China Monthly Antitrust Update: January 2024

IPR Daily

2024-01-23 14:45:04

Legislation

Shenzhen AMR Issues Shenzhen Enterprise Competition Compliance Guidelines

On December 21, 2023, the Shenzhen Administration for Market Regulation (“AMR”) issued the Shenzhen Enterprise Competition Compliance Guidelines. The guidelines impose antitrust compliance requirements on three types of non-price vertical agreements and encourage large enterprises to establish competition compliance management bodies.¹

NDRC Seeks Comments on Rules for Fair Competition Review in Field of Tendering and Bidding

On December 13, to strengthen and standardize the fair competition review in the field of tendering and bidding, and to maintain a fair competitive market order, the National Development and Reform Commission (“NDRC”), in collaboration with relevant departments of the State Council and local authorities, drafted the Rules for Fair Competition Review in the Field of Tendering and Bidding (Draft for Comments), which is open for public comments.²

State Council Issues Comprehensive Plan for Fully Aligning with International High-standard Economic and Trade Rules to Promote High-level Systemic Opening in China (Shanghai) Pilot Free Trade Zone

On December 8, to support the China (Shanghai) Pilot Free Trade Zone in aligning with international high-standard economic and trade rules, promoting high-level systemic opening, and comprehensively implementing the strategy to enhance the pilot free trade zone, and to better leverage the pioneering role of the Shanghai Free Trade Pilot Zone in creating a national model for systemic opening, the State Council issued the Comprehensive Plan for Fully Aligning with International High-standard Economic and Trade Rules to Promote High-level Systemic Opening in China (Shanghai) Pilot Free Trade Zone.³

SAMR Improves “Three Letters and One Notification” System for Antitrust Administrative Enforcement

On December 6, in order to enhance the effectiveness and standardization of antitrust supervision, timely prevent and stop monopolistic behavior, protect fair market competition, and accelerate the construction of a unified national market, SAMR has established and improved the antitrust “Three Letters and One Notification” system. This system includes the Reminding Urgency Letter, Interview Notice, Initiating Investigation Notice, and Administrative Penalty Decision (for business entities)/Administrative Advisory Letter (for administrative agencies).⁴

Authorities

Meng Yang Assumes Position of Deputy Director of SAMR and Takes Charge of Antitrust Divisions

On December 28, 2023, Meng Yang assumed the position of Deputy Director of SAMR, becoming a member of the Party Group and taking charge of the Policy and Regulation Department, Competition Policy Coordination Department, Antitrust Enforcement Division I, Antitrust Enforcement Division II, Department of Supervision and Inspection and Anti-Unfair Competition (Regulatory Office of Direct Selling and Anti-MLM), Department of Online Transaction Supervision and Management, Department of Advertising Supervision and Management, and the Department of Metrology. He is also responsible for liaising with the Competition Policy and Evaluation Center, the China Institute of Metrology (National Time Frequency Metrology Center, National Standard Material Research Center), and the China Metrology Testing Association.⁵

SAMR Discusses Administrative Monopoly Enforcement: Strengthening Coordination of Competition Supervision and Industry Management Policies

On December 26, the State Council Information Office held a regular press conference on government policies. Li Chunlin, Deputy Director of the NDRC, Li Liejun, Director of the Industry Policies and Regulations Department of the Ministry of Industry and Information Technology, Liu Pengfei, Spokesperson of the Ministry of Transport and Director of the Policy Research Office, and Zhao Chunlei, Head of the Competition Policy Coordination Department of the SAMR, were invited to introduce the progress of accelerating the construction of a unified national market and answer questions from reporters.⁶

NDRC Discusses Business Environment Construction in Greater Bay Area, Emphasizing Strengthening and Improving Antitrust Enforcement

On December 26, the NDRC issued the Three-Year Action Plan for Building an International First-Class Business Environment in the Greater Bay Area of Guangdong, Hong Kong, and Macao to implement the decisions and arrangements of the Central Committee of the Communist Party of China and the State Council. The plan aims to further deepen cooperation among Guangdong, Hong Kong, and Macao, create a market-oriented, rule-of-law, and international first-class business environment, enhance the level of market integration in the Greater Bay Area, and boost its international competitiveness. The NDRC highlighted the importance of strengthening and improving antitrust enforcement as part of this initiative.⁷

Beijing AMR Sends Letters to Collect Information on Leading Enterprises in 8 Provinces and Regions and Establishes a Mechanism for Cooperative Examination of Business Concentration

On December 4, in order to understand the overall situation of key enterprises covered by the examination in the region, the Beijing AMR sent letters to seven other provinces (regions, cities) to collect information on leading enterprises in various industries. Simultaneously, letters were sent to departments such as the Beijing Municipal State-owned Assets Supervision and Administration Commission and the Statistics Bureau to collect information on leading enterprises in Beijing.⁸

Public Enforcement

Shanghai AMR Penalizes Four Pharmaceutical Companies for Abusing Market Dominance

On December 25, 2023, the Shanghai AMR imposed administrative penalties on Sph No.1 Biochemical & Pharmaceutical Co., Ltd., Wuhan Huihai Pharmaceutical Co., Ltd., Wuhan Kede Pharmaceutical Co., Ltd., and Hubei Minkang Pharmaceutical Co.，Ltd. for abusing their dominant position in the market for Chinese injection-grade colistin sulfate B. The companies were found to engage in unfair pricing practices, and the administrative penalty decisions include orders to cease the illegal activities, confiscation of illegal gains, and fines amounting to 3% and 8% of their respective annual sales in the previous year. The total amount of fines imposed is RMB 1.2 billion yuan.⁹

Administrative Monopoly Behavior of Office of People’s Government of Wuhua District, Kunming Corrected by Yunnan AMR

