Acknowledgement: This article was first published on Global Legal Insights.
Overview of the law and enforcement regime relating to cartels
In China, cartel conduct is mainly regulated under the Anti-monopoly Law of the People’s Republic of China (the “AML”), which came into force in 2008 and was amended for the first time in 2022. The amended AML has been effective since August 1, 2022.
The AML prohibits horizontal monopoly agreements (including concerted practice) among competitors, such as price-fixing, output restriction, market allocation, new technology development restriction, and joint boycott, etc. (Article 17 of the AML). Industrial associations are prohibited from organising undertakings to reach cartel agreements (Article 21 of the AML). As newly amended, the AML prohibits an undertaking (even if not a competitor to other parties to the cartel) from arranging or providing substantive assistance for others to reach monopoly agreements (Article 19 of the AML). Exemptions to cartel violations are also allowed if efficacy defences can be duly established (Article 20 of the AML), though with very few (if any) successful cases in practice.
When probing cartel cases, Chinese competition authorities (the State Administration for Market Regulation, the “SAMR”, as well as the provincial-level administrations for market regulation, the “AMRs”) also rely on the Provisions on the Prohibition of Monopoly Agreements (which was promulgated by the SAMR on June 26, 2019, and was amended in March 2023 with the amendment being effective from April 15, 2023), which further clarifies the provisions of the AML with respect to the prohibition of monopoly agreements. Moreover, in certain sectors, guidelines promulgated by the Antimonopoly Commission of the State Council (which is in charge of formulating and issuing antimonopoly guidelines) play an important role in investigating and concluding cartel cases in specific sectors, such as the guidelines on platform economy, active pharmaceutical ingredients, automotives, as well as guidelines on monopolistic abuse of intellectual property rights.
The SAMR (taking the responsibility of the National Antimonopoly Bureau) is responsible for unified antimonopoly enforcement (including cartel enforcement) in China, with the provincial-level AMRs authorised (and under the guidance of the SAMR) to probe cartel cases within its administrative region, respectively.
Undertakings that engage in cartel conduct can be ordered to cease illegal conduct, and may face monetary penalties (i.e., the confiscation of illegal gains and imposition of fines). As newly amended, the AML also imposes sanctions on the legal representative, the principal person in charge, and other directly liable individuals of the undertaking, if such individuals are responsible for cartel agreements. The foregoing sanctions can also be taken on undertakings that “arrange” or provide “substantive assistance” to conclude cartel agreements (Article 56 of the AML). The sanctions imposed on the undertaking will be made public and registered in the credit record system (Article 64 of the AML).
The stakeholders can seek compensation for damages from cartel participants through civil lawsuits as private enforcement (Article 60 of the AML). The AML itself does not set criminal sanctions to undertakings or individuals for cartel conducts, while it generally provides that if a violation of the AML constitutes a crime, the wrongdoer shall also be held criminally liable (Article 67 of the AML). Certain severe bid-rigging conducts can be prosecuted under the Criminal Law of the People’s Republic of China (the “Criminal Law”, see Article 223 of the Criminal Law).
It might be worth noting that the newly amended Provisions on Prohibition of Monopoly Agreements added the rules covering “potential competitor” under the concept of competitor (Article 8), which is, to a certain extent, aligned with the rationale of the Supreme People’s Court (the “SPC”) in Shanghai Huaming Power Equipment Manufacturing v. Wuhan Taipu Transformer Switchgear (2022). Also, the rules tend to clarify the definitions of “arrange” and “substantive assistance” for hub-and-spoke cartels (Article 18). Arguably, it can be expected that the SAMR’s radar (including that of AMRs at the provincial level) may further identify potential competitors as cartel members, and that hub-and-spoke cartels will not be an obstacle for cartel enforcement.
