The Private Competition Enforcement Review: China
Overview of recent private antitrust litigation activity
In the infancy of the Anti-Monopoly Law (AML) of 2008, commentators believed that public enforcement by the competition authority would be the main driver of China's antitrust enforcement, while private antitrust litigation would play a less prominent role. However, the volume and significance of private antitrust litigation have grown steadily in recent years, thanks to the growing awareness of private litigation among market participants and the institutional reform that has continued to strengthen the competence and capability of the Chinese judiciary.
In particular, following the creation of the dedicated intellectual property (IP) appellate tribunal within the Supreme People's Court (SPC) to assume exclusive jurisdiction over all antitrust appeal cases in 2019,2 an increasing number of heavyweight judgments have been handed down by the highest court to provide further guidance to private antitrust litigation activities.
In terms of cartels, the SPC ruled that a party to a brick and tile output restriction cartel did not have the standing to request other cartelists to compensate the damages resulting from its ceased supply as part of the cartel.3 The SPC opined that the plaintiff's claim essentially related to the distribution of illegal gains among the cartelists; the output limitation itself was unlawful and, as such, the interest of cartelists was not intended to be safeguarded by the AML.
As regards vertical anticompetitive agreements, the final ruling on Yutai v. Hainan Administration for Market Regulation4 has affirmed that the courts will continue to carry out a rule of reason/effects-based analysis with respect to claims against resale price maintenance (RPM) and that this can co-exist with the per se illegality/by-object violation approach to the same conduct adopted by the competition authority (the State Administration for Market Regulation (SAMR)). In 2021, in a move to align these two seemingly different approaches, in the draft amendments to the AML, the National People's Congress proposed a rebuttable presumption of anticompetitive effect for RPM to be applicable to both administrative and civil litigation. Yet many questions remain unanswered, and detailed guidance is needed to flesh out this merged approach. On the one hand, while the presumption of anticompetitive effect works in the SAMR's favour when carrying out public enforcement, the SAMR will likely need to examine the counterarguments and evidence put forward by the company under investigation and weigh the likelihood of the company appealing, and the courts endorsing, its decision later. On the other hand, the shifting of initial burden of proof to the defendant from the plaintiff is likely to encourage more civil lawsuits and pose challenges to companies when defending their distribution arrangements before the courts.
An abuse of dominance lawsuit against TMall and its parent company Alibaba for allegedly forcing online merchants to pick sides under its 'choose one from two' policy, which was initiated by its rival e-commerce platform JD.com, is ongoing. In April 2021, during the course of this proceeding, the SAMR issued an administrative penalty decision, finding Alibaba's exclusivity requirements on on-platform merchants to constitute an abuse of market dominance.5 It is worth observing the extent to which JD.com will be able to benefit from the SAMR's finding of infringements to prove the existence of, and harms resulting from, Alibaba's abusive exclusive dealing arrangements in terms of online merchants, and further to substantiate the requested damages for losses (which are primarily consequential rather than direct) as a result of the exclusionary act.
Other headline-grabbing cases include ByteDance's claim against Tencent6 (challenging the latter's self-preferential treatment (users were prevented from sharing content from competing services on WeChat, a prevalent instant messaging platform operated by Tencent)), Xiaomi's allegation against InterDigital7 (representing the first-ever case in which the plaintiff has petitioned a Chinese court to set global IP licensing fees) and OPPO's lawsuit against Sharp8 (in which a Chinese court has, for the first time, asserted jurisdiction over the royalties charged by the defendant for global patent licensing). Both Xiaomi v. InterDigital and OPPO v. Sharp concluded with settlements reached by the parties, which reaffirms the message that China has become an increasingly important battlefield for global patent disputes involving Chinese licensees.