On December 22, the Yunnan AMR announced that it had rectified the issuance of documents by the Office of the People’s Government of Wuhua District in Kunming, which required winning bidders of urban renewal and reconstruction projects to register and establish wholly-owned subsidiaries or hold a controlling stake in joint venture project companies within the jurisdiction of Wuhua District. According to the announcement, the Yunnan Provincial Market Supervision Administration initiated an investigation on July 24, 2023, into the suspected abuse of administrative power that exclude or restrict competition by the Office of the People’s Government of Wuhua District in Kunming.¹⁰

Administrative Monopoly Behavior of Tonghua Natural Resources Bureau Corrected by Jilin AMR

On December 13, the Jilin Provincial Market Supervision Department announced that it had rectified the issuance of documents by the Tonghua Natural Resources Bureau, which established an unreasonable “multi-testing consolidation” catalog, restricting construction units to choose only surveying units within the catalog for relevant surveying activities, thereby excluding and limiting fair competition in the surveying market. According to the announcement, the Jilin AMR initiated an investigation on December 13, 2023, into the suspected abuse of administrative power that exclude or restrict competition by the Tonghua Natural Resources Bureau.¹¹

Fuzhou Real Estate Appraisal Association Penalized by Fujian AMR

On December 11, the Fujian AMR issued an administrative penalty decision against the Fuzhou Real Estate Appraisal Association, imposing a fine of RMB 0.3 million. According to the announcement, the Fujian AMR initiated an investigation on November 16, 2021, into the Fuzhou Real Estate Appraisal Association for monopolistic agreement practices.¹²

Administrative Monopoly Behavior of People’s Government of Tinglin Town Corrected by Shanghai AMR

On December 7, the Shanghai AMR announced that it had rectified actions by the Tinglin Town People’s Government in Jinshan District, Shanghai. This included the establishment of a small-scale construction project contracting unit repository through the issuance of documents, requiring registered enterprises to operate in the town, thus affecting fair market competition. According to the announcement, the Shanghai AMR initiated an investigation on July 26, 2023, into the Tinglin Town People’s Government in Jinshan District, Shanghai, for suspected abuse of administrative power that exclude or restrict competition.¹³

Administrative Monopoly Behavior of Two Local People’s Government Corrected by Zhejiang AMR

On December 6, the Zhejiang AMR announced that it had rectified actions by the People’s Government of Nanhui District in Jiaxing City, where documents were issued requiring certain government-invested projects to be constructed or undertaken by local small and medium-sized construction enterprises, excluding and restricting the equal participation of non-local construction enterprises in relevant market competition. According to the announcement, the Zhejiang AMR initiated an investigation on September 27, 2023, into the People’s Government of Nanhui District in Jiaxing City for suspected abuse of administrative power that exclude or restrict competition.¹⁴

Courts Litigation

Chongqing FIPC Decides in First Instance of OPPO v. Nokia Standard Essential Patent Royalty Dispute

On December 14, 2023, the Chongqing First Intermediate People’s Court （“FIPC”) issued a first-instance judgment in the OPPO v. Nokia Standard Essential Patent Royalty Dispute, confirming the global fair, reasonable and non-discriminatory (FRAND) licensing rates for Nokia’s 2G, 3G, 4G and 5G standard essential patent portfolios. This judgment is the first global license rate judgment for standard essential patents made by Chinese judicial authorities.¹⁵

SPC Finally Ruled Funeral Parlor’s Refusal to Deal with Funeral Intermediary Constitutes Abuse of Dominant Market Position

On December 14, the Supreme People’s Court of the People’s Public of China ruled that a funeral service company B in Quanzhou substantially refused to deal with a funeral service company A in Quanzhou when it was feasible to do so and lacked justifiable reasons, and that such refusal completely excluded a funeral service company A in Quanzhou from the market for funeral intermediary services in the central and urban areas of Quanzhou City, which produced an exclusionary and restrictive effect on competition, and therefore Quanzhou A Funeral Service Company B has committed the refusal to deal prohibited by Article 17(1)(c) of the Anti-monopoly Law of the People’s Republic of China.¹⁶

[1]https://amr.sz.gov.cn/xxgk/qt/ztlm/gpjzsc/lxhy/content/post_11047091.html

[2]https://yyglxxbsgw.ndrc.gov.cn/htmls/article/article.html?articleId=2c97d16b-8678801b-018c-5bba0f9b-0076#iframeHeight=807

[3]https://mp.weixin.qq.com/s/v1naKVAkuuj8Ma6doZxjhA?scene=25#wechat_redirect

[4]https://www.samr.gov.cn/zw/zfxxgk/fdzdgknr/jzzcxds/art/2023/art_515052484fd94fb1a2d8a648615b4c1c.html

[5]https://www.samr.gov.cn/jg/zjld/my/index.html

[6]http://www.scio.gov.cn/live/2023/33108/index.html

[7]https://www.ndrc.gov.cn/xxgk/zcfb/ghwb/202312/t20231225_1362911.html

[8]https://www.samr.gov.cn/fldes/sjdt/dfdt/art/2023/art_37f69819247f4fc6bbf785112c46ba0f.html

[9]https://mp.weixin.qq.com/s/oNeM4sfkvr05rqQzmSZiOg?scene=25#wechat_redirect

[10]https://www.samr.gov.cn/fldys/tzgg/xzjj/art/2023/art_dd692ef6347342f39a6fac106ba60f23.html

[11]https://www.samr.gov.cn/fldes/tzgg/xzjj/art/2023/art_38f6b93cb63f4bc69b49aea3e56e5301.html

[12]https://scjgj.fujian.gov.cn/zw/tzgg/202312/t20231208_6328352.htm