Fighting for Fairness

As for the National Development and Reform Commission (NDRC), it is clear that the pharmaceuticals/medical equipment, automobile and utilities are the hottest industries targeted by antitrust investigations.

The NDRC showed its determination to probe and penalize acts of monopoly in the pharmaceutical industry through its Circular on the Launch of a Dedicated Nationwide Review on the Pricing of Pharmaceuticals (Drug Price Circular), as part of an investigation campaign carried out from June 1 to October 31. The NDRC has already punished three cases involving the pharmaceutical/medical device industry this year, and circulated two rounds of questionnaires to pharmaceutical and medical device companies. The latest NDRC enforcement case in this industry is the penalty imposed on Medtronic's vertical monopoly agreements on December 7. The NDRC determined that Medtronic reached vertical monopoly agreements with its trading partners through sales contracts, email notices and negotiations. The company was charged of fixing the resale price and tender price of certain medical devices as well as restricting the minimum resale price to hospitals. It also implemented the agreements by adopting a table of prices, showing costs at every sales tier. It is worth noting that Medtronic also imposed some non-pricing restrictions (i.e. customer allocation and territorial allocation) to reinforce the effect of price restrictions. Finally, the NDRC imposed a fine of Rmb118.5 million (equivalent to 4% of the company's turnover on relevant devices in 2015). The NDRC said it would keep an eye on the medical devices industry so as to prevent anti-competitive conduct in manufacturing and sales.

The Anti-monopoly Guidelines for the Automotive Industry (Auto Guidelines), the only guidelines drafted for a specific industry, are expected to be issued in late 2016 or 2017. This shows that the NDRC will continue to keep a close eye on the auto sector.

As for utilities, under the guidance of the NDRC, the Pricing Bureau of Hubei Province punished five companies in the gas supply business for abuse of market dominance. In the notice released on its official website, the NDRC expressed that the agency and its local counterparts will continue to monitor public utilities providers suspected of market position abuse. Moreover, administrative monopoly has become a priority of the NDRC's antitrust enforcement, as six such cases have been investigated since the AML took effect, five of which were investigated and closed in 2015.

3. What was the total amount of fines levied in the past year? What was the biggest case?

The total amount of fines levied by the NDRC has exceeded Rmb7 billion in the past year. Charges by the SAIC in 2015 totaled Rmb11.94 million. The Ministry of Commerce (MOFCOM), which is responsible for merger clearance, released four decisions penalizing six companies for failing to notify their concentration of undertakings in 2015. The total amount of fines imposed by MOFCOM reached Rmb1.05 million that year.

The biggest case in 2015 was the NDRC's Qualcomm case, where the U.S. semiconductor company was imposed a ne of Rmb6.08 billion for its abuse of dominance in the standard essential patent (SEP) licensing market. Following the PRC authorities' investigations, Qualcomm encountered similar antitrust probes in other jurisdictions including the United States and South Korea.

4. How do the regulations on monopoly agreement exemptions and cartel leniency affect companies?

The NDRC's Guidelines on the General Conditions and Procedures for the Exemption of Monopolistic Agreements (Exemption Guidelines) specify the general criteria and procedures for the exemption of monopoly agreements. The Exemption Guidelines apply to companies that can prove an agreement is in compliance with Article 15 of the AML. Article 15 has always been criticized for its ambiguity and impracticality. The Exemption Guidelines provide explicit provisions on the application timing, documents and materials as well as the major factors in determining whether an agreement can be exempted. However, the extent to which stakeholders can benefit from the Exemption Guidelines and successfully obtain exemptions remains to be seen in practice.

Currently, there is no marker system regulated in China's effective laws or regulations. But one could be introduced in the PRC antitrust regime following the adoption of the draft Guidelines on the Application of the Leniency Program for Horizontal Monopolistic Agreement Cases (Leniency Guidelines). A company concerned with potential cartel behavior may submit a preliminary report to mark its ranking with the enforcement agency, if it is unable to provide complete materials for the leniency application. The system would provide companies with more time to prepare the requested materials. In order to encourage parties to report their monopolistic agreements as early as possible, the Leniency Guidelines provide prior communication channels between companies and the enforcement agencies. They also clarify substantive and procedural details, such as the submission documents and forms, registration and acceptance, and the determination of the sequence, exemption or mitigation of fines. However, it is worth noting that the Leniency Guidelines are only applicable to horizontal monopoly agreement cases.