While it remains challenging for plaintiffs in private litigation to prevail on their cases due, primarily, to the complexity and high evidentiary burden, the past few years have started to see plaintiff victories. On 28 April 2020, a court in Nanjing awarded Yangtze River Pharmaceutical Group 68.8 million yuan for successfully establishing that a supplier of an active pharmaceutical ingredient (which Yangtze River Pharmaceutical Group purchased to manufacture antihistamine tablets) had abused its market dominance.9 This case not only represents one of the rare private antitrust cases in China in which the plaintiff prevailed, but also involved the highest damages a court has ever awarded to a plaintiff, and is thereby expected to boost the confidence of other companies contemplating lodging lawsuits.
General introduction to the legislative framework for private antitrust enforcement
The legislative framework and key substantive and procedural rules for private antitrust litigation in China are as follows.
The comprehensive competition statute, the AML, which came into effect on 1 August 2008, sets the basis at a high level for private antitrust enforcement in China. In particular, Article 50 of the AML provides that undertakings shall be responsible for civil liabilities according to the law for losses caused to other parties due to their anticompetitive conduct, including anticompetitive agreements (Articles 13 and 14), abuse of a dominant market position (Article 17) and carrying out concentrations with restrictive effects on competition without the authority's prior approval.
In 2012, the SPC promulgated the Judicial Interpretations on Issues concerning the Application of Law in Adjudicating Civil Disputes Arising from Alleged Monopolistic Conduct (the Antitrust Judicial Interpretations), which was updated at the end of 2020. This document sets out a comprehensive framework on the key issues arising in antitrust civil lawsuits, including jurisdiction, standing, burden of proof, standard of proof and statute of limitations. According to Article 1 of the Antitrust Judicial Interpretations, antitrust-related civil lawsuits include both damages claims arising from alleged monopolistic conduct and petitions to void contracts or constitutional documents (e.g., articles of associations) of trade associations that allegedly violate the AML.
The procedural rules governing private antitrust litigation include the Civil Procedure Law (CPL) and relevant judicial interpretations issued by the SPC, including, most notably, the Judicial Interpretations on the Application of the Civil Procedure Law (the CPL Interpretations) and the Provisions on Evidence in Civil Procedures.
In terms of jurisdiction, there are two layers of courts to review civil antitrust lawsuits:
- courts of first instance:
- general: private antitrust cases in China are under a special jurisdictional arrangement and only courts above a certain level have jurisdiction to review claims. According to Article 3 of the Antitrust Judicial Interpretations, private antitrust cases shall be brought before intermediate courts sitting in the provincial capitals and major municipalities, or other courts authorised by the SPC. These courts are believed to be more capable of addressing the legal and economic complexities involved in private antitrust cases; and
- in three key areas: in 2014, the Chinese National People's Congress resolved to set up specialised IP courts in Beijing, Shanghai and Guangzhou. The SPC further authorised these three IP courts as having exclusive jurisdiction over antitrust cases in Beijing municipality, Shanghai municipality and Guangdong Province (excluding Shenzhen), respectively; and
- unified court of appeal: in 2019, the SPC set up a dedicated appellate tribunal, which enjoys exclusive jurisdiction over appeals against all first instance antitrust judgments. This 'leapfrog appeal' mechanism is expected to encourage more antitrust lawsuits and amplify the court's role in shaping the landscape of Chinese antitrust enforcement.
The AML applies to conduct with extraterritorial effects on competition in China, as does similar legislation in many jurisdictions. Specifically, Article 2 of the AML is applicable to conduct that takes place outside the territory of the People's Republic of China (PRC) but that has the effect of eliminating or restricting competition in the Chinese domestic market.