Overview of investigative powers in China
The investigative powers of the competition authorities are set out in Article 47 of the AML, including:
• on-site inspections of business premises and other relevant premises;
• interviews with and requests for information from the undertakings under investigation, the stakeholders and other relevant entities or individuals;
• to request and make copies of documents, including credentials, agreements, account book, emails and digital data, etc, from the undertakings under investigation, the stakeholders and other relevant entities or individuals. In practice, the competition authority may obtain data from individuals’ mobile phones. In the Straumann Dental Implants case (concluded by Beijing AMR in 2022), the chat history of company staff with resellers on WeChat, a widely used chat app in China, was presented as evidence;
• to seal or detain relevant evidence they consider relevant to protect the evidence from being lost or destroyed; and
• to inquire about the undertakings’ bank accounts.
The competition authorities may conduct “dawn raids” on suspected cartels. The AML does not limit the investigative powers above to announced inspections (which are conducted after the competition authorities formally decide to file the case), and thus the competition authorities may exercise such powers in dawn raids. In the Driving School case (concluded by Hunan AMR in 2022), where a price-fixing agreement between five local driving schools was identified, the AMR officials made on-site inspections in the offices of the driving schools in dawn raids. In the Automobile Inspection case (concluded by Shanxi AMR in 2022) regarding cartels between local automobile inspection companies, the AMR officials conducted interviews with staff members of the undertakings and obtained relevant documents in dawn raids.
Undertakings, as well as individuals who refuse to cooperate with or hinder the investigation (e.g., refusing to provide relevant documents, providing false material or information, or destroying evidence), may face sanctions, such as fines. The maximum amount of fines has been increased by the newly amended AML in Article 62, i.e., up to 1% of the annual sales of the previous year of undertakings, and up to RMB 500,000 for individuals. The competition authorities have large discretion in initiating investigations into cartels. Cartels may be discovered on the authority’s own initiative or through third-party complaints. It is not uncommon for other government authorities to provide evidence of collusion discovered in their own investigations. For example, in the Automobile Inspection case, cartel evidence was provided by the police bureau, which was originally discovered in a criminal case.
Despite the wide discretion granted to competition authorities, there are limitations to their powers. The AML specifies that officials in these authorities can be punished for abuse of power, malpractice, disclosure of trade secrets, personal secrets (“personal secrets” was added to the list of punishable offences under Article 66 of the amended AML), and other related offences. For more information on investigation and decision-making procedures, please refer to “Key issues in relation to investigation and decision-making procedures” for details on administrative reconsideration and judicial review processes.
Overview of cartel enforcement activity during the last 12 months
Cartel enforcement has remained an important part of antitrust enforcement in China in the past 12 months, as 11 out of a total of 69 antitrust penalty cases published in 2022 were cartel cases (plus one additional cartel case that was concluded in 2022 but announced on January 4, 2023). Such figures show no significant changes to the number of cartel cases concluded and announced by the SAMR in the past three years.
Among the 12 cartel enforcement cases mentioned above, there are certain features worth noting:
• A total of more than 100 companies were penalised, with total monetary penalties (including confiscation of illegal gains) reaching approximately RMB 522.54 million (~USD 76 million). The highest amount of fines imposed on a single case is approximately RMB 451 million (~USD 65 million) in a cement cartel case in Shaanxi Province involving 12 undertakings and one association.
• All such cartel cases were investigated and concluded by the provincial AMRs and no published cartel cases were concluded by the SAMR. The majority of such cases were concluded prior to July 2022, seemingly reflecting the authorities’ intention to conclude existing cases before the amended AML came into force (i.e., August 1, 2022).
• Industrial associations are commonly found liable in cartels. In four cases, the cartels were found to have been arranged by associations.
• The majority of fines are between approximately 2% and 3% of the undertaking’s annual sales of the previous year. However, in the concrete cartel case (concluded by Fujian AMR in 2022), six out of seven undertakings were fined 4% of the annual sales of the previous year, respectively.
• The confiscation of illegal gains remains less commonly used, possibly because of the difficulty in proving and calculating such gains. In 2022, only two cases involved the confiscation of illegal gains of certain undertakings. These cases were the counterfeit seal cartel case (concluded by Yunnan AMR in 2022), which involved six undertakings, and the explosive equipment cartel case (concluded by Zhejiang AMR in 2022), which involved five undertakings.
