Analysis on the Establishment of the Anti-Monopoly Panel

Issue 28 By Lv Guoqiang,[Anti-Monopoly]

After ten years of preparation, the Anti-monopoly Law of China went into effect on August 1, 2008. In December of 2008, the No.2 Intermediate People’s Court of Shanghai formed the first panel to handle both civil and administrative anti-monopoly cases. Judge Kong Xiangjun, head of the Supreme People’s Court, IP Division, believes that this model is significant for the implementation of the Outline of the National Intellectual Property Strategy, and the optimized of allocation of judicial resources, and will set an example for nationwide judicial practice. Professor Wang Xiaoye, a known expert on the anti-monopoly law, also considers it an unprecedented move. Furthermore, he calls the formation of the group, a very daring and meaningful act that conforms to international standards. Lv Guoqiang, Chief Justice of this panel, was asked to contribute to the following article.
The Anti-monopoly Law of China(the Law) is a fundamental statutory effort for curtailing monopolistic practices, preserving competition and maintaining orderly conduct in the marketplace. It is also an indispensable piece of legislation for improving the market structure, safe-guarding the economy and guaranteeing market allocation of resources. It has been known as the constitution of economics. To apply the Law, our court, through discussion and resolution, decided to establish a special anti-monopoly panel.
I. Why a special panel?
The Law is targeted at both economic and administrative monopolistic practices for which the Law provides civil and administrative remedies. The duality of a remedial mechanism dictates difficult tasks for which the judicial role must be significant.
Prior to the enactment of the Law, courts entertained anti-monopoly disputes that used nebulous causes of action, such as provided in the Contract Law or the Unfair Competition Law, which deals with certain types of monopolistic practices. For example, the Contract Law provides in Article 329, “any contract shall be null and void if it illegally monopolizes technology, impedes technological progress, or infringes on the technology of another.” In December 2004, the Supreme People’s Court provided in Article 10 of the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in Technical Contract Dispute. Based on the interpretation, courts found some technical contracts invalid which involved monopolistic practices. In a few isolated cases, courts also entertained complaints under Article 6 of the Unfair Competition Law, as a tie-in for unreasonable conditions. These cases bordered on “abuse of dominant market position by business operators”, which is analogous to the current Anti-monopoly Law provision.
Before the Law went into effect, this court had tried the unfair competition case of Shanghai CMP Sinoexpo International Exhibition Co., Ltd. and CMP Information against. China Food Additives & Ingredients Association. The defendant was a nationwide industrial association. Both the plaintiff and defendant separately held exhibitions equivalent in content in the first half of 2006. During this period, the defendant issued a notice, requiring that its members and exhibitors not participate in the exhibition of the plaintiff. The plaintiff sued, claiming that the defendant’s acts constituted unfair competition, and sought an injunction. At trial, the court found that the purpose of the defendant’s act was to expel competitors and monopolize the exhibition market by forcing certain exhibitors to withdraw from the plaintiff’s show. Additionally, it was held that the defendant’s act had constituted unfair competition. The court ordered the defendant to cease and desist and issue a notice publicly to eliminate the ill effects. The defendant appealed, but the judgment was affirmed.
This court also handled a case involving intellectual property rights misuse; which had parallel anti-monopoly causes.
We established this special panel taking into consideration the following:
First, the Law is closely related to the prevention of IP misuse and the protection of IP rights. Similar to the Unfair Competition Law, it is covered by the Competition Law. For this reason, the Rules of the Supreme People’s Court on Civil Cause of Action, effective April 1, 2008, finally included both monopoly dispute and unfair competition dispute into the category of IP rights dispute and clearly stipulated “monopoly dispute” as a cause of action.
Second, the Law only lays out basic principles, without detailing how it would be implemented in court, which leaves room for courts to maneuver. The statutory definitions on monopoly practices, administrative process and remedial measures focus mainly on administrative aspects; it gives little guidance for the courts. Therefore, courts must contemplate each legal problem, and find their own guidance through practical cases.
Third, anti-monopoly cases are extremely complicated, entangled with problems of law and economics, and are highly specialized. They have a profound impact on businesses and industries, some even involving national economic security. The adjudication of anti-monopoly cases covers both IP adjudication and administrative adjudication in terms of the internal distribution work inside the court. It involves both the social economic area and governmental administrative area. It requires that judges have extensive legal and economic knowledge.
