Significant features of concluded cases
Types of behaviour investigated
Concerted practice in horizontal monopoly agreements
Continued RPM law enforcement

APIs in spotlight
How to respond?


The healthcare industry has gradually become a key focal point of Anti-monopoly Law enforcement in China. Between the implementation of the law in 2008 and the end of July 2017, the National Development and Reform Commission (NDRC) and the State Administration for Industry and Commerce (SAIC) concluded and reported nine anti-monopoly penalty cases, which targeted 16 healthcare enterprises and resulted in total fines of approximately Rmb134 million. It is likely that these authorities will create an 'anti-monopoly windstorm' in the healthcare industry and they could investigate and penalise certain well-known pharmaceutical and medical device enterprises. Through their conclusion of a number of cases, the NDRC and SAIC have accumulated significant experience in the industry and, as such, healthcare enterprises are likely to face increasing anti-monopoly compliance challenges in future.


Until July 2017, the SAIC had concluded three cases and imposed total fines of Rmb828,900, while the NDRC had concluded six cases and imposed total fines of Rmb133 million (see table below for details).




Illegal gains confiscated



October 28 2015

Chongqing Qingyang Pharmaceutical monopoly case (abuse of dominant market position – refusal to deal)

Not applicable


November 24 2016

Chongqing Southwest No 2 Pharmaceutical Factory Co, Ltd monopoly case (abuse of dominant market position – refusal to deal)

Rmb 482,884


January 11 2017

Wuhan Xinxing Jingying Medical Ltd monopoly case




November 15 2011

Promethazine active pharmaceutical ingredients (APIs) monopoly case (abuse of dominant market position – unfairly high prices)



January 15 2016

Allopurinol drug cartel case (cartel – price fixing, market allocation and bid rigging)

Not applicable


July 22 2016

Estazolam drug cartel case (cartel – joint boycott and price fixing)

Not applicable


December 5 2016

Medtronic resale price maintenance (RPM) case

Not applicable


December 29 2016

Smith & Nephew RPM case

Not applicable


July 28 2017

Zhejiang Second Pharma and Tianjin Handewei Pharmaceutical monopoly case (abuse of dominant market position – unfairly high prices and refusal to deal)

Not applicable


Significant features of concluded cases

From the anti-monopoly cases that have been investigated in the healthcare industry to date, the following defining features can be identified:

  • A diverse range of entities have been subjected to penalties, including private enterprises, Sino-foreign equity joint ventures, wholly foreign-owned enterprises and state-owned enterprises.
  • The type of anti-monopoly behaviour that has been punished has varied widely, with the law enforcement authorities penalising enterprises for not only abusing their dominant market positions, but also reaching and implementing horizontal and vertical monopoly agreements.
  • The cases span the industry, covering both the upstream and downstream industry chains. Penalty recipients have included API producers, pharmaceutical producers and distributors and medical device producers.

Types of behaviour investigated

The cases that have been investigated to date cover not only common anti-monopoly behaviour, but also relatively obscure or complex behaviour. As of the end of July 2017, the SAIC had concluded three cases in the healthcare industry, all of which included the abuse of a dominant market position in certain API markets in China.

The NDRC and the provincial level pricing authorities had concluded:

  • two cases involving the abuse of a dominant market position;
  • two horizontal monopoly agreement cases; and
  • two vertical monopoly agreement cases.

The abuse of dominance cases in which Chongqing Qingyang Pharmaceutical and Chongqing Southwest No 2 Pharmaceutical Factory refused to deal, which were concluded by the SAIC, were the first two refusal to deal cases in China. The NDRC recently concluded the third refusal to deal case, involving Zhejiang Second Pharma Co Ltd and Tianjin Handewei Pharmaceutical Co Ltd. Further, the Estazolam drug cartel case concluded by the NDRC was the first concerted practice case since the Anti-Monopoly Law's implementation.

Concerted practice in horizontal monopoly agreements

In the Estazolam drug cartel case, three enterprises held secret meetings, reaching a tacit understanding regarding the collective increase of the price of Estazolam tablets. Although Changzhou Siyao Pharmaceutical Co, Ltd did not actively participate in the conspiracy, it did not object to the collusion and later followed the other two companies' lead. As such, the NDRC determined that it had engaged in a concerted practice (for further details please see "China intensifies pharmaceutical antitrust enforcement: NDRC rules in first-ever concerted practice case"). Article 6 of the Provisions on Anti-price Monopoly formulated by the NDRC and Article 3 of the Provisions for Administrative Authorities for Industry and Commerce on Prohibiting the Conclusion of Monopoly Agreements formulated by the SAIC set out specific provisions on the determination of a concerted practice. Despite the fact that there are nuanced differences between the two articles, both consider the following major factors when analysing whether a 'concerted practice' has occurred:

  • uniformity;
  • the exchange of information;
  • reasonable explanations;
  • market structure; and
  • market changes.




