Hot issues, trends of anti-monopoly litigation in China

By Huang Wei, Tian Yuan Law Firm
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Professionalism has been increasingly appreciated in the trial of anti-monopoly litigation cases in China. Particularly at the 10-year anniversary of the implementation of China’s anti-monopoly litigation law, major changes are being witnessed for the jurisdiction of anti-monopoly litigation, with anti-monopoly appellate cases tried at first instance by the intellectual property courts or Intermediate People’s Courts leaping the provincial Higher People’s Courts to land directly in the newly established Intellectual Property Tribunal of the Supreme People’s Court.

Huang Wei
Partner
Tian Yuan Law Firm

Additionally, following the establishment of IP courts in Beijing, Shanghai and Guangzhou, the Supreme People’s Court has successively approved, since January 2017, the establishment of 20 intellectual property tribunals in 17 provincial-level administrative regions, beginning with Jiangsu. The establishment of such courts and tribunals will greatly enhance professionalism in the trial of anti-monopoly litigation cases and go a long way to achieving uniformity in judicial judgments and rulings.

And in the hot sectors, anti-monopoly litigation continues to heat up in China.

Major anti-monopoly litigation cases frequently arise in the standard essential patent (SEP) field. Against a background of recurring epic SEP battles occurring around the world, looked at from the perspective of the 2016 Qualcomm v Meizu case and the 2017 Qualcomm v Apple case, in which the author acted as counsel, China has become a major battleground in the global struggle between SEP rights holders and exploiters.

For example, the anti-monopoly and infringement action for a subject amount exceeding RMB1 billion (US$145 million) and the SEP legal action instituted in China by Apple against Qualcomm are key rounds in the global battle between the two. Additionally, SEP anti-monopoly legal actions are also demonstrating that the greater the subject amount in a legal action, the more complex are the issues involved in the case.

Anti-monopoly legal actions in the internet sector are continuing to increase, and whether the boundary of anti-monopoly will be redrawn awaits further observation. With the rapid development of the internet in China, anti-monopoly litigation cases in the internet sector are also progressively increasing. In 2017, the author acted for JD.com in instituting an anti-monopoly legal action involving a claim in the amount RMB1 billion in respect of Alibaba’s act of “choose one or the other” (the exclusivity requirement that an e-commerce platform imposes on the merchants on its platform) in the Beijing Higher People’s Court.

The Supreme People’s Court extended the trial approach it took in the 360 v Tencent case to Xu Shuqing v Tencent, a retrial case involving the abuse of dominant market position, at the end of 2018, holding that in a determination of the dominant market position of an internet enterprise, market share only has a course-grained but potentially misleading use.

Given the importance that the EU attached to Google’s market share in finding that Google had a dominant market position in the Google case, whether the Supreme People’s Court will continue to stick to the trial approach it took in 360 v Tencent in such major cases as JD.com v Alibaba in future, and whether the boundary of internet anti-monopoly in China may be redrawn, await further observation of a large number of cases.

Follow-on anti-monopoly legal actions in China are also becoming progressively more frequent. With the progressive normalization of anti-monopoly law enforcement in China, the institution by relevant entities, after the imposition of penalties by the anti-monopoly law enforcement authorities, of anti-monopoly claim lawsuits based on the administrative penalty decisions is also becoming more frequent.

On the one hand, in 2017, the author acted for a certain enterprise in instituting the first real follow-on anti-monopoly claim lawsuit, for several hundred million yuan, revolving around the administrative penalty rendered by the Chinese anti-monopoly law enforcement authority. On the other hand, with respect to a penalty rendered by a foreign anti-monopoly law enforcement authority that caused Chinese enterprises to suffer losses, the author also actively represented the relevant domestic injured entities, robustly advancing the anti-monopoly claims through such means as instituting anti-monopoly legal actions both in China and abroad, e.g., representing State Grid in the anti-monopoly legal action instituted by it against foreign power cable cartel enterprises.

Follow-up anti-monopoly administrative actions in China are increasing, and the efforts put by the judiciary in its review of law enforcement acts have increased. At present, the further institution of anti-monopoly administrative legal actions by relevant entities after the rendering of administrative penalty decisions is also increasing.

In the first case in China of a judicial review of the administrative penalties imposed for a horizontal price monopoly handled by the Hainan Provincial Price Bureau, in which the author acted as counsel, the Supreme People’s Court’s final finding, after retrial, that the anti-monopoly law enforcement authority does not in principle need to further analyze whether the fixed resale price and minimum price horizontal monopoly agreements had the effect of “eliminating or restricting competition” cleared up, at the Supreme People’s Court level, the long existing divergence of views on horizontal monopoly agreements between Chinese anti-monopoly law enforcement authorities and the judicial system.

With appeals of all post-administrative penalty administrative anti-monopoly litigation cases handled by the Supreme People’s Court’s Intellectual Property Tribunal, it can be reasonably assumed that post-administrative penalty administrative litigation cases will increase further.

The Anti-Monopoly Law (AML) has been implemented in China now for 10 years, and in addition to the occurrence of major cases in the AML enforcement field, major cases such as the 360 v Tencent anti-monopoly case, and the Ruibang v Johnson & Johnson case have established the adjudication approaches and rules for anti-monopoly judicial litigation.

We, as front line anti-monopoly lawyers, feel on a daily basis the rapid development of anti-monopoly litigation in China. Not only are an increasing number of civil entities opting for litigation to resolve anti-monopoly disputes between parties, increasingly appreciating and daring to institute administrative legal actions to review anti-monopoly administrative penalties, but relevant legal actions are also further involving fair competition reviews, follow-on civil anti-monopoly litigation, etc.

It can be assumed that, with the enhanced professionalism in the anti-monopoly adjudication structure and the increasing willingness of relevant entities to resolve anti-monopoly litigation between parties through judicial litigation, anti-monopoly litigation in China will witness a new period of high-speed growth.

Huang Wei is a partner at Tian Yuan Law Firm. He can be contacted on +86 10 5776 3888 or by e-mail at hwei@tylaw.com.cn