5. How has the healthcare industry reacted to increased enforcement and the NDRC's investigation campaign?

Many companies in the healthcare industry have conducted increasingly intense trainings on antitrust compliance for their senior management and employees, especially for key departments like sales and retail. They have also updated their antitrust checklists and compliance manuals in accordance with the various AML developments, such as the NDRC's Drug Price Circular and the two rounds of questionnaires targeting the healthcare sector. Thorough internal reviews and investigations are being exercised on legal documentation (including contracts and agreements) and business models. Many are engaging outside counsel to assist in self-reviews, particularly the companies that received the second questionnaire, which focuses on those suspected of AML violations from the results of the first round.

6. What are the biggest regulatory developments impacting the automobile industry?

Both drafts of the NDRC's Auto Guidelines and MOFCOM's Measures for the Administration of Automobile Sales ended their public comment solicitation period during the first half of 2016, and are currently pending approval from the Anti-monopoly Committee of the State Council and the MOFCOM ministerial meeting, respectively. Progress so far indicates that the two new rules may be issued this year. Auto industry players, including suppliers, distributors, maintenance service providers and parts suppliers, will all be significantly affected. Auto suppliers, in particular, will have to change many of their past practices.

These developments indicate that the government clearly expects market players in this industry to strictly abide by antitrust laws and regulations. Enforcement targeting the auto industry is expected to continue after the enactment of the Auto Guidelines, and any persistent monopolistic behaviors will be subject to severe sanctions.

7. Can you describe the recent trends in MOFCOM's merger control and remedy practices? What advice would you give to foreign companies engaging in a deal that would trigger a merger review?

Anheuser-Busch InBev's acquisition of SABMiller in 2016 is the second case to adopt the “Fix-It-First” approach having obtained MOFCOM approval. The first case was NXP's purchase of Freescale in November 2015. For concentrations with competition concerns, parties may consider this approach so as to gain flexibility and reduce time pressures. Another remarkable case in 2016 is that Lam Research called off its acquisition of KLA-Tencor due to antitrust concerns raised by MOFCOM.

Merger control considerations should therefore be of utmost importance to multinationals planning global acquisitions.

The Anti-monopoly Bureau of MOFCOM has gained substantial expertise through its active enforcement and ongoing communications with foreign counterparts. The speed of merger clearances has been greatly enhanced in recent years, especially after the streamlined procedure for simple concentration cases was introduced in 2014. For example, MOFCOM spent an average of 24 days to clear a simple case in the first half of 2016. That said, there have been no significant changes to the constrained resources and involvement of other agencies in the merger review process. Parties should take the notification period into account at the very inception of the transaction and try to prepare complete and convincing materials as early as they can.

8. What are the biggest implications of the draft revised Anti-unfair Competition Law?

The PRC Anti-unfair Competition Law (AUCL) draft revision introduces the concept of superior bargaining position, and proposes stricter requirements for strong market players. Those with a higher bargaining power in terms of funds, technologies, market access, sales channel, or procurement of raw materials on which the counterparty depends, and where it is difficult for the counterparty to turn to other business operators, not holding a dominant market position is no longer a safe harbor. Any unfair actions taken by such market players may fall under the scope of the AUCL, meaning they will be regulated by, and punished according to, the law.

9. What were some of the major unfair competition cases in the past year?

On May 18, 2015, the Market Supervision and Administration Bureau of Yangpu Area, Shanghai, punished a freight agency company for committing commercial bribery, confiscated Rmb424,200 and imposed a ne of Rmb70,000. Commercial bribery is a typical unfair competitive conduct that distorts orderly competition in the market. Compared with acts of bribery committed in the sale of commodities, those committed in the service sector are usually harder to identify. The party concerned obtained Rmb424,200 in illegal gains by providing a businessman with a Rmb4,000 kickback—a violation of Article 8 of the AUCL.

In another case, Pfizer was fined Rmb100,000 for providing display fees to four pharmaceutical companies and had its illegal gains of Rmb2.95 million confiscated by the Market Supervision and Administration Bureau of Pudong New Area, Shanghai on June 24, 2015. The conduct of Pfizer constituted a violation of Article 59 of the PRC Law on the Administration of Pharmaceuticals. The company had also previously been imposed a huge fine for illegally promoting its drugs in the U.S..