In the private antitrust litigation context, Huawei v. InterDigital serves as a good example of the courts' prevailing view that they have jurisdiction over conduct with extraterritorial effects. In rebutting InterDigital's objection to Shenzhen Intermediate Court's jurisdiction, the Guangdong High Court held that while some of InterDigital's licensing practices took place outside the PRC, they had impacts on the Chinese market and, in particular, on the plaintiff Huawei, which is a PRC-domiciled company.10
As a more recent example, on 9 June 2020, Xiaomi filed a lawsuit against InterDigital before the Wuhan Intermediate Court, in which Xiaomi requested the court to set a reasonable standard for the royalties for licensing InterDigital's standard essential patents (SEPs) worldwide. On 28 July 2020, InterDigital filed before the Delhi High Court in India for both preliminary and permanent injunctions. After becoming aware of InterDigital's moves in India, Xiaomi filed for, and was awarded, an injunction by the Wuhan Intermediate Court, which required InterDigital to immediately withdraw or suspend the requests for injunctions in India and refrain from requesting similar injunctions in China or other jurisdictions.11
According to the CPL, a plaintiff must have a direct interest in the dispute to be prima facie qualified to bring a civil lawsuit. More specifically for private antitrust litigation, Article 50 of the AML imposes civil liabilities on undertakings that have carried out monopolistic conduct resulting in losses to others. Article 1 of the Antitrust Judicial Interpretations provides that entities and individuals suffering losses from monopolistic conduct can initiate antitrust lawsuits.
Neither the AML nor the Antitrust Judicial Interpretations limits standing to sue to direct purchasers, which means that indirect purchasers and end consumers may also lodge antitrust lawsuits. In Tian Junwei v. Carrefour Shuangjing Store and Abbott,12 an individual named Tian Junwei claimed damages from the Carrefour Shuangjing store where he had purchased Abbott infant formula at an inflated price due to the RPM Abbott had imposed on Carrefour. The court of first instance reasoned that depriving indirect purchasers of the eligibility for bringing antitrust lawsuits would lead to an unfair consequence and would defeat the AML's purpose of protecting consumer interests, because, in most cases, ultimately consumers would suffer losses while the relevant undertaking would gain monopoly profits.
For an indirect purchaser to sue, it is important to establish that it has suffered losses from the defendant's alleged monopolistic conduct and that there is a causal link between its losses and the defendant's conduct.
It should be noted that a party to a cartel is not entitled to compensation from other cartelists because there is no legitimate interest to protect in the first place, as shown in the brick and tile cartel case detailed in Section I.
The process of discovery
As a general rule on the private litigation procedure in China, each party has the responsibility to collect and present evidence to substantiate its factual or legal arguments. For example, in the case of abuse of market dominance, Article 8 of the Antitrust Judicial Interpretations sets out that the plaintiff bears the burden to prove that the defendant has a dominant position in the relevant market and has abused this dominant position. In line with this, the courts in the relevant precedents have consistently required the plaintiffs to produce evidence of the existence of the alleged abusive conduct and the anticompetitive effect resulting from the act. The defendant seeking to justify its conduct bears the burden to provide justifications.
Notably, unlike many common law jurisdictions, in China there is essentially no mechanism equivalent to discovery that compels parties to disclose evidence in their possession to the opposing side. This, in turn, means that it is generally difficult in a Chinese court proceeding for a party to have access to the evidence in the opposing party's possession, unless the opponent produces this evidence on its own to advance its own proposition.
The CPL provides an avenue for a party to apply for the court to collect evidence that the parties cannot acquire themselves owing to 'an objective reason'.13 The CPL Interpretations provide a list of instances in which objective reasons may apply, including for evidence that is in the possession of a governmental authority, which may only be accessed by a court for judiciary purposes, and for evidence containing state secrets, trade secrets and personal privacy.
The heavy burden of proof is widely recognised as a major challenge for the plaintiff to prevail in an antitrust lawsuit. As a result, there have long been calls for reforms to facilitate plaintiffs' access to evidence. For example, an interim draft of the Antitrust Judicial Interpretations had proposed court-assisted evidence collection, in particular where the relevant evidence is in the possession of the defendant and is necessary to prove the plaintiff's proposition. Refusal to produce demanded evidence that is unfavourable to the defendant may lead to the shift of burden of proof. However, such a clause was removed from the final version that came into force.