Key issues in relation to enforcement policy
In 2022, competition authorities continued to strengthen antitrust enforcement in the field of people’s livelihood, especially in the public utilities, medical and construction material industries. However, as shown in the cartel cases announced in 2022 (which were all enforced by provincial AMRs), each provincial AMR determines the priority of antitrust enforcement according to the economic development situation of the province. For instance, Shaanxi AMR focuses on the construction material industry, while Beijing AMR focuses on the medical and education industries (as mentioned in the meetings of provincial AMRs).
The amended AML to some extent increases the penalties of cartel conduct and introduces deterrent punishment provisions (as discussed in “Civil penalties and sanctions” below). As such, it is likely that cartel conduct (especially of hardcore cartels) will be punished more severely in the future.
On the other hand, the competition authorities also acknowledged that punishment should not be the sole objective of antitrust enforcement, and emphasised the importance of combining punishment with education. Some provincial AMRs opted to use non-punitive measures, such as administrative guidance or training, in the enforcement, in order to encourage undertakings to adjust their behaviours voluntarily. For instance, Beijing AMR organised compliance training on the amended AML for enterprises in the platform economy industry, while Guizhou AMR provided administrative guidance to enterprises in the public utilities sector. It is possible that competition authorities may adopt different methods of antitrust enforcement in the future, depending on the severity of the cartel violation.
Key issues in relation to investigation and decision-making procedures
The cartel investigation and decision-making procedures by the competition authorities are mainly regulated under (a) the AML and regulations prescribed by the SAMR, such as Interim Provisions for Market Regulation Administration on the Procedures of Administrative Penalty (the “Interim Provisions on Administrative Penalty”), and (b) the general administrative laws applicable to administrative actions, such as the Administrative Penalty Law of the People’s Republic of China and the Administrative Compulsion Law of the People’s Republic of China (the “Administrative Compulsion Law”). Once challenged by the undertakings, certain investigative actions, as well as the cartel decisions, can be scrutinised under the administrative reconsideration proceedings and/or the judicial review process.
Investigations shall be conducted in accordance with the law
As mentioned above, the investigation measures and procedures are under the legal regime of both the AML rules and general administrative rules. For example, sealing and detaining relevant evidence is governed by the Administrative Compulsion Law, the AML and the Interim Provisions on Administrative Penalty, etc. The procedural requirements include a service of notice in writing, limitation on the duration, which shall not exceed 30 days unless approved by the head of the competition authority, and timely release of measures when the seal/detention is unnecessary, etc. Further, the competition authorities shall only seal/detain the objects relevant to the case. If the objects are not properly kept by the competition authority and loss is caused, the competition authority shall compensate the objects that were not duly kept.
Violations of rules governing investigative measures and procedures by the authorities may cause the evidence so obtained to be deemed illegal and, accordingly, excluded. In more severe cases, decisions based upon such defective investigations may be overruled, since malpractice and violation of legal procedures are grounds for overruling an administrative penalty decision.
Furthermore, responsible officials in competition authorities may be punished for abuse of power, malpractice, disclosure of trade or personal secrets, etc. However, communications between undertakings (including relevant individuals) and their attorneys do not typically enjoy legal privilege and may thus be used as evidence in cartel decisions.
Decision-making procedures
The investigation, as well as the decision-making of cartel cases, are not subject to certain time limits. However, the authorities may internally prioritise cases that might severely impact on the market and customer welfare in order to speed up the procedures.
In any event, before the cartel punitive decision is made, the competition authorities are obliged to inform the parties of the proposed penalty, as well as the corresponding factual and legal basis, and inform the parties of their rights to defend and request for a hearing. The authorities must ensure that the undertakings can exercise their right to defend.
The undertakings can request for a hearing after being informed of the proposed penalty in order to defend themselves. Such hearings are still conducted by the authority carrying out the investigation but are hosted by a division other than that which investigated the case. In practice, administrative hearings are more commonly applied by the parties in complex cartel cases to protect their rights and benefits.
Once the undertakings exercise their right of defence, either through written submission or hearings, the authority shall take into account the undertakings’ arguments and can conclude a case and issue its formal decision.
