China’s Supreme Court Issues Judicial Interpretations for Antitrust Civil Cases
Published 27 June 2024
Sarah Xuan
On June 24, 2024, China’s Supreme People’s Court (SPC) issued the Interpretation of the Supreme People's Court of Several Issues Concerning the Application of Law in the Trial of Monopoly Civil Cases ("Interpretations"). The Interpretation comes into effect on July 1, 2024.
The Interpretations include following key points, but not limited to:
[Definition]
The monopoly civil dispute case in the Interpretation refers to civil cases that are disputes arising from losses suffered by a natural person, legal person, or non-legal person organization due to a monopolistic act and violation of the Antimonopoly Law by contract content, or operator groups’ articles of association, resolutions, decisions, etc., and are brought up to the people’s court in accordance with the Antimonopoly Law. The operator groups above include combinations or unions formed by two or more operators, such as guilds, to achieve a common purpose.
[Jurisdiction]
The first instance monopoly civil dispute case shall be governed by the IP Court and the Intermediate People’s Court designated by the SPC. The territorial jurisdiction of monopoly civil disputes shall be determined according to the specific circumstances of the case and in accordance with the provisions of the Civil Procedure Law and the relevant judicial interpretations on the jurisdiction of tort, contract disputes, etc.
[Experts]
The concerned parties may apply to the people's court for one or two persons with specialized knowledge of the field involved in the case, economics, etc., to appear before the court and give explanations on the specialized issues of the case. The concerned parties may apply to the people's court for the commissioning of a professional organization or professional personnel to provide market research or economic analysis on the specialized issues of the case. The professional organization or professional personnel may be determined by an agreement between the concerned parties; if the agreement fails, the people's court shall appoint one. The people's court may refer to the civil procedure law and relevant judicial interpretations of the provisions of the appraisal opinion to review and determine the market research or economic analysis opinion proposed by the professional organization or professionals. The people's court shall not accept the opinion of a concerned party that commissions a relevant professional organization or professional person to propose a market survey or economic analysis on its own in respect of a specialized issue of the case, provided that the opinion lacks reliable facts, data, or other necessary basic information to support it, or it lacks a reliable method of analysis, or the other party puts forward evidence or reasons that are sufficient to refute it.
[Burden of proof on the relevant market]
Where the plaintiff claims that the monopolistic conduct complained of violates the Antimonopoly Law, it shall generally define the relevant market referred to in paragraph 2 of Article 15 of the Antimonopoly Law and provide evidence or fully explain the reasons.
Where the plaintiff claims that the defendant has a dominant market position or significant market power on the basis of its market share in the relevant market, the plaintiff shall define the relevant market, provide evidence, or fully explain the reasons.
The plaintiff provides evidence sufficient to directly prove one of the following circumstances and can no longer bear the burden of proof to define the relevant market:(i) The operator of the monopoly agreement has significant market power;(ii) The operator sued for abuse of a dominant market position has a dominant market position;(iii) The monopolistic act complained about has the effect of excluding or restricting competition.
Where the plaintiff asserts that the monopolistic conduct complained of falls within the provisions of Articles 17.1-17.5 and 18.1.1-18.1.2 of the Antimonopoly Law, the plaintiff may refrain from providing evidence on the definition of the relevant market.
[Recognition of concerted behavior]
The People's Court shall take into account the following factors in determining other concerted behavior as stipulated in Article 16 of the Anti-Monopoly Law:(i) Whether there is consistency in the market behavior of the operators;(ii) Whether there has been meaningful liaison, exchange of information, or transmission between the operators;(iii) The market structure, competitive situation, and market changes in the relevant market;(iv) Whether the operators can provide a reasonable explanation for the consistency of their behavior.
If the plaintiff provides prima facie evidence of the first and second subparagraphs of the preceding paragraph, or prima facie evidence of the first and third subparagraphs, which can prove that there is a greater possibility of concerted behavior of the operators, the defendant shall provide evidence or give sufficient explanation to provide a reasonable explanation for the consistency of its behavior; if it cannot provide a reasonable explanation, the people's court may find that the concerted behavior is established.
