OECD kpcdb

1. Scope

 

Article 13 of the AML prohibits monopoly agreements, which include agreements, decisions and other concerted conducts aimed at eliminating or restricting competition. The AML provides the following examples of prohibited agreements between competing undertakings: price fixing, output restriction, market sharing, restriction of products or technology developments, and joint boycott.

 

The AML also prohibits in Article 14 non-competing undertakings from fixing resale price and restricting minimum resale price. Under Article 16 industry associations are prohibited from organising undertakings to engage in monopoly agreements.

2. Assessment

According to Article 15, Articles 13 and 14 do not apply if undertakings can prove that the agreements are concluded for any of the following purposes:

 

a)  improving technologies, or engaging in research and development of new products

b)  improving product quality, reducing cost, and enhancing efficiency; unifying specifications and standards of products; or implementing specialised division of production

c)  increasing the efficiency and competitiveness of small and medium-sized undertakings

d)  serving public interests in energy conservation, environmental protection and disaster relief

e)  mitigating sharp decrease in sales volumes or obvious overproduction caused by economic depression

f)   safeguarding legitimate interests in foreign trade and in economic co‑operation with foreign counterparts

g)  other purposes as prescribed by law or the State Council

 

In addition, the undertakings must prove that the agreement does not severely restrict competition in the relevant market and that consumers shall receive a share of the profits derived from the agreement.

3. Remedies and sanctions

According to Article 46, where an undertaking in violation of the provisions of the AML concludes and implements a monopoly agreement, the enforcement authorities shall instruct it to cease the conduct, confiscate its unlawful gains, and, in addition, impose on it a fine of not less than 1% but not more than 10% of its sales achieved in the previous year. If such monopoly agreement has not been implemented, the undertaking may be fined not more than CNY500,000.

4. Leniency

China operates a leniency programme. Under Article 46 of the AML, if an undertaking reports to the enforcement authorities about the monopoly agreement reached and provides material evidence, the enforcement authorities may, at their own discretion, mitigate, or exempt the undertaking from punishment.

 

The leniency programmes operated by NDRC and SAIC are as follows:

 

NDRC: The first undertaking that voluntarily reports the cartel and provides critical evidence is granted a 100% reduction of fines, whereas the second undertaking is granted a reduction in fines of no less than 50%. Subsequent applicants may be granted a reduction in fines of no more than 50%.

SAIC: The first undertaking that voluntarily reports the cartel and provides critical evidence for the SAIC to detect a cartel is granted a 100% reduction of fines. Other applicants may be granted a reduction in fines, but the amount may vary depending on the case. However, the leniency programme does not apply to cartel organisers and the reduction of fines does not apply to unlawful gains.

 

 

* This information is based on Competition Law in Asia-Pacific: A Guide to Selected Jurisdictions (2018).