Administrative reconsideration and judicial review
After a cartel punitive decision is served, the parties who have objections are allowed to either make an application to the SAMR for administrative reconsideration or file an administration litigation with the competent court to challenge the decision (“direct litigation”). The parties may also file an administration litigation to challenge the SAMR’s decision of reconsideration (“second litigation”). The court rulings, either in direct litigation or second litigation, can be further appealed.
For cartel decisions, both substantive and procedural issues can be subject to administrative review by the SAMR and judicial review by the courts. In practice, very few enforcement decisions were overruled in judicial review by the courts of first instance and almost none of these reversals have been upheld by the SPC.
Civil penalties and sanctions
Pursuant to Article 56 of the AML, the competition authorities may order the undertaking to cease illegal conduct, confiscate its illegal gains, and impose fines.
For the undertaking that concludes and implements the cartel agreement itself, the competition authorities may impose a fine of 1–10% of its annual sales for the previous year or, if there are no sales for the previous year, a fine of up to RMB 5 million. If the cartel agreement has not been implemented, the competition authorities may impose a fine of up to RMB 3 million. For the liable personnel of the undertaking, the competition authority may impose a fine of up to RMB 1 million. In practice, the basis for calculation is generally limited to the sales of the undertaking generated within China and, in some cases, to sales in the relevant market.
The undertaking arranging or providing substantive assistance for other undertakings to reach a cartel agreement will also be sanctioned, to which the standards of sanctions in the above paragraph shall apply.
There is no rule that explicitly provides that the parent company should be strictly liable for cartel conduct by its subsidiary if the parent company is not a party. In some extreme cartel cases in early 2022, fines were calculated based on the consolidated annual turnover of the parent company nationwide, but the alleged conduct was carried out by its subsidiaries in a very limited geographic market. However, such practice is not settled law, and this is especially true since the AML was amended to introduce a new regime of deterrent fines; i.e., according to Article 63 of the AML, for severe breaches, the competition authorities may impose a fine of two to five times the amount calculated based on Article 56. This seemingly leaves less or little room for application of parent liability (or the single economic entity doctrine) in China as a deterrent measure.
Leniency/amnesty regime
China introduced the leniency programme in 2008 when the AML first came into effect. Article 56 of the amended AML sets forth the principle of a leniency regime for cartel enforcement. In practice, the competition authorities also rely on the Provisions on Prohibition of Monopoly Agreements and the Guide on the Application of the Leniency System to Horizontal Anticompetitive Agreement Cases (the “Leniency Guideline”, issued in January 2019) to exercise their discretion to reduce, or even exempt, the leniency applicant from penalties for its cartel conduct.
The ranking of leniency is determined according to the time of application, and the ranking directly determines the reduction percentage of the penalty. Generally, the authorities only grant leniency to three undertakings at most in one cartel case. However, the competition authorities have discretion in determining the applicant’s eligibility under Article 12 of the Leniency Guideline. For a significant and complex case involving multiple undertakings (more than three) that all apply for leniency and provide different material evidence, the possibility of granting leniency to more undertakings exists.
Ranking | Full immunity/reduction of penalties |
First | Full immunity or a penalty reduction of at least 80% |
Second | A penalty reduction of 30–50% |
Third | A penalty reduction of 20–30% |
In order to qualify for and be granted leniency, the applicant must meet certain requirements:
• apply for leniency in a timely manner: the undertaking shall report to the competition authority for leniency before the penalty decision is rendered (Article 4 of the Leniency Guideline);
• submit the report and important evidence related to the cartel: the “material evidence” refers to the evidence sufficient for the competition authority to initiate an investigation or confirm a breach of Article 17 of the AML that is not already in the authorities’ possession (Article 6 of the Leniency Guideline); and
• fully cooperate with the authority in the investigation in a quick, continuous, comprehensive, and truthful manner: undertakings shall stop the suspected violation immediately, shall not conceal, destroy or transfer evidence, provide false materials and information, engage in any other conduct that may interfere the investigation, or disclose relevant information without the authorities’ consent.