Fourth, as the economy becomes more globalized, the basic role of the market in resources allocation must be ensured by the judicial and other systems, and a mode of economic operation must be established to keep consistent with international standards. Using this process, the number of anti-monopoly litigations will grow gradually. The work of the court is closely related to the national economic development. The court should fully perform its adjudicating functions to prevent illegal monopolistic conduct, protect the legal interest of business operators and consumers, and maintain an orderly market of fair competition. It should provide a strong and powerful guarantee for a stable and faster economic growth.
II. Special Panel Characteristics
Much different from the ordinary panel of judges, the special panel is a major endeavor on judicial reform. It features the following:
1. Combined civil and administrative processes. Under the Law and the Supreme Court’s decree, anti-monopoly cases to be litigated fall in two categories, civil and administrative. Generally, the civil anti-monopoly cases are tried in the IP division and the administrative anti-monopoly cases in the administrative division. A special panel established in this hears both categories of cases. The “two in one” model enhances judicial consistency and increases judicial efficiency.
2. Specialized rules. At the time of establishing the special panel, the adjudicatory committee of this court also promulgated Several Rules on the Establishment of the Special Panel, which provides clearly for the composition, scope of case acceptance, and key targets of the bench, by which the bench may operate in a standardized way.
3. Selected expertise. Experts were chosen for the special panel. As anti-monopoly cases are highly professional-oriented and complicated, to ensure case quality and effective operation, the ad hoc collegiate bench is composed of backbone forces from the IP division and the administrative division who have long been engaged in specialized adjudications. The members of the ad hoc bench should be deeply based in jurisprudence and experienced in adjudicatory practice.
4. The court president or the divisional presiding judge acts as the chief justice of the ad hoc collegiate bench. As a new category, anti-monopoly cases involve either IP adjudication or administrative adjudication or both. Their adjudication is extremely challenging. The fact that the court president or the presiding judge of a division acts as the chief justice of the bench highlights the importance of anti-monopoly adjudication and guarantees case quality.
III. Key targets of the ad hoc collegiate bench
When established, the ad hoc collegiate bench mainly targets the following:
First, adjudicating cases according to law.
The ad hoc collegiate bench accepts cases mostly in two categories: 
1. Civil anti-monopoly cases
Article 50 of the Law says that “the business operators which implement monopolizing conducts and cause damage to others shall bear the civil liabilities according to law.” The Notice of the Supreme People’s Court says that, “where a party brings a civil action on monopolizing conduct, it should be accepted and adjudicated by the court according to law, unless it is rendered unacceptable according to Article 108 of the Civil Procedure Law or the accepting conditions of the Anti-monopoly Law.”
Article 3 of the Law lists three categories of monopolistic conduct that are prevented by the law, namely, monopoly agreements reached between business operators; abuse of dominant market position by business operators; and concentration of business operators that may have the effect of eliminating or restricting competition. In addition, Article 55 of the Law says that “this law is applicable if business operators abuse their intellectual property rights to eliminate or restrict competition.” 
Regarding the jurisdiction over civil anti-monopoly actions, Article 29 of the Civil Procedure Law provides that, “a lawsuit on tortious act shall fall into the jurisdiction of the people’s court at the place where the tortious act occurred or where the defendant has his domicile”. For this reason, a party may bring a civil anti-monopoly action to our court, if the defendant’s domicile or the place of monopolizing conduct or consequence thereof falls into our jurisdiction.
2. Administrative anti-monopoly cases
Article 53 of the Law states that “dissatisfied with the decision rendered by the law enforcement authority in accordance with Articles 28 or 29 herein, the party may first request an administrative review. Still dissatisfied with the decision of the administrative review, the party may bring an administrative action according to law. Dissatisfied with other decisions than hereinabove of the Law enforcement authority, the party may either request an administrative review or bring an administrative action.” The Notice of the Supreme People’s Court says that “if a citizen, body corporate or other entity brings an administrative action on dissatisfaction with any specific administrative act of the Law enforcement authority made in accordance with the Law, the people’s court shall determine whether an administrative review is necessary in accordance with the Administrative Procedure Law and Article 53 of the Antimonopoly Law. The people’s court shall accept and adjudicate by law any case that is acceptable and meets the essentials of a complaint required by Administrative Procedure Law.”
