China: China Monthly Antitrust Update - May 2022

Legislation

SAMR: the Revised Anti-monopoly Law to Introduced This Year

On April 26, 2022, Gan Lin, deputy director of the State Administration for Market Regulation ("SAMR") and director of the State Anti-Monopoly Bureau("SAB"), attended a press conference on the Report on New Progress in Intellectual Property Protection and Business Environment in China (2021) held by the Information Office of the State Council and reported about the order of the market in maintaining fair competition since establishment of the SAB. Director Gan Lin disclosed at the meeting that the revised Anti-monopoly Law is expected to be released this year. ¹

SAMR Issues the 2022 Legislative Work Plan

The 2022 Legislation Plan of the State Administration for Market Regulation, adopted at the sixth executive meeting of the SAMR on April 19, 2022, is hereby issued to the National Medical Products Administration, the National Intellectual Property Administration, and all departments and bureaus and directly affiliated agencies of the SAMR for implementation. ²

New Rules of the Supreme People's Court: Civil and Administrative Cases Involving Monopoly Disputes in the First Instance Shall Governed by Intellectual Property Courts or Intermediate Courts (Effective as of May 1)

Several Provisions of the Supreme People's Court on Jurisdiction over Intellectual Property-related Civil and Administrative Cases of First Instance, adopted at the 1858th meeting of the Judicial Committee of the Supreme People's Court on December 27, 2021, are hereby promulgated by the Supreme People's Court, effective on May 1, 2022. ³

Beijing Issues 21 Measures for Assisting and Benefiting Enterprises: Strengthening the Anti-monopoly Compliance Guidance, Fair Competition Review and Anti-monopoly Investigation of Platform Companies

In order to deeply implement the guiding principles of the Central Economic Work Conference and the reform arrangements of Beijing Municipality for optimizing the business environment, continue to effectively carry out "Stability on Six Fronts" and "Security on Six Fronts", better stimulate the vitality of market players, and support the development and growth of market players, focus on the provision of more fair, transparent, accurate and efficient government services for market players based on market regulatory functions. In order to continuously reduce institutional transaction costs of enterprises, the Beijing Administration for Market Regulation has formulated a series of work measures. ⁴

SAMR Updates Three Anti-monopoly Regulations

In order to implement the newly revised Law of the People's Republic of China on Administrative Penalties and urge the administrations for market supervision and management to enforce the laws in a strict, standardized, fair and civilized manner while further advancing the reform of streamlining administration, delegating powers, and improving regulation and services, the SAMR has decided to revise certain provisions of six regulations and abolish another four. Among others, the revised regulations include three anti-monopoly regulations, i.e. the Interim Provisions on Prohibition of Monopoly Agreements, the Interim Provisions on Prohibition of Abuse of Dominant Market Position, and the Interim Provisions on the Review of Concentration of Undertakings. ⁵

The Central Government Determines to Eliminate Local Protectionism and Regional Barriers

The Opinions of the Central Committee of the Communist Party of China and the State Council on Accelerating the Construction of a Unified National Market (the "Opinions") were officially released on 10 October. According to the Opinions, efforts will be made to establish unified national market systems and rules, break down local protectionism and market segmentation, remove substantial obstacles restricting economic circulation, and promote the smooth flow of commodity element resources over a larger scope. ⁶

Public Enforcement

SAMR Latest Response: Attention Paid to the Suspected Monopolistic Behavior of CNKI

The SAMR stated in a reply to the message left by a reporter of the Changjiang Daily on April 25, 2022 that attention has been paid to the suspected monopolistic behavior of China National Knowledge Infrastructure("CNKI") reported by all parties and the relevant work is being carried out in accordance with the law. ⁷

Chongqing Administration for Market Regulation Rectified Multiple Administrative Monopoly Cases

Recently, the SAMR published on its website that Chongqing Administration for Market Regulation rectified three administrative monopoly cases, namely: Hechuan District Education Commission designated transaction, Fuling District Agriculture and Rural Affairs Commission designated transaction, Liangjiang New Area State-owned Assets Supervision and Administration Bureau designated transaction. ⁸

Special Anti-monopoly Law Enforcement Actions Launched in 12 Provinces and Municipals, Including Beijing and Shandong, from March to October

Recently, market regulators of 12 provinces and municipals, namely, Beijing, Shanxi, Shandong, Hainan, Xinjiang, Gansu, Chongqing, Fujian, Shaanxi, Hebei, Tianjin and Hubei, have stated that they will carry out special anti-monopoly law enforcement actions in key fields in 2022 from March/April to October, in order to promote the formation of an efficient and standard unified national market with fair competition, focus on the abuse of administrative power to eliminate or restrict competition. ⁹

Courts Litigation

The Anti-monopoly Administrative Ligation Brought by Huizhou Motor Vehicle Inspection Industry Association Listed in the Top Ten IP Cases of Guangdong Province in 2021