The Provisions on Prohibition of Monopoly Agreements further clarify the scope of application of the leniency regime. If an undertaking plays a major role in reaching a cartel, coerces other undertakings to participate in reaching or implementing a cartel, or prevents other undertakings from stopping the illegal conduct, the competition authority may not exempt it from punishment (Article 47) but may still grant a reduction of penalties.
The leniency regime can also apply to the liable personnel of the undertaking. If the liable personnel voluntarily reports to the competition authority and provides important evidence and cooperates with the investigation, he/she may be granted a penalty reduction of 50% or full immunity.
Among the penalty decisions of cartel cases made by the authorities in 2022, only one undertaking was granted leniency. In the cruise cartel case (concluded by Anhui AMR in 2022), which involved seven undertakings, one of the undertakings applied for leniency and – based on the fact that it was “the first applicant to voluntarily report to the authority about the cartel and provided material evidence, while considering that it is the initiator of the cartel agreement” – Anhui AMR decided to grant a reduction of 80% on both the fines and confiscations of illegal gains to that undertaking.
However, it should be noted that the leniency system only applies to the reduction of administrative penalties, not follow-on litigations. Therefore, undertakings may still face civil liability for compensation due to their involvement in a cartel, which may reduce their enthusiasm to apply for leniency.
Moreover, the conditions for undertakings to be granted leniency are relatively stringent, and the competition authorities have significant discretion in determining whether and to what extent to reduce the penalties. For example, in a cement case (concluded by Shaanxi AMR in 2022), which involved 12 undertakings and one association, one of the undertakings seemingly applied for leniency, but Shaanxi AMR did not grant leniency and instead imposed a fine of 2% of its annual sales of the previous year.
Administrative settlement of cases
In China, there is no administrative settlement system for cartel cases that allows for streamlined administrative procedures in response to parties’ consent to waive some of their procedural rights. However, in practice, active cooperation by undertakings during investigations is taken into consideration when determining the appropriate level of punishment. For example, in a recent LPG cartel case (concluded by Guizhou AMR in 2022), which involved eight undertakings, Guizhou AMR granted a penalty reduction to one of the undertakings because it “actively cooperated in the investigation, truthfully stated the facts and actively provided relevant evidence”. The authority imposed a fine of only 1% of the undertaking’s annual sales of the previous year.
Article 53 of the AML sets forth the system of suspending the investigation based on the commitments of undertakings. The competition authorities also rely on the Guidelines of Commitments Made by Undertakings in Monopoly Cases (promulgated by the Antimonopoly Commission of the State Council) when allowing suspension of investigation into suspected cartel conduct. If the undertaking being investigated promises to take specific measures to eliminate the consequences of its behaviour within a time limit approved by the authority, the authority may decide to suspend the investigation.
However, the Provisions on the Prohibition of Monopoly Agreements stipulate that competition authorities shall not accept the application for suspension of investigation for hardcore cartel behaviours, including: (1) price-fixing; (2) output and quality restriction; and (3) market allocation (Article 32). In practice, there is no precedent for authorities to suspend the investigation of hardcore cartel cases.
Third party complaints
Any party may complain to the competition authorities about suspected cartel agreements. Such right to complain is not limited to stakeholders of an alleged cartel. The competition authorities are required to verify the facts presented in a third-party complaint if it is: (1) written; and (2) accompanied by relevant facts and evidence. However, the competition authorities are not obliged to initiate a formal investigation or lodge a case upon the complaint.
The complaint should generally contain the basic information about the third party, the alleged individuals or organisations, the facts and evidence pertaining to the suspected cartel, and whether the third party has already pursued other administrative or judicial remedies.
The newly amended Provisions on Prohibition of Monopoly Agreements added that as for complaints in written form, the authority may provide feedback on the result of the complaint after investigating and handling the case in response to the written request of the informant (Article 23).
Although it is not necessary for the competition authorities to initiate a formal investigation and lodge a case upon receiving a third-party complaint, five out of 12 cartel cases in 2022 were initiated upon third-party complaints, which demonstrates the importance of such complaints in uncovering cartels for the competition authorities.