Use of experts
In private antitrust litigation, parties may request the presence of one or two persons with specialised knowledge to explain specific issues to the court.14 In practice, parties often involve economic experts to provide opinions on certain issues, by way of submitting reports or by testifying. For example, in Qihoo v. Tencent,15 both parties presented testimonies of economists to assist the court with issues such as market definition, market shares and anticompetitive effects. Notably, on hearing the appeal, the SPC rejected the opinions of the economists engaged by Qihoo on the grounds that the economists turned out to be commenting on the ruling of the first instance (which effectively amounted to legal opinions) rather than providing views on economic analysis. Expert opinions are generally subject to cross-examination during the court proceeding.
The Antitrust Judicial Interpretations also provide that a party may commission a market investigation or economic analysis report on specific issues of the case from professional institutions or professionals. With the court's permission, both parties may jointly appoint an institution or expert. In practice, however, jointly commissioned reports by both parties are rarely seen in antitrust lawsuits. The plaintiff and the defendant typically commission a report each and submit these for the court's review and cross-examination.
The AML and the Antitrust Judicial Interpretations do not provide further guidance specific to antitrust class actions, and thus the general rules in the CPL and relevant judicial interpretations apply. Although the CPL provides avenues for collective actions or public interest actions, their use is rare and there have been no published precedents of either.
The CPL provides for the consolidation of lawsuits (collective action). Specifically, where one side or both sides to a lawsuit involve two or more persons and the subject matters of litigation are the same, the court may consolidate the lawsuits upon consent by the parties. Where there are more than 10 plaintiffs, they may elect a representative to participate in the proceeding on behalf of all plaintiffs. If there is an indeterminate number of eligible plaintiffs, the court would need to issue a public announcement to set out the facts as well as the claims and to notify the interested parties to register within a certain period of time.
More specifically in the antitrust context, according to the Antitrust Judicial Interpretations, if two or more plaintiffs file lawsuits to the same court against the same monopolistic conduct, the court may decide to consolidate the multiple proceedings. If two or more lawsuits are brought before multiple different courts, the courts receiving the subsequent cases should, within seven days, transfer the cases to the court that received the first lawsuit.16
The CPL also provides for public interest litigation, in which relevant authorities (e.g., the People's Procuratorate) or organisations (e.g., China Consumers Association) may bring lawsuits against wrongdoings involving environmental pollution or infringements of consumer interests in sectors such as the food and drugs sector. The draft amendments to the AML published for public comment in 2021 propose that the People's Procuratorate may file a lawsuit if public interests are harmed. This proposal is widely welcomed as it is intended to draw on public resources to address the disparities between the plaintiff and the defendant in civil antitrust litigation.
Unlike in other jurisdictions, including the United States, punitive damages and statutory multiplied damages are not available to plaintiffs in China. Pursuant to the Antitrust Judicial Interpretations, compensatory damages and reasonable expenses incurred for investigating and stopping the alleged monopolistic conduct (potentially including attorneys' fees) are recognised before the court.
In addition, the limitation period for claiming damages arising from monopolistic conduct is three years, commencing from the date on which the plaintiff became aware or should have been aware of the infringement. If the alleged monopolistic conduct has continued for more than three years by the time the plaintiff initiates the proceeding, the plaintiff is only entitled to damages for the losses it incurred during the three years prior to the date of the claim.17
The calculation of damages in antitrust civil lawsuits is often complex. As a general rule, damages should be calculated on a case-by-case basis and take into account the specific circumstances of the case. While previous cases shed little light in this regard, in the Rainbow v. Johnson and Johnson ruling rendered in 2013, the Shanghai High Court awarded damages on the plaintiff's actual loss but denied other claims.18
Damages aside, under the general laws of torts and contract, plaintiffs may also seek a cease-and-desist order, removal of obstructions, restitution, restoration of the original conditions and other forms of performance, to obtain relief from the monopolistic conduct in question. For instance, in the Yingding v. Sinopec ruling of first instance in 2016, which involved alleged abuse of dominance by Sinopec, the Kunming Intermediate Court ordered Sinopec to admit Yingding's biofuel products into its distribution network within 30 days of its ruling.19 For IP-related cases, injunctive relief in general is available to IP holders, although the court tends be sceptical towards SEP holders' requests for injunction and may suspect these amount to a violation of the fair, reasonable and non-discriminatory obligation by the SEP holder.