On April 25, 2022, Guangdong High People's Court released the top ten cases for judicial protection of intellectual property rights in Guangdong courts in 2021, including "Anti-monopoly Dispute between Huizhou Motor Vehicle Testing Association and Guangdong Administration for Market Regulation over an administrative penalty". Guangdong Administration for Market Regulation imposed an administrative fine (i.e. RMB 0.4 million) on the trade association for its monopoly behaviour by using the association's influence in the regional market. The association denied to accept the penalty decision and brought it before the court. After hearing of the case, the court dismissed all claims from the association. The court analysed the case thoroughly. This case is of typical significance to the trial of similar cases. ¹⁰

The Supreme People's Court Releases the Top 10 IP Cases, Including the Joint Operation of Driving Schools in Relation to Horizontal Monopoly Agreement

The Supreme People's Court released the Top Ten Intellectual Property Cases and 50 Typical Intellectual Property Cases in 2021 on April 21. In particular, the typical case in the antitrust field — "Joint Operation of Driving Schools - Horizontal Monopoly Agreement" was selected as one of the top ten intellectual property cases. The decision of this case effectively safeguarded the order of fair market competition, which is conducive to curbing monopolistic conduct from the source. ¹¹

Hangzhou Intermediate Court Accepts the Case Brought by an Individual Against CNKI for Abuse of Market Dominance

Recently, an individual Guo Bing from Hangzhou formally brought an action against CNKI for abusing its dominant market position. According to Guo, CNKI allegedly abused its dominant market position (mainly by refusing to provide access to the Academic Misconduct Detection System to individual users without justification, restricting the personnel of the institution to use the Academic Misconduct Detection System through obviously unreasonable contractual clauses), damaging their legitimate rights and interests. ¹²

The First Domestic FRAND Rate Decision: ZTE v. Tianlong Mobile for Infringing 4G SEP

The evaluation and selection of Top 10 Intellectual Property Events in Shenzhen in 2021, organized by the Shenzhen Municipal Administration for Market Regulation (the "Shenzhen Intellectual Property Office"), is underway. Among the 19 candidates, Event No.15, in which a Chinese company requested a court to decide global royalty rates on its own initiative for the first time, is attracting attention. This is the first time that a Chinese right holder asserts its rights against a Chinese implementer in the field of SEP. The ruling of this court reflects China's attitude towards the protection of intellectual property rights. It is possible that foreign companies may even use this case as a "model case" to charge SEP rates in the future in China. ¹³

Judgment of the Supreme People's Court: China Audio-video Copyright Association Not Constitute Abuse of Market Dominance

On March 28, 2022, the Intellectual Property Tribunal of the Supreme People's Court heard the dispute over the abuse of market dominance between Nansha Jiazhou Red Pub of Nansha District, Guangzhou City and China Audio-video Copyright Association ("CAVCA"). The first instance rejected the plaintiff's claims, and the second instance rejected the appeal and upheld the original judgment, determining that the CAVCA did not constitute an abuse of market dominance. ¹⁴

Dentons Team

Dentons Invited to Write on Competition Law Issues in Distribution/Supply Agreements (China Chapter) for Practical Law

In March 2022, Ken Dai and Jet Deng, co-leader of Dentons Antitrust Team published an English article entitled "Competition Issues for Distribution and Supply Agreements in China" on Practical Law. Partner Rangi He and Senior Associate Goodall Feng also contributed to the article. This article summarizes and answers some common antitrust issues raised in distribution/supply agreements between upstream and downstream companies and provides practical guidance to both domestic and foreign enterprises and market players. ¹⁵

Footnotes

1. http://www.scio.gov.cn/xwfbh/xwbfbh/wqfbh/47673/48228/wz48230/Document/1723776/1723776.htm?flag=1

2. https://mp.weixin.qq.com/s/fhJAOMVkdKXtAsD9D2msSQ?scene=25#wechat_redirect

3. https://www.court.gov.cn/zixun-xiangqing-355871.html

4. http://scjgj.beijing.gov.cn/zwxx/zcwj/202204/t20220418_2679508.html

5. https://gkml.samr.gov.cn/nsjg/fgs/202203/t20220331_340952.html

6. https://news.sina.com.cn/o/2022-04-11/doc-imcwiwst1191436.shtml

7. https://m.thepaper.cn/baijiahao_17807865

8. https://www.samr.gov.cn/fldj/tzgg/qlpc/

9.本文源自各省市场监督管理局微信公众号/官方网站

10. https://mp.weixin.qq.com/s/hX-Cgb9zLHutODFlsDrRbw?scene=25#wechat_redirect

11. https://www.court.gov.cn/zixun-xiangqing-355881.html

12. https://new.qq.com/omn/20220420/20220420A0DK0X00.html

13. https://mp.weixin.qq.com/s/VEC4cQrjD3Rcun1jvZCueg?scene=25#wechat_redirect

14. https://mp.weixin.qq.com/s/Ji6s39By8dSw2S07wnTF8A?scene=25#wechat_redirect

15. https://mp.weixin.qq.com/s/6yeU3ODXpwyyAWA9HIzKrQ?scene=25#wechat_redirect

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