Chinese Anti-monopoly Private Litigation

Such disappointment, apart from the litigants, has extended also to other potential plaintiffs. This is not confined to the frustrated ruling, but the truth about the real nature of this particular case is, strictly speaking, not an anti-monopoly private litigation per se. This case goes back to the very essence of the basis of the law; the so-called first case is in fact, an administrative matter.

Article 50 of the AML states:

“The business operators that implement the monopolistic conduct and cause damages to others shall bear the civil liability according to law.”

However, if only furnished with such a simple provision, Chinese customers and competitors barely have any real legal recourse and only receive the desired compensation through the initiation of private anti-monopoly litigation.

The reasons are diversified:

Firstly, although the Chinese courts did make some preparation in anticipation of the enforcement of the AML they are, in reality, not well prepared to deal with anti-monopoly civil cases. According to the internal arrangement of Supreme Court, the No.3 Civil Division, which mainly deals with IP cases as well as unfair competition cases, has responsibility to dispose anti-monopoly cases. During the list of litigation cases promulgated by the Supreme Court, anti-monopoly cases appeared for the first time. At the highest level in the Chinese judiciary hierarchy, the No.3 Civil Division rarely hears cases on its own. Furthermore, it focuses primarily on IP issues or disputes, but not on competition issues. The situation in the lower courts are similar to the Supreme Court. As a result, Chinese judges have limited experience in the anti-monopoly field; in particular they lack the detailed analytical skills from the perspective of microeconomics. In China, although microeconomics and regulatory economics are amongst the more popular areas of research within the academic circle of economic law, as far as the actual practice of the law is concerned, especially when it comes to litigation, Chinese judges seldom apply such knowledge and analytical approach. For most judges, monopolistic competition, oligopoly, transaction costs, game theory and contestable markets are purely theoretical.

Secondly, although the AML has been promulgated and has come into effect in China, there are still many unresolved problems with regard to its enforcement. Traditionally, as the Chinese economy is centrally planned, the AML could not find a strong foundation in such an economic system, and the entire concept of anti-monopoly is still considered a stranger to Chinese society. If a Chinese judge faces an anti-monopoly civil case, the first challenge for him/her is to decide on what are the purposes and criteria of the AML, namely the improvement of efficiency, or of consumer welfare or maximisation of social welfare? Taking into consideration factors such as opportunity, efficiency, justice, prosperity, harmony and freedom, which of these will be the prevailing value to Chinese anti-monopoly litigation? Without the understanding of the AML, any verdict rendered is doomed to create conflicts and contradictions. Notwithstanding, there do exist measurements of the concentration degree of the relevant market being fundamental and basic steps for invoking the AML. However there is no common concept on how to address the relevant market in China, thus market share is not used as a standard in the concentration notification regulation. It is hard to imagine that Chinese courts could make a sound judgment before being able to grasp the core concept about the AML.

And finally, according to the custom of court practices, the Supreme Court should issue or make the relevant judicial explanation on the guidelines or implementation rules for the AML in order to guide the lower courts. Take for instance the Supreme Court which has published its explanation about anti-dumping cases and anti-subsidiary cases to facilitate trade remedy case hearings. Without any real and practical experience in handling anti-monopoly cases, to date, the Supreme Court has not announced its plan nor given any dates for such in issuing the much needed guide or explanation. In the absence of such an explanation, the Chinese courts cannot effectively proceed to rule on who can or cannot be plaintiffs, whether there is a cause of action, assessment of damages, quantum of compensation, etc.

Due to the reasons mentioned above, it is easy to appreciate the difficulty faced by the Chinese courts, and that the initiation of a suit relating to or invoking the AML is nearly impossible, or at best, may face with many unknown or uncertain obstacles.

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