The current AML and regulations are silent on whether passing-on defences are available to defendants, and published court cases to date have no direct reference to these.
In the meantime, in China, it is difficult for defendants to challenge the standing of the plaintiff based on pass-on defences. While a plaintiff needs to have a direct interest in the dispute to be prima facie able to bring a civil lawsuit according to the CPL, whether the plaintiff has indeed not suffered losses because of pass-on is more of a substantive issue that will be contested in the subsequent court proceeding after the plaintiff has passed the standing test. In addition, under the Antitrust Judicial Interpretations, antitrust civil lawsuits include those in which the plaintiff sues (1) to recover losses resulting from the defendant's monopolistic conduct or (2) to request the court to affirm that the contract or articles of association of trade associations in dispute contravene the AML, which means that, strictly speaking, the court can take on the plaintiff's claim without first determining whether the plaintiff has, in fact, passed on losses.
Pass-on defences, however, will more likely have a bearing in the calculation of damages. As a general principle, in China, the plaintiff is only entitled to compensation for the actual losses it has suffered. Therefore, in theory, pass-on defences may be accepted by the court if the defendant can prove that the direct or intermediary purchaser plaintiff has passed on an alleged price overcharge to an indirect purchaser and therefore suffered either no or less damages. In the meantime, while overcharges (e.g., as a result of a cartel or excessive pricing practice upstream) might have been passed on to downstream customers, the plaintiff may still prove actual losses if the higher price has resulted in a decrease in its sales volume.
The AML provides two alternative routes to remedy monopolistic conduct. The wording of the AML suggests that administrative enforcement is not a precondition for bringing private litigation before a court. Article 2 of the Antitrust Judicial Interpretations provides that the courts shall accept cases in which the plaintiff brings a lawsuit to a court, either directly or after the competition authority has made a decision. In follow-on litigation, while, strictly speaking, the SAMR's finding of infringement is not binding on the court, it may play an influential role or even create a rebuttable presumption in the court's own fact-finding that the same conduct had breached the AML in the court proceeding.20 Note, however, the SAMR has made it clear that its decision, based on the relevant undertaking's commitments to make rectifications, to suspend and ultimately terminate the investigation (as opposed to a penalty decision) should not be deemed as evidence of whether the relevant undertaking's conduct constituted monopolistic conduct.
Follow-on private lawsuits are not uncommon in practice. A damages claim brought by a Chinese competitor of Tetra Pak, Xin Ju Feng, on the back of the SAMR's decision against Tetra Pak for its loyalty rebate arrangements in 2016, is currently at trial before the Beijing High Court.21 In another example, the Shanghai High Court's review of a lawsuit initiated by State Grid Shanghai is ongoing.22 VISCAS was penalised by the European Commission in 2014 for operating a cartel with 10 other producers of underground and submarine power cables.23 The decision was appealed to the European Court of Justice, but the Court dismissed the appeal on 19 December 2019. Building on the European Commission's decision, State Grid Shanghai claimed for damages, arguing that it had purchased a large quantity of cables from VISCAS during the collusion period. It remains to be seen how much evidentiary value a foreign competition authority's administrative finding would have in Chinese courts' final decisions.