Did the companies commit acts uniformly?

Were the companies' price adjustment activities consistent?

Information exchange

Did the companies communicate their intentions or exchange information?

Did the companies communicate their intentions?

Reasonable explanation

Can the companies give a reasonable explanation for their concerted practice?

Not applicable

Other factors

  • Market structure
  • Competition
  • Market changes
  • Industry situation
  • Market structure
  • Market changes

Continued RPM law enforcement

Vertical price monopolies have always been a priority of the NDRC's Anti-monopoly Law enforcement – particularly in the healthcare industry – and this trend is likely to continue. In the Medtronic RPM case, the NDRC – in its penalty decision – not only clarified the illegality of the fixed resale price of Medtronic (Shanghai) Management and its setting of a minimum resale price, but also touched on how it had limited distributors' sales territories and prohibited distributors from selling the products of competing brands, among other things. The NDRC held that "these restrictive measures were implemented together with the vertical pricing measures, further strengthening the anti-competitive effect of maintaining the resale prices and setting minimum resale prices".

This case, while indicating that the Anti-monopoly Law enforcement authorities plan to continue their strict enforcement with regard to vertical pricing monopolies, also shows that they are starting to pay attention to other non-pricing vertical restrictive measures. Accordingly, relevant enterprises should act prudently with respect to vertical restrictive measures, regardless of whether they involve pricing.

APIs in spotlight

The enterprises engaged in the manufacture and sale of APIs are in the antitrust law enforcement authorities' spotlight. Among the nine cases that the SAIC and the NDRC have concluded to date, six have involved APIs. Further, all of the concluded abuse of dominance cases have concerned APIs. The following reasons may explain API enterprises' position on the front line and their dominant position in the market:

  • Few enterprises actually compete in certain API markets.
  • API manufacturers provide the active ingredients of drugs with a strong ability to control the market and downstream pharmaceuticals have no choice but to submit to and rely on the API manufacturers.
  • China has a strict certification system for supervising the production of APIs and it is difficult to enter API markets.

On August 14 2017 the NDRC released its draft Price Conduct Guidelines on Operators of Drugs Prone to Shortages and APIs to solicit public feedback.(1) The draft guidelines cover most monopolistic behaviours of API manufacturers, including monopolistic agreements and the abuse of a dominant market position. The draft guidelines aim to:

  • curb illegal price increases and malicious market controls;
  • ensure fair competition and price order in the relevant areas;
  • protect consumer welfare; and
  • contribute to medical reform.

According to the NDRC, feedback will be accepted until September 13 2017.

How to respond?

Healthcare enterprises should watch for any developing trends and features in anti-monopoly investigations in China. In addition, enterprises can strengthen their anti-monopoly compliance by:

  • promptly conducting risk screening and, if necessary, engaging a professional lawyer to assist in conducting an internal anti-monopoly audit;
  • providing anti-monopoly compliance training to senior officers and employees (particularly sales departments) and arranging for senior officers and employees to participate in drills for responding to dawn raids in anti-monopoly investigations;
  • examining their product pricing policy, discount or rebate system, sales policies and distributor contracts, among other things, from an Anti-monopoly Law perspective;
  • looking out for horizontal information exchanges, including concerted practice, and prudently handling sensitive information exchanges;
  • assessing their market share and, if it could constitute a dominant market position or relatively strong advantageous position, conducting:
    • a check of the agreements executed with upstream and downstream enterprises; and
    • an anti-monopoly risk assessment regarding irregular terminations of dealings, refusals to deal, exclusive arrangements and other restrictive measures or commercial terms suspected of being unreasonable; and
  • if a suspected violation of the law is discovered, seeking legal advice as soon as possible and promptly formulating a rectification or response plan.

For further information on this topic please contact Michael Gu or Sihui Sun at AnJie Law Firm by telephone (+86 10 8567 5988) or email ([email protected] or [email protected]). The AnJie Law Firm website can be accessed at


(1) The original draft guidelines are available on the NDRC's website.