Enforcement proceedings

Enforcement authorities

Which authorities are responsible for enforcement of the dominance rules and what powers of investigation do they have?

After consolidation of China’s three antitrust enforcement authorities, the SAMR is responsible for the AML enforcement of cases relating to abuse of dominance.

Pursuant to article 39 of the AML, the SAMR has rights to adopt the following measures during the investigation:

  • entering the business premises or any other relevant premises of the undertaking under investigation to carry out inspection;
  • questioning the undertaking that is under investigation, the interested parties or any other related organisations or individuals and require them to provide the relevant explanation;
  • inspecting or making copies of the relevant documents and materials, such as certificates, agreements, accounts books, business correspondence and electronic data, of the undertaking under investigation, the interested parties or any other related organisations or individuals;
  • sealing up or confiscating the relevant evidence; and
  • enquiring into the bank accounts of the undertaking.

The SAMR is entrusted with the power to conduct ‘dawn-raid’ investigations of business premises or other premises of undertakings under investigation. During the dawn-raid investigation, the SAMR also has the power to interview individuals, inspect or copy relevant documents and material, seal or retain relevant evidence and investigate the bank accounts of the undertakings.

Sanctions and remedies

What sanctions and remedies may the authorities impose? May individuals be fined or sanctioned?

Under the AML, the sanctions include a fining penalty of between 1 and 10 per cent of the sales revenue for the previous year of the undertaking in breach of the law and to confiscate illegal gains.

The Price Law provides that the sanctions include rectifying the violations, confiscating any illegal gains and a fine penalty of up to five times the amount of the illegal gains. An objection notice will be given and a fine may be imposed if there are no illegal gains. In serious circumstances, the undertaking will be ordered to suspend operations while the infringing behaviour is rectified and the relevant authority may also revoke the business licence of the infringing undertaking.

As of the time of writing, the highest fine imposed for abuse of dominance is 6.08 billion yuan imposed by the NDRC in the Qualcomm case in 2015.

Enforcement process

Can the competition enforcers impose sanctions directly or must they petition a court or other authority?

Yes, the Chinese competition authorities can impose sanctions directly without any petition from court. Article 10 of the AML provides that the anti-monopoly law enforcement agency designated by the State Council shall be responsible for the anti-monopoly law enforcement work, and such anti-monopoly law enforcement agency may empower corresponding agencies in the governments of the provinces, autonomous regions and municipalities directly under the central government to be responsible for the anti-monopoly law enforcement work.

Enforcement record

What is the recent enforcement record in your jurisdiction?

In the decade ending October 2018, Chinese antitrust regulators investigated and concluded 165 cases involving monopoly agreements and 55 cases of abuse of dominance, imposing penalties totalling more than 11 billon yuan.

In 2018, Chinese antitrust authorities launched investigations into 32 abuse of dominance and monopoly agreement cases, and announced 16 typical enforcement cases concerning the abuse of administrative power to exclude or restrict competition. Further, according to a SAMR press release on 27 December 2018, the enforcement authorities will focus on cases concerning public utilities, active pharmaceutical ingredients (APIs), building materials and common consumer products in 2019.

Take an example in 2018, the SAMR imposed 10.04 million yuan in cumulative fines on Hunan Er-Kang Medical Operation and Henan Jiushi Pharmaceutical for abuse of dominance in the domestic market for chlorpheniramine maleate active pharmaceutical ingredients. The fines imposed on Er-Kang and Jiushi Pharmaceutical are equivalent to 8 per cent and 4 per cent of their annual sales in 2017. After investigation, the activities amounting to abuse of market dominance of foresaid undertakings include:

  • selling chlorpheniramine maleate APIs to downstream operators at exorbitant prices;
  • forcing downstream operators to buy other pharmaceutical recipients;
  • refusing to provide chlorpheniramine maleate APIs to downstream operators under the pretext of short supply or with unacceptable conditions; and
  • buying back drug products and reselling at a unified increased price, asking for a high level of deposits.

In 2016, the NDRC published a decision based on article 17(1)(i) of the AML (selling products at unfairly high prices or buying products at unfairly low prices). In 2016, the SAIC published six punishment decisions based on abuse of dominance, among which:

  • three punished violations of article 17(1)(v) of the AML (implementing tie-in sales or imposing other unreasonable trading conditions at the time of trading without any justifiable causes);
  • one decision punished violation of article 17(1)(iv) of the AML (restricting trading party so that it may conduct deals exclusively with themselves or with the designated undertakings without any justifiable cause);
  • one decision punished violation of article 17(1)(vi) of the AML (applying discriminatory treatments on trading prices or other trading conditions to their trading parties with equal standing without any justifiable causes);
  • and one punished violations of article 17(1)(iv), (v) and (vii) (other forms of abusing the dominant market position as determined by the Anti-monopoly Law Enforcement Agency under the State Council) of the AML.