10. What developments do you expect to see in the next 12 months and how will they change the competition landscape?

The six supporting antitrust guidelines—Guidelines for the Prohibition of Acts of Abusing Intellectual Property Rights, Guidelines on Commitments of Business Operators in Anti-monopolistic Cases, Leniency Guidelines, Auto Guidelines, Exemption Guidelines and Guidelines on the Determination of the Illegal Income Derived from the Monopolistic Acts of Business Operators and the Determination of the Fines Thereof—are expected be issued in the next 12 months, which will provide companies with a clearer direction of AML enforcement. Antitrust cases involving products or industries relating to citizens' daily lives, as well as public utilities, are likely to remain a priority of NDRC and SAIC enforcement. The two regulators will also continue to monitor the intersection of antitrust and intellectual property, and pharmaceutical and auto companies are advised keep a close watch on developments.

As for enterprises, the fair competition review system will offer a new basis for remedies. It may be worth considering counting on this system to protect their interests when being confronted with local protectionism, barriers to entry, unfair government subsidies and other suspected forms of administrative monopoly.

1.国务院在过去12个月中有哪些竞争倡导？

国务院于2016年6月14日发布了《关于在市场体系建设中建立公平竞争审查制度的意见》(“《意见》”)。《意见》针对的是妨碍建设全国统一市场和公平竞争的各种做法，如地方保护、区域封锁、行业壁垒、企业垄断及违法给予优惠政策或减损市场主体利益的行为。《意见》同时规定了行政审查制度的总体要求和基本原则，并明确了科学建立公平竞争审查制度的对象、方式、标准及例外规定。

国务院的竞争倡导表明，相比行业政策，竞争政策在中国的经济计划中更为重要，并将在进一步培育竞争文化中发挥重要作用。根据《意见》，包括江苏、广东、辽宁、宁夏和成都在内的许多地方政府已下发并公告了执行公平竞争审查制度的相关意见或决定。同时，对现行政策法规的评估及对其中反竞争部分的废除，这些地方政府也设定了明确的最终期限。

公平竞争审查制度旨在从源头上杜绝行政垄断，简言之，就是要禁止所有行政机关和法律、法规授权的具有管理公共事务职能的组织实施垄断行为。

2. 国家工商总局在哪些领域的执法最为积极？国家发改委关注的又是哪些领域？

国家工商总局始终非常关注与公众日常生活相关的公用企业，包括电信和水、天然气、盐等资源供应的企业。根据国家工商总局官网发布的竞争执法公告，国家工商总局及地方工商部门2015年和2016年查处的案件中，近半数涉及公用企业。这一趋势仍将继续，尤其在国家工商总局2016年4月8日发布了《关于公用企业限制竞争和垄断行为突出问题的公告》后。同时，保险和制药公司也应时刻警惕违反《中华人民共和国反垄断法》（“《反垄断法》”）的行为。

就国家发展与改革委员会（“国家发改委”）而言，反垄断调查最关注的行业显然是医药、汽车和公用企业。2016年6月1日至10月31日国家发改委开展的调查行动中，其发布的《关于在全国开展药品价格专项检查的通知》（“《药价通知》”）表明了查处医药行业垄断行为的决心。国家发改委今年已查处了三起医药行业相关案件，并对制药和医疗设备公司发出了两轮问卷调查。最近的一起案例为12月7日国家发改委对美敦力纵向垄断协议的处罚。国家发改委认定美敦力通过经销协议、邮件通知、口头协商等方式，与其交易相对人达成垄断协议，限定相关医疗器械产品的转售价格、投标价格和到医院的最低销售价格，并通过制定各经销环节的产品价格表等措施，实施了价格垄断协议。值得注意的是，美敦力还采取了限制销售对象和销售区域等非价格措施，进一步强化了价格垄断协议的实施效果。最终，国家发改委对美敦力处1.185亿元人民币罚款（2015年度涉案产品销售额4%）。国家发改委也表示将继续加强医疗器械行业反垄断监管，制止生产、销售等环节中的各种限制竞争措施。

此外，《关于汽车业的反垄断指南》（“《汽车反垄断指南》”）是唯一针对特定行业起草的反垄断指南，预计将在2016年末或2017年发布。这表明国家发改委将继续密切关注汽车行业。

在公用企业方面，在国家发改委的指导下，湖北省物价局对五家天然气供应公司滥用市场支配地位的行为进行了处罚。国家发改委在官网发布的公告中表示，国家发改委及各级价格主管部门将继续监管公用企业涉嫌滥用市场支配地位的行为。此外，行政垄断成为国家发改委反垄断执法的重点。自《反垄断法》生效以来已调查了六起行政垄断案件，其中五起在2015年调查并结案。