In some situations, plaintiffs may not be able to avail themselves of the intended benefits of a follow-on action. For example, if the SAMR's published penalty decision does not provide detail on specific instances of wrongdoing, the court may still consider that the administrative decision is not sufficient to prove that the defendant has engaged in the alleged anticompetitive conduct towards the plaintiff. For example, in Tian Junwei v. Carrefour Shuangjing Store and Abbott, discussed in Section IV, the Beijing High Court dismissed the claim on the grounds that the administrative decision by the National Development and Reform Commission did not specifically prove that there had been RPM practice between Abbott and the Carrefour Shuangjing store from which Tian Junwei had bought Abbott infant formula. In addition, the agreement submitted by the Carrefour Shuangjing store and Abbott showed that there was no RPM clause contained therein.
In practice, there could potentially be situations in which an undertaking brings a private civil lawsuit to the court while the competition authority's administrative investigation into the same alleged conduct has yet to conclude. The current rules are not entirely clear on whether, in this situation, the court should hold the litigation proceeding pending the outcome of the administrative procedure, but Article 150 of the CPL provides courts with broad discretion to suspend litigation proceedings where considered necessary.
Chinese law does not recognise the concept of legal professional privilege.
While the law requires lawyers not to reveal information that clients or others are unwilling to disclose (including trade secrets and privacy),24 there are exceptions (e.g., conduct endangering state security, public security and personal and property safety). In addition, the clients themselves (i.e., the undertakings under investigation by the competition authority or in dispute with other parties before the court) cannot refuse to provide information citing professional privilege when mandated to do so. Therefore, strictly speaking, attorney–client communications, attorney work product and joint-defence arrangements do not enjoy privilege from disclosure in Chinese courts.
However, the fact that there is no discovery in civil litigation proceedings means that it may be difficult for one party to gain access to sensitive information and documents in the opposing party's hands, which would be privileged in other jurisdictions, unless the opposing party volunteers to provide the information and documents. We are not aware of any courts granting an application to collect such information.
In China, settlement is generally encouraged in court proceedings. The parties may settle through a court-led mediation procedure or apply to the court to certify their sidebar settlement. The court will issue a consent judgment, which is binding on the parties.
i Settlement through mediation by the court
The court would generally seek to mediate between the parties at various stages of the proceeding, unless the parties explicitly object to mediation. The parties may also proactively request the court to carry out mediation. Once the parties reach an agreement as a result of mediation, the court will issue a confirmatory judgment to formalise the terms of settlement and this judgment will be legally binding upon the parties and enforceable.
ii Settlement between the parties
The parties to a private antitrust dispute may also initiate discussions between themselves aimed at settlement outside the court proceedings without the involvement of the court. If the parties agree on settlement, the plaintiff may petition to withdraw the case, and the parties may also petition the court to issue a confirmatory judgment to officially recognise their settlement and to render it enforceable. The court will review the terms of settlement to ensure that they do not fall foul of public interests.
In China, settlement is a rather common way through which parties ultimately resolve their antitrust-related disputes, although there is currently a lack of official statistics to show the exact proportion of cases resolved in this manner. For example, in 2020, Galanz (a major Chinese home appliance manufacturer) announced the settlement of its dispute with TMall (the largest online business-to-consumer retail platform); it had sued TMall for allegedly forcing online merchants (including Galanz) to not make their goods available on competing e-commerce websites. In 2016, Qualcomm sued Meizu (a Chinese smartphone manufacturer) for having infringed its SEPs relating to 3G and 4G; later, the parties reached settlement and Qualcomm dropped the claim.25
Existing laws and regulations do not provide a clear answer as to whether antitrust disputes can be resolved through arbitration. The rulings by some provincial courts in earlier years showed scepticism towards addressing antitrust disputes by means of arbitration, primarily due to public interest considerations. Such examples include the Shenzhen Intermediate Court's ruling in Yulong v. Ericsson (2016)26 and Jiangsu High Court's ruling in Songxu v. Samsung (2016).27
This issue remains unsettled following two verdicts rendered by the SPC in 2019 and 2020, respectively. The two cases both concerned Shell (China) Ltd, and the SPC seemed to adopt different approaches to the issue of arbitrability.