The reasonable explanation referred to in this provision includes that the operators have independently implemented the relevant behaviors based on changes in the market and competitive conditions.
[Factors recognizing the effect of excluding or restricting competition by monopolistic agreements]
In reviewing and determining whether the monopoly agreement under complaint has the effect of excluding or restricting competition in accordance with paragraphs 1 and 2 of Article 18 of the Antimonopoly Law, the people's court may take into account the following factors in a comprehensive manner:(i) The defendant's market power in the relevant market and the cumulative effect of the agreement on similar unfavorable competitive effects in the relevant market;(ii) Whether the agreement has the unfavorable competitive effect of raising barriers to entry in the market, discouraging more efficient operators or business models, or restricting inter- or intra-brand competition;(iii) Whether the agreement has a pro-competitive effect, such as preventing free-riding, promoting inter-brand competition, preserving brand image, enhancing pre- or after-sales service, promoting innovation, etc., and is necessary to achieve that effect;(iv) Other factors that may be considered.Where the evidence in the case is sufficient to prove that the pro-competitive effects clearly outweigh the adverse competitive effects, the people's court shall find that the agreement does not have the effect of excluding or restricting competition.
[Recognition of an operator’s dominant position in the relevant market]
Where the plaintiff has evidence to prove that the operator has one of the following circumstances, the people's court may, based on the structure of the relevant market and the actual competitive situation in a specific case, and in conjunction with the relevant market economic laws and other economic knowledge, preliminary find that the operator has a dominant position in the relevant market, unless there is evidence to the contrary that is sufficient to refute it:(i) The operator maintains prices significantly higher than the competitive level of the market for a longer period of time, or the quality of goods has significantly deteriorated over a longer period of time without seeing a significant loss of users, and there is a clear lack of competition, innovation, and new entrants in the relevant market;(ii) The operator maintains a higher market share than other operators for a longer period of time, and there is a clear lack of competition, innovation and new entrants in the relevant market.
The information released by the defendant to the public may serve as prima facie evidence for the plaintiff to prove that the defendant has a dominant market position, unless there is evidence to the contrary sufficient to rebut it.
[Recognition of abuse of intellectual property right by an operator in a market dominant position]
The people's court may focus on the following factors in determining the market dominance of an operator sued for abuse of intellectual property rights in accordance with Article 23 of the Antimonopoly Law:(i) The substitutability of the object of the particular intellectual property right within the relevant market, the number of substitute objects, and the cost of switching to substitute objects;(ii) The substitutability of the goods offered by utilizing the particular intellectual property right and the market share of the goods;(iii) The ability of counterparties to a transaction to provide checks and balances on the operator of the particular intellectual property right;(iv) Innovation and technological change in the relevant market;(v) Other factors relevant to the exercise of intellectual property rights that need to be taken into account.
Where an operator argues that it cannot be presumed to have a dominant market position solely on the basis of its possession of intellectual property rights, the people's court shall support it.
[Civil liability]
If the defendant commits monopolistic acts and causes losses to the plaintiff, the people's court may, in accordance with the plaintiff's litigation request and the facts ascertained, order the defendant to bear civil liabilities such as cessation of infringement and compensation for losses. If ordering the defendant to stop the monopolistic behavior is not enough to eliminate the effect of exclusion or restriction of competition, the people's court may, according to the plaintiff's litigation request and the specific facts of the case, order the defendant to undertake the legal responsibility of making the necessary actions to restore competition.
[Loss calculation]
The damages suffered by the plaintiff as a result of the alleged monopolistic conduct include both direct damages and a reduction in the benefits available to the plaintiff relative to what would have been available if the conduct had not occurred.