There is no conclusion on the length of abuse of dominance proceedings from initial investigation to final decision. According to the publicly available notices of past decisions, the length ranges from six months to five years.

The most high-profile dominance case is the TP case. On 16 November 2016, the SAIC found that, from 2009 to 2013, TP abused its dominant position in aseptic carton packaging machinery for liquid food products, technical services for aseptic carton packaging machinery for liquid food products, and cartons for liquid food product aseptic packaging and conducted tie-in sales, exclusive dealing and loyalty discounts without justifiable reasons in China. To determine TP’s market position in the three relevant markets, the SAIC mainly considered the following:

  • TP’s market share and competition status in the relevant markets, including its competitive advantages in the relevant markets reflected by the changes of its sales margin and its profitability;
  • TP’s ability to control the market, particularly prices and discounts as well as other trading conditions;
  • the extent to which other undertakings (especially the users) depend on TP; and
  • the difficulty that other undertakings encounter when entering the relevant markets.

The SAIC concluded that:

  • TP was using its dominant position in machinery and technical service markets to impose restrictions on and affect customer’s usage of cartons, which damaged the competition in the carton market and violated article 17(1)(v) of the AML;
  • TP’s restrictions on the use of non-proprietary technical information that excluded the only companies that are able to achieve production at scale of brown paper from supplying brown paper to a third party constituted a violation of article 17(1)(iv) of the AML; and
  • TP’s two types of loyalty discount scheme have a loyalty-inducing effect and constitute other forms of abuse of dominant market position as prohibited by article 17(1)(vii) of the AML. The investigation lasted for almost five years from January 2012 and the punishment imposed was a fine totalling 667.7 million yuan.
Contractual consequences

Where a clause in a contract involving a dominant company is inconsistent with the legislation, is the clause (or the entire contract) invalidated?

The AML provides that the enforcement authority may order the cessation of any illegal actions. It does not specifically provide for the consequences of an infringement in relation to the validity of contracts. However, under the Contract Law, any contractual provisions that are in breach of mandatory provisions of laws and regulations are void.

Private enforcement

To what extent is private enforcement possible? Does the legislation provide a basis for a court or other authority to order a dominant firm to grant access, supply goods or services, conclude a contract or invalidate a provision or contract?

From a legislative perspective, article 50 of the AML provides the possibility for private enforcement against abusive the behaviour of dominant firms in the Chinese courts.

However, the AML does not explicitly provide for a basis for a court to order a dominant firm to grant access, supply goods or services, conclude a contract or invalidate a provision or contract.


Do companies harmed by abusive practices have a claim for damages? Who adjudicates claims and how are damages calculated or assessed?

Yes, companies harmed by abusive practices have a right to claim for damages by submitting a case to a people’s court. The relevant court has the power to adjudicate these damages claims.

In 2017, the Yunnan High People’s Court ruled on the appeal of the Yunnan YingDing v Sinopec Corporation and Sinopec Yunnan Branch retrial case. This is the first antitrust case in the petroleum industry and is of great pioneering significance. Based on the AML and the Renewable Energies Law, Yunnan YingDing sued Sinopec in the Kunming Intermediate People’s Court for Sinopec’s refusal to integrate the biodiesel produced by Yunnan YingDing into its sales system, which was abuse of dominant market position. After the judgment of the first instance, which required Sinopec to accept Yunnan YingDing’s products, both parties appealed to the Yunnan High People’s Court. In the second instance, the Yunnan High People’s Court ruled to revoke the original judgment and to remand the case for retrial. Yunnnan YingDing lost the action in the first instance of retrial at the end of 2016 and lost the appeal of retrial in August 2017.


To what court may authority decisions finding an abuse be appealed?

Article 53 of the AML provides that where any party concerned is dissatisfied with any decision made by the Anti-monopoly Law Enforcement Agency punishing activities of abuse of dominance, that party may apply for an administrative reconsideration or lodge an administrative lawsuit according to law.

Under article 28 of the Administrative Reconsideration Law and article 168 of the Civil Procedure Law respectively, administrative reconsideration organs (which is normally the authority vertically superior to the authority having issued the decision) and the people’s court of second instance should review both facts and laws.