[author: Michael Zhang]
On May 8, 2012, the Supreme Court of China issued new “Rules on the Application of Law on Civil Cases Concerning Monopolistic Conduct” (the “Rules”). The Rules clarify some of the questions concerning anti-monopoly cases (“AML Cases”), which are civil cases based on alleged monopolistic actions. Since the promulgation of the PRC Anti-Monopoly Law in 2008, and through the end of 2011, approximately 60 anti-monopoly cases have been filed with different Chinese Courts (with eight of them still pending), and apparently no plaintiff has prevailed in any of these cases. This may be due to the difficulties faced by the plaintiffs in collecting evidence, or the fact that the plaintiffs and their advisors typically lack relevant expertise.
Scope of Plaintiffs and Causes of Action
According to the Rules, both natural persons and legal persons/organizations can be plaintiffs in AML Cases. The causes of action in AML Cases can be either that (1) the plaintiff suffered actual damage from monopolistic conduct and is suing for compensation; or (2) the plaintiff believes that an agreement between enterprises or a trade association charter violates the PRC anti-monopoly law and is seeking that the Court declare such agreement/charter invalid.
Ex Ante Administrative Proceedings Are Not Required To Bring AML Cases To Court
Under the PRC anti-monopoly law, there are both administrative penalties and civil liabilities for monopolistic conduct. Previously there was a question as to whether an administrative penalty was a necessary precursor to a civil action; the Rules now indicate a negative answer. They make clear that ex ante administrative proceedings are not a prerequisite for a civil action, and recognize both follow-on litigation and direct litigation. Thus, parties harmed by monopolistic conduct may either bring a civil action after a decision of the anti-monopoly enforcement agencies becomes effective, or initiate a legal action directly before the Court.
Burden of Proof
Before the Rules, the question as to the burden of proof in AML Cases was not clear. The Rules now shed some light on this issue.
1) In AML Cases Involving A Monopoly Agreement: If the plaintiff can prove that the defendants entered into an agreement which would likely constitute a “monopoly agreement”, the defendants bear the burden to prove that such agreement does not have the effect of eliminating or restricting competition.
2) In AML Case Involving Abusive Use of A Dominant Market Position: The plaintiff still bears the burden to prove that (1) the defendant holds a dominant position in the relevant market (except when the defendant meets the standards of the market-share-based dominance presumptions established in Article 19 of the anti-monopoly law), and (2) the defendant abuses such dominant position. However, where the defendant is a public enterprise or is entitled by relevant laws to monopolistic status in a certain field of business, the Court may, based on the market structure and competition condition, form a presumption of market dominance, in which case the defendant will bear the burden to prove otherwise.
The Rules also make a plaintiff’s evidence collection easier by allowing relevant information released by the defendant to be used as prima facie evidence of dominant market position.
Once it is established that the plaintiff suffered damage from the monopolistic conduct of the defendant, the Court may order the defendant to stop its conduct and/or compensate the plaintiff for its damages. The Court may include any reasonable expenses incurred by the plaintiff in its attempt to investigate and stop the monopolistic conduct in the scope of the compensation. However, Chinese laws do not provide for punitive damages in AML Cases.