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Antitrust Litigation: Has China Opened A Pandora's Box?

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Renard Francois
François Renard

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Ho Victor
Victor Ho

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06 June 2012

China's Supreme People's Court's Rules Concerning the Application of the Law in Civil Proceedings Arising as a Result of Monopolistic Conduct came into force on 1 June 2012.

All companies, especially those with strong market positions in China, are strongly advised to further review their operations in China and assess the risk of being sued before national courts for breach of local antitrust rules, having regard to international guidance and experience in the area of antitrust.
 
China's Anti-Monopoly Law (the AML), which entered into force on 1 August 2008, provides that any undertaking violating the AML and causing damage to others shall "bear civil liability". However, no procedural rules regarding antitrust litigation in China had previously been provided. This has now changed: China's Supreme People's Court's Rules Concerning the Application of the Law in Civil Proceedings Arising as a Result of Monopolistic Conduct (the SPC Rules), which entered into force on 1 June 2012, provide guidance on a number of important issues relevant to private antitrust actions, including in relation to standing, the allocation of jurisdiction amongst the PRC courts, the allocation of the burden of proof between plaintiff and defendant, the appointment of independent experts and the statute of limitations applying to private actions under the AML. The SPC Rules now provide a basic framework to guide the hearing of civil disputes under the AML, and set the scene for an increase in private actions in the coming years. By adopting a more ambiguous position on certain key issues, the SPC Rules possibly represent a step backwards compared with previous draft versions.


Although the SPC Rules might have suggested that China had opened a Pandora's box of antitrust private litigation, they also omit certain of the more plaintiff-friendly provisions of the earlier draft rules, including the provision for court-directed discovery and the presumption of dominance for public utilities and other legally-sanctioned monopolies. They also abandon the express option of collective actions. A landmark ruling in a private action adopted by the Shanghai First Intermediate People's Court 15 days before the official entry into force of the SPC Rules, Bangrui Yonghe v. Johnson & Johnson, seems to confirm the relatively defendant-friendly approach adopted so far by Chinese courts.


This memorandum summarizes the SPC Rules and gives some guidance to companies as to how antitrust litigation is likely to develop in China.


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