The scope of administrative anti-monopoly cases, according to the Law, covers any administrative act or performance of its legal duties by the Law enforcement authority regarding monopoly agreements, abuse of dominant market position or concentration of business operators. Administrative acts can be mainly divided into administrative license, administrative penalty, administrative handling decision, administrative approval, administrative coercive measure, and the related required performance of legal duties.
The defendant in administrative anti-monopoly cases, according to the Law, can be a law enforcement authority. However, it is still unclear which law enforcement authority may be a defendant in an administrative anti-monopoly action. The Law provides that the agencies designated by the State Council to undertake law enforcement duties are responsible for the enforcement of the law. The enforcement agencies of the State Council may delegate its power to relevant agencies of the people’s governments of provinces, autonomous regions or municipalities directly under the central government. Currently, they include the Ministry of Commerce, the National Development and Reform Commission and the State Administration for Industry and Commerce. However, rules have not been issued with regards to which local governmental agencies may be empowered by the law enforcement agencies of the State Council. 
As to the jurisdiction over administrative anti-monopoly cases, Article 14 of the Administrative Procedure Law says that, “the intermediate people’s courts shall have jurisdiction as courts of first instance over the following administrative cases: cases of confirming patent rights of invention and cases handled by the Customs; suits against specific administrative acts undertaken by departments under the State Council or by the people’s governments of provinces, autonomous regions or municipalities directly under the Central Government; and grave and complicated cases in areas under their jurisdiction”. Article 1 of the Rules of the Supreme People’s Court on Several Issues Concerning Administrative Actions Jurisdiction explains that the “grave and complicated cases” in the Administrative Procedure Law means “cases in which the defendant is the people’s government at the county level or above, which may, however, exclude cases in which the name of the county-level government is used in registration of real property; jointer or group actions which bear significant social effects; cases of grave nature involving foreign parties or parties from the Hong Kong SAR, the Macao SAR or the Taiwan region; and other cases of grave or complicated nature.” 
The Law provides clearly that the State Council shall establish an Anti-monopoly Commission, which is responsible for organizing, coordinating and guiding the work. This commission performs the following functions: studying and drafting relevant competition policies; organizing the investigation and assessment of overall competition situations, and releasing an assessment report; formulating and releasing anti-monopoly guidelines; and coordinating anti-monopoly administrative law enforcement. The law enforcement agencies designated by the State Council shall be responsible for the anti-monopoly law enforcement work. The law agencies under the State Council may, if necessary for the work, empower corresponding agencies in the people’s governments of the provinces, autonomous regions and municipalities directly under the Central Government to undertake anti-monopoly law enforcement work according to the Law. 
Based on the previous information, considering the special professional, technical and legal requirements, the first-instance administrative anti-monopoly cases may fall into the jurisdiction of the intermediate court at the place where the defendant is domiciled.
Second, strengthen the research on the Law, investigate and study new developments and new issues, sum up judicial experiences, and make consistent enforcement standards.
Currently, the following legal issues are awaiting urgent solutions in the adjudication of civil anti-monopoly cases:
1. Whether jurisdiction of the court should be general in handling civil anti-monopoly cases, or special as designated in patent cases.
2. Plaintiff’s standing: whether a consumer may bring private actions for civil anti-monopoly cases, and the scope of and conditions for actions that business operators may raise.
3. Civil liabilities for anti-monopoly violations: apart from damages, how the court would contemplate other forms of relief for the victim, such as preliminary injunctions, and how to calculate damages.
4. Whether the anti-monopoly practices enumerated in the Law are illustrative or exhaustive.
5. How the administrative anti-monopoly causes would square with civil causes.
6. How the administrative anti-monopoly causes would square with civil antimonopoly causes.
7. How to allocate the burden of proof for civil and administrative cases, and how to determine scientific and justifiable methods to analyze anti-monopoly?
Third, strengthen the study on the Law and the training of professionals, and develop foreign exchange and cooperation on anti-monopoly adjudications.
Fourth, devote more effort into disseminating the law-related information to the general public. The ad hoc collegiate bench will not only handle various anti-monopoly cases, but also strengthen the law publicity, and widen the legal and social effects of the judgments. It will fully utilize the judicial functions of the people’s court against monopolies.

About the author:
Lv Guoqiang is a judge from the Shanghai No. 2 Intermediate People’s Court.

 (Translated by Ren Qingtao)

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