The following factors may be taken into account in determining the damages suffered by the plaintiff as a result of the monopolistic act complained of:(i) The price of goods, operating costs, profits, market share, etc. in the relevant market before or after the end of the act of monopolization complained of and during the period of its commission;(ii) The prices of goods, operating costs, profits, etc. in comparable markets not affected by the monopolistic act;(iii) The commodity prices, operating costs, profits, market shares, etc. of comparable operators not affected by the monopolistic behavior;(iv) Other factors that can reasonably prove that the plaintiff has suffered losses as a result of the alleged monopolistic behavior.
Where the plaintiff has evidence to prove that the monopolistic act complained of has caused losses to him, but it is difficult to determine the specific amount of losses in accordance with the provisions of the preceding paragraph, the people's court may, in accordance with the plaintiff's claim and the evidence in the case, take into account factors such as the nature, extent, duration, and benefits gained from the monopolistic act complained of and exercise its discretion in determining the amount of compensation that is reasonable.
Depending on the plaintiff's claim and the specific circumstances of the case, the people's court may include in the scope of damages the reasonable expenses paid by the plaintiff for investigating and stopping the monopolistic behavior, including reasonable market investigation costs, economic analysis costs, and attorney's fees.
[Statute of limitations]
The statute of limitation for the right to claim damages arising from monopolistic acts shall be calculated from the date on which the plaintiff knows or should have known that the rights and interests had been jeopardized and the obligor.
If the plaintiff reports the monopolistic act complained of to the antimonopoly enforcement agency, the statute of limitation shall be interrupted from the date of his report. If the antimonopoly enforcement agency decides not to open a case, withdraws the case, or decides to terminate the investigation, the statute of limitation shall be recalculated from the date when the plaintiff knew or should have known of the cause of action.
If the antimonopoly enforcement agency determines after investigation that the case constitutes a monopoly, the statute of limitation shall be recalculated from the date on which the plaintiff knows or should have known that the decision of the antimonopoly enforcement agency determining that the case constitutes a monopoly has become legally effective.
Comment
According to the SPC, the Interpretation herein is a new comprehensive judicial interpretation made on the basis of the 2022 amended Antimonopoly Law, and it also absorbed the previous experience from the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Dispute Cases Arising from Monopolistic Conduct, which was released in May 2012 and will be annulled on July 1, 2024.
The Interpretation covers both procedural and substantial issues. For instance, the first chapter thereof incorporates procedural issues such as the definition of monopolistic civil disputes, jurisdiction, consolidation of actions, evidence recognition, and so on. Starting from the second chapter, the Interpretations has three chapters that address various issues regarding the recognition of the relevant market, the monopoly agreement, and the abuse of dominant market position, respectively, in detail. In addition, the Interpretation also provides issues regarding civil liability, such as the forms of liabilities, recognition of loss, and statute of limitation.
Among them, taking the jurisdiction as an example, it specifies that both the IP Court and the Intermediate People’s Court designated by the SPC can try the first instance monopolistic civil dispute, which determines the level of the courts that can handle the first instance case thereof. Currently, there are four IP courts in China which are in Beijing, Shanghai, Guangzhou, and Hainan province.
Further, it also provides that “the territorial jurisdiction of monopolistic civil disputes shall be determined according to the specific circumstances of the case and in accordance with the provisions of the Civil Procedure Law and the relevant judicial interpretations on the jurisdiction of tort disputes and contract disputes”.
Based on the above, for example, if a court in Beijing has jurisdiction over a monopolistic civil dispute according to the principle of the territorial jurisdiction, then the Beijing IP Court shall try the case as the first instance court. If a place where its court has a territorial jurisdiction over the monopolistic civil dispute does not have an IP court, then it is the intermediate people’s court designated by the SPC to try the dispute as the first instance court.
It is reported that antimonopoly civil suits are one of the important trial fields in the people’s courts, and there had been 977 first instance monopolistic civil cases concluded from the period 2013 to 2023, and the intellectual tribunal of the SPC has also concluded 131 out of 178 accepted cases from January 2019 to May 2024.