In Huili v. Shell,28 Shell's distributor, Huili, claimed that Shell had orchestrated a bid-rigging cartel among its distributors in Inner Mongolia, and Shell counter-argued that the court had no jurisdiction as there was an arbitration clause in the distribution agreement between the parties. In adjudicating the appeal, the SPC held that the courts have jurisdiction on two main grounds: (1) determining whether an alleged cartel existed and awarding damages according to the finding go beyond the remit of private contractual arrangements between the parties and concern public interests, which means that such disputes should not be resolved through arbitration; and (2) the Arbitration Law does not explicitly provide that antitrust disputes are arbitrable. On this basis, in August 2019, the SPC concluded that the arbitration clause in the distribution agreement would not exclude the court's jurisdiction over the case. This position was later affirmed by the SPC in State Grid Shanghai v. VISCAS,29 which also concerned an alleged cartel.
In contrast, in Changlin v. Shell,30 Shell's distributor, Changlin, claimed that Shell had abused its dominant market position and further argued that such antitrust dispute would preclude the application of the arbitration clause in their distribution agreement. However, in June 2020, the SPC held the view that Changlin's petition to the court (i.e., finding that Shell had engaged in abusive conduct and ordering Shell to cease the conduct) was closely related to the rights and obligations agreed under the distribution agreement between the parties. The SPC further noted that the dispute between the parties arose, in essence, from the performance of the distribution agreement and as such should be bound by the arbitration clause.
It is worth examining how the two verdicts can be reconciled. One interpretation may be that the alleged cartel in Huili v. Shell extended beyond the distribution relationship between Huili and Shell and also related to other Shell distributors, whereas the alleged abuse of market dominance in Changlin v. Shell did not appear to relate to other parties and instead fitted squarely into the distribution relationship between Changlin and Shell.
Unfortunately, in its verdict in Changlin v. Shell, the SPC did not provide a test to assess the circumstances under which an antitrust dispute is part of a broader contractual dispute, rather than amounting to a stand-alone issue. It will be worth following any further guidance on this issue that the SPC may provide.
Indemnification and contribution
Neither the AML nor any antitrust-specific regulations or judicial interpretations provide further guidance on multiple infringers' compensation to injured parties or allocation of liability among co-infringers. As such, the general rules in civil litigation apply. According to the Civil Code, which became effective on 1 January 2021, where the court finds multiple defendants to be jointly and severally liable, one defendant has the right to demand recovery from co-defendants in respect of liabilities that exceed its share.31 The claim of contribution from the other defendants can be asserted in a separate lawsuit.
Future developments and outlook
i Further judicial guidance in an evolving private litigation landscape
In recent years, an increasing number of plaintiffs have successfully claimed damages in civil antitrust lawsuits (e.g., Yangtze River Pharmaceutical Group, discussed in Section I), which not only helps grow the awareness of market participants in terms of the relevance of competition law to their business dealings, but also increases the confidence and sophistication of these participants in availing themselves of the AML to tackle pressing issues. In addition, the SPC will provide a more prominent role in private antitrust enforcement given its exclusive jurisdiction over all antitrust-related appeals through the 'leapfrog appeal' mechanism. The SPC is set to hand down rulings on several important cases, including the appeal in relation to abuse of dominance by way of exclusive trading, excessive pricing and unreasonable trading conditions in Yangtze River Pharmaceutical Group,32 as well as Hitachi Metals' appeals against a lower court's ruling against its refusal to trade practice.33 The rulings on these cases are expected to provide further guidance on certain key issues, including assessing abuse of dominance in relation to patent licensing.
ii New rules to boost private antitrust enforcement
Against the backdrop of the Chinese leadership's continued emphasis on antitrust enforcement, amendments to the AML are anticipated to be finalised in 2022. The new AML, in turn, will further necessitate the formation of the second set of judicial interpretations for antitrust litigation (following the Antitrust Judicial Interpretations), which the SPC had planned in 2020. The second set of judicial interpretations is expected to introduce pro-plaintiff measures, such as lowering the burden of proof upon plaintiffs and improving plaintiffs' access to evidence to substantiate propositions. 2021 has seen an increase in case volume, and the legislative and judicial developments in 2022 will add momentum; in turn, more private enforcement activities will help further shape the competition rules and their implementation.