If the competition authorities reject such complaints, the third parties whose interests are affected by the rejections may apply for administrative reconsideration or judicial review of the rejections. In a Beijing court case (2019), where Beijing AMR rejected a complaint from an individual reseller who alleged the existence of a cartel among wholesalers, the court ruled that the individual’s interests may have been harmed by the alleged cartel conduct, and thus he was entitled to file a judicial review of the AMR’s rejection.
Right of appeal against civil liability and penalties
The party punished by an administrative penalty can seek remedy by applying for administrative reconsideration or filing administrative litigation to challenge the penalty decisions (Article 65 of the AML). The party can also file administrative litigation to appeal the results of administrative reconsideration. Also, the party can appeal to a higher court to challenge the ruling of the court of first instance.
For cartel decisions, both substantive and procedural issues can be viewed under the administrative reconsideration by the SAMR and administrative litigation by the court. In practice, very few enforcement decisions have been overruled in judicial review by courts of first instance (the enforcement decision was overruled in Hainan AMR v. Hainan Shenghua Construction (2022) by the court of first instance; however, the SPC withdrew the ruling of the first instance court) and almost no overrulings have been upheld by the SPC.
In 2022, the SPC announced two administrative litigation cases concerning the enforcement decisions of cartels, both of which maintained the original enforcement decisions, where some opinions of the SPC may be worth noting.
In Maoming Dianbai District Jianke Concrete v. Guangdong AMR (2022), the SPC pointed out that, due to the concealing character of concerted behaviours, factors such as consistent market behaviours and information exchange can be used to demonstrate the existence of concerted behaviours, and the authorities have the burden of proof to establish the aforementioned factors, while the undertaking is responsible for providing a reasonable explanation for their consistent behaviour.
In Hainan AMR v. Hainan Shenghua Construction (2022), the SPC pointed out that a comprehensive assessment of the specific circumstances of the case is required when determining the legitimacy and appropriateness of the specific amount of fines imposed by the authority, in accordance with the legislative purpose of preventing and curbing monopoly behaviours of the AML and ensuring the fairness of the case outcome. Specifically, when making such assessment, authorities should consider the degree of harm caused by the cartel behaviour, the undertaking’s subjective malicious intent, its position and role in the illegal conduct, whether any illegal gains have been confiscated, and whether the undertaking has resisted administrative investigations or actively ceased the illegal behaviour, etc.
Criminal sanctions
The crime of bid-rigging was first stipulated in the Criminal Law in 1997, long before the promulgation of the AML. According to the provisions promulgated by the Supreme People’s Procuratorate and the Ministry of Public Security in relation to the standards for filing criminal cases, the bidder conducting bid-rigging will face up to three years of imprisonment and a fine. The bidder is liable to such penalties if the bid-rigging causes a loss of more than RMB 500,000, the illegal proceeds exceed RMB 200,000, or the winning bid amount exceeds RMB 4 million.
Article 67 of the amended AML prescribes criminal liability for violating the AML in general. However, the Criminal Law has not yet set out specific crimes for AML violation, and the application of such criminal liability is to be clarified in future amendments of the Criminal Law.
Cooperation with other antitrust agencies
Exchange and cooperation of antitrust enforcement on the global level have long been the priorities of the Chinese competition authorities. The SAMR has strived to follow a global cooperation strategy through exchanges and interactions with various countries and organisations in different jurisdictions, including the United States, the European Union, the United Kingdom, and Japan, etc.
On February 4, 2022, the SAMR and the Russian Federation Antimonopoly Service signed the Agreement on Cooperation between the Government of the People’s Republic of China and the Government of the Russian Federation in the Field of Antimonopoly Law Enforcement and Competition Policy. The two countries will further deepen their practical cooperation in the areas of antimonopoly case notification, information exchange, law enforcement cooperation, and technology exchange.
The AML stipulates the extraterritorial application effect of the antimonopoly law (Article 2), allowing the AML to be applied in cases where cartel behaviour has been acted outside China and has an eliminating and restrictive effect on the competition in the domestic Chinese market.