3. 去年最高一笔罚款的总金额是多少？最大的案件是哪一起？

2015年，国家发改委的罚款总额逾人民币70亿元，国家工商总局的罚款总计为人民币1,194万元。负责并购审查的商务部在2015年对未进行经营者集中申报的六家公司发布了四项行政处罚决定，罚款总额达到人民币105万元。

2015年最大的案件是国家发改委对高通公司的查处，这家美国半导体公司因滥用标准必要专利（SEP）许可市场的支配地位被处以人民币60.8亿元的罚款。中国反垄断机构对其进行调查后，高通在美国和韩国等司法管辖区也受到了类似的反垄断调查。

4. 垄断协议豁免和卡特尔宽大制度的相关法规对企业有何影响？

国家发改委《关于垄断协议豁免一般性条件和程序的指南（征求意见稿）》（“《豁免指南》”）规定了垄断协议豁免的一般性条件和程序。《豁免指南》适用于经营者能够证明协议符合《反垄断法》第15条规定的情形。一直以来，《反垄断法》第15条因其模糊性和不可操作性而受到批评。《豁免指南》对申请时间、文件和资料以及认定协议是否属于豁免情形的主要因素作出了明确规定。但是，利益相关方能在多大程度上得益于《豁免指南》并成功获得豁免还有待实践证明。

目前，中国现行的法律法规并未规定“标记制度”，但如果《横向垄断协议案件宽大制度适用指南（征求意见稿）》（“《宽大指南》”）获得通过，则意味着中国引入这一制度。如果涉嫌实施卡特尔行为的企业不能提供有关宽大申请的完整材料，可向执法机构提交初步报告以确定其顺位。该制度可为公司提供更多准备申请材料的时间。为了鼓励经营者尽早报告垄断协议，《宽大指南》提供了公司与执法机构之间的事先沟通渠道，并明确了实质性和程序性的细节，例如文件和表格的提交、注册和受理、顺位的确定、罚款的豁免或减轻。但值得注意的是，《宽大指南》仅适用于横向垄断协议案件。

5. 医疗行业对加强执法和国家发改委的调查行动有何反应？

医疗行业的许多公司都逐渐开始对其高管和员工，尤其是销售、零售等关键部门的员工开展反垄断合规培训。企业还根据《反垄断法》立法和执法的最新发展，例如发改委的《药价通知》和针对医疗行业的两轮问卷调查，更新了反垄断清单和合规手册，并对法律文件（包括合同和协议）及商业模式进行了深入的内部审查和调查。许多公司还聘请外部律师来协助自查，尤其是收到第二轮问卷调查的公司，会基于第一轮问卷调查的结果，关注自身涉嫌违反《反垄断法》的行为。

6. 对汽车行业的最新监管举措中，影响最大的是什么？

国家发改委《汽车反垄断指南》和商务部《汽车销售管理办法》草案都在2016年上半年完成了向社会公开征求意见，目前正在分别等待国务院反垄断委员会和商务部部长会议的批准。从目前的进展来看，两项新规可能都在今年发布。包括供应商、经销商、维修服务提供商和零件供应商在内的汽车行业从业者将受到严重影响，尤其是汽车供应商，届时需要改变过去的许多做法。

这两部草案表明政府明确期望该行业的市场参与者严格遵守反垄断法律法规。针对汽车行业的执法在《汽车反垄断指南》出台后仍将继续，此后的任何垄断行为都将受到严厉制裁。

7. 您能描述一下商务部并购控制和补救措施近期的趋势吗？如果交易会启动并购审查，您对参与交易的外国公司有何建议？

2016年百威英博（Anheuser-Busch InBev）收购南非米勒酿酒公司（SABMiller）是第二起用“先行修正”措施获得商务部批准的案例。第一起案例是恩智浦2015年11月收购飞思卡尔。对可能引起竞争关注的经营者集中行为，相关企业可考虑用这一手段来灵活处理，从而减小时间压力。2016年的另一个重要案例是Lam Research因商务部提出的竞争关注而放弃收购KLA-Tencor。因此，考虑并购控制对计划跨国收购的跨国企业来说至关重要。

通过积极执法和与外国反垄断机关的持续沟通，商务部反垄断局积累了丰富的经验。近年来并购审查的速度也显著提高，尤其是2014年引入简易程序处理简易案件后。例如，2016年上半年，商务部审查简易案件的平均时间为24天。即便如此，并购审查程序的资源紧张、没有其他机构参与的问题仍未得到显著改善。相关企业应当在交易初期就将申报所需时间考虑在内，并尽早准备好完备的申报材料。

