awarded as the "Competition Law Firm of the Year 2016 in China" by Corporate INTL and the "Leading Antitrust Law Firm in Asia-Pacific Region" by Chambers and Partners. The award demonstrates Dentons China‟s excellent achievements and admirable reputation among clients in antitrust field.

Dentons China Awarded as "Leading Antitrust Law Firm in Asia-Pacific Region" by Chambers

In February 2016, Dentons China was awarded as the "Leading Antitrust Law Firm in Asia-Pacific Region" by the world-renowned law firm rating agency Chambers and Partners, while Jet Deng was listed as "Leading Antitrust Lawyer in Asia-Pacific Region" again. In 2015, Dentons China Antitrust Team acted as the attorney in many cases with high-profile both abroad and at home, including lawsuits against high-technology company for abuse of dominant market position, antitrust investigation against enterprises from sectors of auto shipping, electronic component and life science, three antitrust lawsuits related to abuse of standard essential patent, concentration notifications for set-up of both domestic and foreign joint ventures and also provided antitrust compliance advice to numerous multinationals regarding their business operation in China.

Ken Dai Attends the 11th International Cartel Workshop in Japan

From 3 to 5 February 2016, Ken Dai, Partner of Dentons China Antitrust Team participated in the 11th International Cartel Workshop in Tokyo, Japan. The workshop is presented by the American Bar Association Section of Antitrust Law and the International Bar Association Antitrust Committee every two years. It is the first time for a city from Asia (Tokyo, Japan) to hold the Workshop, recognizing the prominence of cartel enforcement in East Asia during the last five years. Through a hypothetical global cartel investigation, a faculty of more than 75 highly experienced attorneys from around the world analyzed legal issues from detection of a conspiracy by company inside counsel to the ultimate disposition of both the enforcement actions and civil damage actions in jurisdictions around the world. The workshop highlighted current developments and future prospects in cartel enforcement in many jurisdictions.

Footnotes

1 http://www.chinalaw.gov.cn/article/cazjgg/201602/20160200480277.shtml

2 http://www.saic.gov.cn/fldyfbzdjz/gzdt/201602/t20160204_166524.html

3 http://jjs.ndrc.gov.cn/fjgld/

4 http://www.saic.gov.cn/fldyfbzdjz/gjjl/201602/t20160226_166853.html

5 http://fldj.mofcom.gov.cn/article/xxfb/201602/20160201263645.shtml

6 http://sports.chinanews.com/cj/2016/02-19/7765173.shtml

7 http://www.saic.gov.cn/fldyfbzdjz/gzdt/201602/t20160203_166450.html

8 http://www.liehv.com/shehui/wanxiang/2016-02-29/59030.html

9 http://www.saic.gov.cn/zwgk/gggs/jzzf/201602/t20160203_166468.html

10 http://jjs.ndrc.gov.cn/fjgld/

11 http://he.people.com.cn/n2/2016/0222/c192235-27778632.html

12  http://fldj.mofcom.gov.cn/article/jyzjzjyajgs/

13 http://www.thepaper.cn/newsDetail_forward_1431675

14 http://www.zjsfq.gov.cn/25b187bfb3d34e19b225a6e094cf532d

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