On May 8 2012, the Supreme People's Court of China issued a long-awaited interpretation of the PRC Anti-monopoly Law (AML) entitled the Provisions on Various Issues for the Application of Law in the Adjudication of Civil Lawsuits Caused by Monopolistic Conduct. This represents significant progress in China's antitrust law regime and fills the vacuum left by the lack of judicial guidance on antitrust litigation since the AML took effect in 2008. The judicial provisions cover various significant issues in antitrust civil litigation.
According to Article 1 of the new judicial provisions, any person, whether an individual or entity, can sue for damages caused by monopolistic conduct. Under the AML, monopolistic conduct refers to one of three types of behaviour: a monopolistic agreement, the abuse of a dominant market position, and a concentration of undertakings with potential anticompetitive effect. Under Article 2 of the judicial provisions, a person can sue either directly, or following an anti-monopoly enforcement agency's finding of monopolistic conduct.
The trial courts for antitrust civil cases will be the intermediate people's courts in the capitals of provinces or autonomous regions, in the municipalities under the central government's direct administration or within its plan, and the intermediate people's courts designated by the Supreme People's Court. With the Supreme People's Court's approval, a basic people's court at the lowest level of the court system may trial antitrust cases.
In the case of horizontal monopolistic agreements among business competitors, the plaintiff does not need to prove that the alleged agreement has an anticompetitive effect, while the defendant must prove the opposite. According to Article 13 of the AML, such agreements include those on price fixing, output restraints, market division, restrictions on the purchase or development of new technology, equipment or product, and group boycotts.
The Supreme People's Court treats vertical monopolistic agreements (such as resale price maintenance) differently to horizontal agreements. Here, it is for the plaintiff to prove a vertical agreement's anticompetitive effect.
In an abuse of dominance case, the plaintiff must prove that the defendant has a dominant market position and has abused that position. After the plaintiff meets this initial burden, the burden shifts to the defendant to prove the justifiability of such conduct. If an abuse of dominance is alleged against a public utility or other business operator with exclusive status granted by law, the court may make the finding as to the defendant's dominance considering the particular market structure and competition, unless there is sufficient opposing evidence.
The plaintiff may use the information the defendant releases to public to prove the defendant's dominant position, and the court may rely on such information to make its finding, unless there is sufficient opposing evidence.
The judicial provisions allow a party to request that a professional organisation or individual prepare a market survey or economic analysis report in an antitrust case. The parties may negotiate on which professional to use. If they fail to reach an agreement, the court will appoint a professional. Moreover, a party may have one or two experts appear in court to explain special issues. A reasonable amount of the plaintiff's expert expenses may be added to the damages awarded by court.
The statute of limitations commences from the date when the plaintiff knows or should have known about the damage incurred. Where the plaintiff reports the alleged monopolistic conduct to the enforcement agency, the statute of limitations is paused on the date of reporting. Where the enforcement agency decides not to open a case, to withdraw the case or to terminate the investigation, the statute of limitation starts anew from the date when the plaintiff knows or should have known the agency's decision. If the enforcement agency makes a finding of monopolistic conduct, the statute of limitation starts anew from the date when the plaintiff knows or should have known the agency's decision with that finding has become legally valid.
Where the alleged monopolistic conduct has continued for over two years when the plaintiff files the suit and the defendant raises the defence of the statute of limitations, the amount of damages will be calculated for the period starting from two years before the plaintiff files the suit with the court.
The judicial provisions are a milestone for private antitrust enforcement in China. They will facilitate a plaintiff's efforts to challenge monopolistic conduct. Indirect purchasers have standing to sue. For horizontal monopolistic agreements, a defendant must prove no anticompetitive effect. A plaintiff may use the defendant-released information as evidence of its dominant position. Plaintiffs are encouraged to use experts to support their cases. Antitrust civil litigation in China are now likely to become much more significant and complex.
Janet Hui and Stanley Wan