JANUARY 2013

Legal Focus

fined a number of agricultural companies for conspiring to raise the price of mung beans across 16 provinces, regions and municipalities in China.

However, the Sea Sand case published by GDPB recently is remarkable due to the authority for the first time clearly discloses the application of leniency program to break down the alliance. Also, the GDPB further give a general description on the “important evidence” to be submitted in return for the leniency treatment, which is, “important evidence” does not necessarily refer to a written agreement, but could be other useful information, such as the names of the participants and communication through other ways (e.g. text messages) among the participants.

The increase of the transparency of leniency program may enhance the practicality of the leniency rule under the AML and thus encourage more and more cartel participants to actively report to NDRC. If a company has already participated in a cartel, it should be worried for being reported by other allies, who is seek for being the first one to provide important evidence and for a mitigated fine.

How should companies be protecting themselves against recriminations regarding competition rules?

Acting legally is always the first principle. It is important for the companies to set up an effective antitrust compliance program to ensure that compliance should be considered as a part of decision-making process and in every aspect of a companies’ daily business.

In the situations where companies have already conducted the violations, it is important to rectify as soon as possible, as well as response to and cooperate with the authorities once being noticed and investigated.

Currently, leniency treatment only is granted to the reporter(s) of the monopoly agreements. If companies have been involved in monopoly agreements, report to the enforcement authorities is a wise choice.

What do you feel are the main challenges in competition and antitrust enforcement?

Since the development of the AML is in its early stage, rules are needed to be further clarified and transparency of the enforcement is also needed to be enhanced.

For example, in the Sea Sand case, the leader of the cartel was granted fine reduction. However, according to the Procedural Rules of Administration of Industry and Commerce (SAIC) on Investigation of Cases regarding Monopoly Agreements and Abuse of Dominance, an organizer of a cartel is not eligible for leniency treatment. Here raises a question whether NDRC follows different rules in terms of a leader’s qualification for leniency. Especially in the Sea Sand case, it seems that

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NDRC does not prohibit a leader from benefiting from the leniency program. It is an important issue to be clarified by the authorities, especially in relation to those cases where NDRC and SAIC both have jurisdiction.

other than hefty fines, what are the risks of violating the rules and penalties surrounding competition and antitrust?

Concerning the concentration of undertakings in violation of the AML, order to cease the wrong doing, order to dispose shares or assets, transfer the business or adopt other necessary measures to restore the market situation before the concentration within a time limit may be imposed besides fines.

Concerning monopoly agreements and abuse of dominance, order to cease the wrong doing, confiscation of the illegal gains may be imposed on the violating undertakings, besides the fines.

Besides the civil and administrative liabilities, if a crime is constituted for refusing to cooperate with the inspection and investigation of AMEAs, involved undertakings shall assume criminal liabilities.

Is there anything else you would like to add?

Companies are strongly advised to seek the help from professionals or outside lawyers when facing antitrust risks or for establishment of an antitrust compliance program. LM

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