Ken Dai, Oct 28, 2013
China just celebrated the 5-year anniversary of the Anti-Monopoly Law, which took effect on August 1, 2008. The anti-monopoly enforcement agencies in China seem to be determined to celebrate this anniversary in dramatic fashion, including settling two significant cases concerning minimum resale price maintenance. This shows that RPM is an increasingly important issue under the AML, which enterprises should approach very cautiously.
RPM is a typical clause in a vertical monopoly agreement, which is regulated under Article 14 of the AML. Because this provision was drafted in relatively high-level terms, there has been much uncertainty on how the AMEAs would handle RPM cases – at least until this year.
Regarding RPM in general, there are two approaches—neither is unconditionally accepted on a worldwide basis. The first approach is to hold RPM per se illegal, without analyzing its effects on competition. The second approach is the “rule of reason” analysis, which examines the legality of RPM on the basis of analysis of both its anticompetitive and procompetitive impact. Since there is no uniform or explicit global rule that the AML could follow, it makes particular sense to look into China’s recent RPM cases to find out which approach is applied in China.
Other issues relating to RPM include how to calculate the amount of fines or compensation and how the RPM prohibition is enforced. Generally, RPM is enforced by two means in China. The first is through public enforcement by the National Development and Reform Commission, the antitrust agency is in charge of tackling price-related monopolistic behavior. The second is through private litigation, handled by the courts. This article provides insights into these issues by analyzing recent high-profile cases
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