A round-up of laws, regulations and cases in China.
On 2 February, the National Development and Reform Commission (‘NDRC’) issued Draft Guidelines for the Application of Lenient Treatment Rules in Horizontal Monopoly Agreement Cases (Draft for Comment), seeking comments by 22 February 2016.
The Draft provides that an operator may apply to the competent anti-monopoly law enforcement agency for lenient treatment before any action has been taken it under Article 39 of the Anti-monopoly Law. After submitting an application for lenient treatment, the operator must: stop the suspected violation immediately; cooperate fully and sincerely with the law enforcement agency during the investigations; properly store evidentiary materials and information and refrain from concealing, destroying or transferring such evidence or offering false materials or information; refrain from disclosing any information about the application without approval of the agency; and refrain from obstructing any other anti-monopoly law enforcement actions.
On 2 February，the National Development and Reform Commission (‘NDRC’) issued the Guidelines for Operator Commitment in Anti-Monopoly Cases (Draft for Comment), seeking comments on the Draft by 22 February 2016.
Under China’s Anti-Monopoly Law, enforcement agencies may decide to suspend an investigation if the operator agrees to undertake certain specific measures to rectify the breach. The Draft contains guidelines in relation to the acceptance of operator commitments. The main provisions of the Draft are set out below.
Where, after investigation, a law enforcement agency holds that an operator has engaged in monopolistic behaviour, it shall make a decision on punishment under the Anti-Monopoly Law, and no longer accept any commitment made by the operator.
A law enforcement agency shall not suspend the investigation on the basis of a commitment made by the operator if the case involves fixing or changing commodity prices, limiting production or sales quantity or segmenting a sales or material purchase market.
A decision made by a law enforcement agency to suspend or terminate an investigation shall not be interpreted as an affirmation that the operator's behaviour is not monopolistic. Despite the decision, the agency can investigate, and impose administrative punishments in relation to, similar behaviour.
On 4 February, the State Administration of Press, Publication, Radio, Film and Television (‘SAPPRFT’) and the Ministry of Industry and Information Technology issued the Administrative Provisions on Online Publishing Services (‘Provisions’). The new Provisions will come into effect on 10 March 2016.
In order to engage in online publishing, a publisher must have the approval of the relevant publishing authorities and must have obtained an Internet Publishing Services Licence, (Article 7). Article 10 provides that foreign-owned companies, or companies that are partly foreign owned, cannot engage in online publishing except in collaboration with a local publisher and with the prior approval of SAPPRFT.Further, publishers of books, electronic publications or others engaged in online publishing services must act in accordance with Article 8, which provides as follows:
“To engage in internet publishing services, a book, newspaper, periodical, audiovisual or electronic publisher must:
(1) have a defined domain name, smart device app or other publication platform for its internet publishing services;
(2) provide internet publishing services only within the scope of its licence; and
(3) have the technologies and equipment necessary for internet publishing services; the relevant servers and storage devices must be located within the territory of the People's Republic of China.
In addition, the Provisions specify certain content that must not be included in online publications.
On 25 February, the State Council issued its Anti-Unfair Competition Law (Revised Draft for Comment) Seeking Public Opinion. The deadline for submitting comments is 25 March 2016.
The Revised Draft for Comment specifies that a business operator shall not leverage its comparatively dominant position in order to conduct any unfair trading practice such as: obliging a contracting party to enter in a transaction with a third party without good reason; obliging a contracting party to purchase certain designated commodities without good reason; imposing conditions on a contracting party or other business operator without good reason; overcharging or making unreasonable requests or unreasonably requiring a contracting party to provide additional economic benefits.
The National Development and Reform Commission ('NDRC') recently imposed a fine of RMB 3,995,400 (approx. US$615,000) on five companies for having reached and executed an anti-competitive agreement in relation to the sale of generic allopurinol tablets. The companies are Chongqing Qingyang Pharmaceutical Co., Ltd., Chongqing Datong Pharmaceutical Co., Ltd., Jiangsu Shimao Tianjie Pharmaceutical Co., Ltd., Shanghai Xinyi United Medicinal Herbs Co., Ltd., and Shangqiu Huajie Pharmaceutical Co., Ltd.
Allopurinol is a drug commonly used to treat kidney stones and gout caused by excessive uric acid: hyperuricemia. From 2014 to 2015, the pharmaceutical companies referred to entered into an agreement to raise the price of allopurinol tablets and divide the market between them, in essence excluding other competitors and severely restricting competition. As a result, the medication expenses of many patients were increased and the interest of consumers harmed.