Issuing Body: Supreme People's Court
Issuing Date: May 3, 2012
Effective Date: June 1, 2012
Seeking to provide guidelines for trials of monopoly-related cases, the Supreme People's Court (SPC) has, after three years of debate and discussion, issued regulations clarifying certain issues relating to jurisdiction, burden of proof, and the production of evidence. The Provisions on the Application of Laws in Civil Disputes Cases Arising from Monopoly Activities (Monopoly Case Provisions) were issued on May 3, 2012, and took effect on June 1. The new provisions reflect the SPC's assessment of nearly four years' experience with the landmark Anti-Monopoly Law of the People's Republic of China (AML), which took effect on August 1, 2008.
The AML has played an increasingly important role in China's economy. Government statistics show that from its implementation date through December 31, 2011, the SPC and local people's courts handled a total of 63 monopoly-related cases involving industries throughout China and across a wide range of industries, including traffic, healthcare, electric equipment and the Internet. Among those cases, 53 were closed, either by settlement or a final court ruling. In a vast majority—perhaps all—the defendants prevailed.
The SPC began drafting the Monopoly Case Provisions in early 2009. During the lengthy rule-making process, the high court collected more than 250 statements from a wide variety of experts representing enterprises in many different industries. The SPC formulated the new rules based on those many statements and opinions.
Under the Monopoly Case Provisions, civil cases arising from monopoly activities (Monopoly Dispute Cases) are categorized as either tort cases or contract cases. Tort cases refer to disputes filed in a people's court by individuals, companies, or other organizations in which the plaintiffs claim to have suffered losses as a result of monopoly activities. Contract cases refer to disputes filed in a people's court by plaintiffs who claim that contract provisions, trade association charters, or other documents are in violation of the AML.
A plaintiff can either file a case directly in the local people's court upon occurrence of the allegedly monopolistic act or it can file after a decision by the relevant anti-monopoly law enforcement authority affirming the existence of monopolistic activity takes effect.
Monopoly Dispute Cases in the first instance/trial shall be under the jurisdiction of provincial-level intermediate people's courts or other intermediate people's courts as designated by the SPC. Subject to SPC approval, a district-level people's court may also have jurisdiction over Monopoly Dispute Cases in the first instance/trial.
Burden of Proof
Among the 53 Monopoly Dispute Cases that have been closed since the AML took effect, the plaintiffs usually lost. As the SPC discovered during its rule-making process, many plaintiffs lacked the expertise needed to properly pursue the charges, and many found it difficult to obtain the necessary evidence. As a result, in most cases the courts rejected the plaintiff's petition, because there was insufficient evidence to support the claims. The Monopoly Case Provisions provide support to help plaintiffs by shifting the burden of proof mainly from the plaintiff to defendants.
- Defendants bear much of the burden in cases brought under Articles 13.1(1) to 13.1(5) of the AML (involving fixing or changing the price of commodities; restricting the production or sales volume of commodities; dividing the sales market or raw material supply market; restricting the purchase of new technology, new facilities, or the development of new technology or new products; or jointly boycotting transactions). In accordance with the Monopoly Case Provisions, the plaintiff must prove that there is an agreement, but the defendant now has the burden to prove that such agreements do not have the effect of excluding or restricting competition.
- If the plaintiff brings its case based on Article 17.1 of the AML, which broadly regulates the abuse of a dominant market position, the plaintiff has the burden to prove that the defendant both has dominance over the relevant market and that it has abused its dominance. If the defendant bases its defense on a claim that its activities are legitimate, the defendant bears the burden of proving such legitimacy.
- If the plaintiff brings a case claiming the abuse of dominance by a public utility enterprise or other operator that has monopolistic status granted by law, the people's court may assume that the defendant enjoys dominance over the relevant market according to market structure and competition in the market, unless otherwise overruled by sufficient evidence.
The Monopoly Case Provisions also provide for multiple ways that parties can find evidence, including public information, expert witnesses, and professional research analysis. Evidence is admissible based on the following principles:
- The plaintiff may use information disclosed by the defendant to prove its dominance over a relevant market. If such information proves that the defendant has dominance over the relevant market, the people's court may determine that the defendant indeed has such a dominant position, subject to evidence to the contrary.
- Each party may apply to the people's court to call one or two witnesses with relevant expertise to illustrate issues involving specific knowledge.
- Each party may apply to the people's court for permission to engage professional organizations or personnel to conduct market research or economic analysis with respect to issues involving specific knowledge. Subject to consent of the people's court, the parties may negotiate together to agree on and determine a particular professional organization or personnel. If no such agreement can be reached, the people's court can designate a professional organization or personnel. The people's court may review and decide whether to accept such research, based on judicial interpretations involving expert conclusions.
Although the Monopoly Case Provisions do not cover a number of important areas of controversy, their issuance surely reflects the desire of the Supreme People's Court to improve the trial practice of Monopoly Dispute Cases under China's still-evolving Anti-Monopoly Law. People's courts at all levels are expected to strictly enforce the new implementing rules to further the implementation of the AML.