iii Challenging issues at the front line of the digital economy
In recent years, the SPC and lower courts have weighed in on the substantive and procedural issues in a number of high-profile lawsuits, such as Qihoo v. Tencent,34 Wu Xiaoqin v. Shaanxi Broadcast and TV Network,35 Huang Wende v. Didi36 and Xu Shuqing v. Tencent.37 Building on this experience and amid the wave of intensified scrutiny over the digital space both worldwide and in China, the Chinese judiciary is expected to see an increase in the number of lawsuits and to tackle cutting-edge issues in ongoing and future cases in the technology space. For example, the Beijing Intellectual Property Court is set to opine on the alleged self-preferential treatment by Tencent to the detriment of competitors in related markets in the ByteDance v. Tencent case.38 The outcome of this case will have a far-reaching impact as it could set out an analytical framework in competition law for certain issues specific to the digital area.
1 Fay Zhou is a partner and Bowen Wang is an associate at Linklaters LLP; Vivian Cao and Xi Liao are partners at Linklaters Zhao Sheng.
2 Supreme People's Court (SPC) Jurisdictional Rules for the IP Appellate Tribunal.
3 (2020) Zui Gao Fa Zhi Min Zhong No. 1382.
4 SPC (2018), SPC Administrative Re-trial No. 4675.
5 Administrative sanction decision against Alibaba, available at www.samr.gov.cn/xw/zj/202104/t20210410_327702.html.
6 ByteDance v. Tencent has been accepted by, and is pending before, the Beijing Intellectual Property Court.
7 (2020) E 01 Zhi Min Chu No. 169(1).
8 (2020) Yue 03 Min Chu No. 689.
9 Jiangsu Nanjing Intermediate Court (2019) Su 01 Minchu No. 1271. The case is currently under appeal before the SPC.
10 Guangdong High People's Court (2013) Yue Gao Fa Min San Zhong No. 306.
11 Hubei Wuhan Intermediate Court (2020) E 01 Zhi Min Chu No. 169(1).
12 Beijing High People's Court (2016) Jing Min Zhong No. 214.
13 Article 64, Civil Procedure Law (CPL).
14 Article 12, Antitrust Judicial Interpretations.
15 SPC (2013) Min San Zhong No. 4.
16 Article 6, Antitrust Judicial Interpretations.
17 Article 16, Antitrust Judicial Interpretations.
18 Shanghai High People's Court (2012) Hu Gao Min San (Zhi) Zhong No. 63.
19 Yunnan Kunming Intermediate Court (2015) Kun Zhi Min Chong No. 3.
20 Articles 93 and 114, CPL Interpretations.
21 2019 Jing Min Chu No. 116.
22 State Grid Shanghai v. VISCAS (2020) Hu Min Xia No. 83.
23 European Commission, Case AT.39610, Power Cables.
24 Article 38, Lawyers Law.
26 Shenzhen Intermediate Court (2015) Shen Zhong Fa Zhi Min Chu No. 1089.
27 Jiangsu High People's Court (2015) Su Zhi Min Xia Zhong No. 00072.
28 SPC (2019) Zui Gao Min Fa Zhi Min Xia Zhong No. 47.
29 See footnote 22.
30 SPC (2019) Zui Gao Min Fa Shen No. 6242.
31 Article 178, Civil Code.
34 See footnote 15.
35 SPC (2016) Zui Gao Fa Min Zai No. 98.
36 SPC (2019) Zui Gao Fa Zhi Min Zhong No. 207.
37 SPC (2019) Zui Gao Fa Min Shen No. 4955.
38 See footnote 6.