8. 《反不正当竞争法》修订草案的最大影响是什么？

《中华人民共和国反不正当竞争法》 (《反不正当竞争法》)修订草案引入了相对优势地位的概念，并对强势的市场参与者提出更严格的要求。如果交易一方在资金、技术、市场准入、销售渠道、原材料采购等方面处于优势地位，交易相对方就会对该经营者产生依赖性，难以转向其他经营者，因此不具有市场支配地位不再是安全港。该等市场参与者采取的任何不正当行为都在《反不正当竞争法》的管辖范围内，意味着他们将依法受到监管和处罚。

9. 过去一年有哪些重大的不正当竞争案例？

2015年5月18日，上海市杨浦区市场监督管理局对某货运代理公司的商业贿赂罪行为进行处罚，没收违法所得42.42万元人民币，并处罚款7万元人民币。商业贿赂是危害市场有序竞争的典型不正当竞争行为，与商品销售过程中实施的贿赂行为相比，服务行业的贿赂行为更难发现。贿赂方向对方的业务人员提供了4,000元回扣，最终获得42.42万元非法所得，违反了《反不正当竞争法》第8条的规定。

另一起案件为上海市浦东新区市场监督管理局于2015年6月24日就辉瑞向四家制药公司支付陈列费的行为，对辉瑞处以10万元人民币的罚款，并没收非法所得人民币295万元。辉瑞的行为违反了《中华人民共和国药品管理法》第59条，其之前在美国就因非法推广药物被处巨额罚款。

10. 您预计未来12个月将有哪些发展，会怎样改变竞争格局？

六部反垄断指南（即《关于禁止滥用知识产权的反垄断指南》、《反垄断案件经营者承诺指南》、《宽大指南》、《汽车反垄断指南》、《豁免指南》和《关于认定经营者垄断行为违法所得和确定罚款的指南》）预计将在未来12个月内发布，这将为企业提供更明确的反垄断合规指导。

涉及公用企业的垄断案件，可能仍将是国家发改委和国家工商总局的执法重点。这两家执法机构也将继续监督反垄断和知识产权的交叉领域，同时医药和汽车公司也应密切关注相关发展。

对企业而言，公平竞争审查制度将为救济手段提供新的依据。面对地方保护、行业壁垒、不正当政府补助和其他形式的涉嫌行政垄断行为时，企业可以考虑依据这一制度来保护自身利益。

1. What have been some State Council competition initiatives issued over the past 12 months?

The State Council released the Opinions on the Establishment of a Fair Competition Review System in the Course of the Creation of the Market System (Opinions) on June 14, 2016. The Opinions target practices that prevent the development of a nationally unified and fair competition market, such as local protectionism, regional blockades, industry barriers, enterprise monopolies, preferential treatment in violation of laws or reductions in, or damage to, the interests of market players. They also specify the overall requirements and basic principles of the administrative review system. The Opinions also clarify the scope, method, standards, and exemptions for the scientific fair competition review system. This initiative shows that competition policy, rather than industrial, is a higher priority in China's economic plans and will play a significant role in further fostering a competitive culture. Following the Opinions, many local governments, including Jiangsu, Guangdong, Liaoning, Ningxia, and Chengdu, have circulated and published their own opinions or decisions for implementing the system. They have also established clear deadlines for evaluating and abolishing existing anti-competitive policies or regulations. The fair competition review system is aimed at eliminating administrative monopoly at the source. Simply put, it prohibits the conduct of monopolistic acts by all government bodies and other organizations legally empowered to administrate public affairs.

2. In which areas has SAIC enforcement been most active? What about the NDRC?

Public utilities relating to citizens' daily lives, including telecommunications and the supply of resources such as water, gas and salt, always draw great attention from the State Administration for Industry and Commerce (SAIC). According to the competition enforcement notices released on the SAIC's official website, nearly half of the cases investigated and punished by the SAIC and its local counterparts in 2015 and 2016 involved public utilities. This trend will continue, especially with the SAIC's release of the Announcement on Outstanding Issues Concerning Restrictive Competition and Monopolistic Acts of Public Utilities on April 8, 2016. Insurance and pharmaceutical companies are also advised to remain alert on possible PRC Anti-monopoly Law (AML) violations.