The Draft Provisions of the SPC Concerning the Application of Law to the Trial of Civil Monopoly Disputes (sought for public comments) adds a new provision on the jurisdiction of extraterritorial monopoly behaviours: if the defendant has no domicile in China, the case shall be under the jurisdiction of the people’s court in the place where the domestic market competition is directly and materially affected (Article 7).
Developments in private enforcement of antitrust laws
Undertakings and/or individuals may take lawsuits against cartel members for civil damages if they suffered losses on account of cartel conduct (Article 60 of the AML). The plaintiffs may file a civil lawsuit after the competition authority has made a decision to punish a cartel (“follow-on litigation”), or directly file a civil lawsuit against the cartel members. However, in practice, due to the high burden of proof on the plaintiff to establish a cartel case, the plaintiffs mainly choose to bring up the follow-on litigation.
In 2022, the SPC announced three civil cartel cases brought directly by plaintiffs without previous administrative enforcement procedures. The SPC identified the existence of cartel activity in two cases, but only in Shanghai Huaming Power Equipment Manufacturing v. Wuhan Taipu Transformer Switchgear (2022) did the SPC order the defendant to bear civil liability for compensation. In Jinxian Wenzhen Art Kindergarten v. Jinxian Wenzhen Liujiayi Kindergarten (2022), the SPC rejected the plaintiff’s claim of compensation for damage because the plaintiff is also the cartel member, and therefore not entitled to obtain the illegal gains of the cartel.
Given the difficulty of claiming civil damages from cartel activities as an individual customer, the amended AML provides that the People’s Procuratorate at or above the municipal level can file a civil public interest litigation on behalf of individual customers against the cartel members (Article 60 of the AML). However, as the specific procedures of civil public interest litigation have yet to be detailed, no civil public interest litigation cases were announced in 2022.
On November 18, 2022, the SPC issued the Draft Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Law to the Trial of Civil Monopoly Disputes and sought public comments (the “Draft Interpretation”). Although not yet adopted, the Draft Interpretation nonetheless reveals a certain intention to ease the burden of proof for plaintiffs. For example, it stipulates that if the existence of a monopoly behaviour is identified in an administrative penalty decision, no additional proof is required to prove the existence of a cartel (Article 11). Additionally, it outlines the distribution of the burden of proof related to cartels and emphasises that the plaintiff will not be held responsible for providing proof for the definition of the relevant market in hardcore cartel cases (Article 16).
Moreover, there seems to be a trend concerning the endeavour to strengthen the connection between administrative enforcement and private enforcement (Article 11 of the AML). This is also suggested in the Draft Interpretation, which states that, if a monopoly behaviour is found to have violated the AML and hence may require an administrative penalty, the evidence of suspected illegal behaviour may be transferred to the enforcement authority (Article 15).
AUTHOR DETAILS
Shaosong Sun
Tel: +86 10 6657 8066 / Email: sunshs@guantao.com
Shaosong Sun is the Deputy Director of Guantao Law Firm and head of the dispute resolution practice group. As a pioneering PRC antitrust lawyer, Mr. Sun’s practice encompasses administrative investigations, antitrust litigation, merger control, and the application of antimonopoly law to a wide range of commercial agreements and practices. He has had notable success representing China Unicom in the country’s largest-ever administrative investigation by NDRC.
Additionally, Mr. Sun also has extensive experience in providing compliance training to clients and has offered antimonopoly law opinions and guidelines to their market strategy developments. He has been recommended by various international rating agencies for many years as one of China’s leading antitrust lawyers. Litigation before the regional and Supreme People’s Court is also a major part of Mr. Sun’s practice.
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Yue Guan
Tel: +86 10 6657 8066 / Email: guanyue@guantao.com
Yue Guan is a Partner in Guantao’s Beijing office and head of the antitrust practice group. With over 10 years of practice experience, she boasts a wealth of knowledge in antitrust matters, having provided invaluable assistance to numerous domestic and foreign enterprises in merger control, compliance advice, antitrust litigation, and responding to administrative investigations and inquiries. Ms. Guan has provided her expertise to leading enterprises in various sectors, such as telecommunications, the Internet, semiconductors, chemicals, energy, steel, automobile manufacturing, food and medicine, building materials, finance, and many more.
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