Non-conditional Clearance: From November to December 2023, 177 cases were cleared without condition by the SAMR (a year-on-year increase of 4.73% compared with that from November to December 2022, and a month-on-month increase of 55.26% compared with that from September to October 2023), implicating industrial sectors of energy, logistics, automobile, pharmaceuticals industry, private equity fund, materials, etc..

On November 9, 2023, the SAMR announced the summary of unconditional approval of merger cases in the first 10 months of 2023 including their characteristics: (1) With respect to the type of cases, simplified cases account for 90% of the total.  (2) With respect to subject composition, the number of concentration cases between domestic enterprises is the highest, 344, accounting for 57%; number of concentration cases between foreign enterprises is 193; and number of concentration cases between domestic and foreign enterprises is 68.  There are 282 concentration cases involving state-owned enterprises, accounting for 47%, and there are 267 concentration cases involving foreign enterprises and 235 concentration cases involving private enterprises.  (3) From the perspective of industry distribution, the cases involving real economy manufacturing industry take up the most, accounting for 39% of the total.  Other industries that account for a relatively higher percentage included wholesale and retail, transportation, water, electricity, gas and heat production and supply, real estate, and information technology services.  (4) In terms of transaction type, there are 312 cases of horizontal concentration involving peer competitors, 248 cases of vertical concentration involving upstream and downstream enterprises, and 124 cases of mixed concentration without horizontal or vertical relationship.  In terms of transaction mode, the largest number of cases are equity acquisitions, at 350, followed by joint ventures, at 279.  (5) From the perspective of the registration place of enterprises, concentration among domestic enterprises mainly involve enterprises registered in Shanghai, Beijing, Guangdong, Zhejiang and other provinces, while concentration among overseas enterprises mainly involve enterprises from the United States, France, Japan and other countries.[7]

Monopoly Agreements

On November 9, 2023, the SAMR published an administrative penalty on 21 local concrete firms in Hangzhou city for entering into and implementing a monopoly agreement.[8]  In this case, it was found that the 21 local concrete firms established the  "Xiaoshan Concrete Association" in 2016, by using the special requirements of supply time and transportation radius for commercial concrete, collaborated with all commercial concrete production firms of the district to avoid competition, coordinate the price increases, and allocate the market.  The responsible persons of the concrete firms in Xiaoshan District, Hangzhou City convened meetings on multiple occasions with other commercial concrete enterprises in Xiaoshan District, and reached a verbal agreement to establish an industry body, jointly increase concrete prices, and allow the trade association to allocate markets.  In December 2016, the 21 concrete firms agreed on the quota of each party, set up two sales companies with capital contribution according to such quota, allocated production volumes, and operated within the designated areas with Jincheng Road as the boundary.  Additionally, the parties formulated rules for the sale of commercial concrete, which were reviewed and approved by the responsible persons and shareholder meetings of the two sales companies.  The main content of such rules includes "targeted sales with quota", "returning the overcharge and paying the shortage", reporting any business with a volume of more than 2000 cubic meters to the sales companies, prohibiting unilateral production expansion, and fines for violations of such rules.  Based on these facts, Zhejiang Administration for Market Regulation determined that the conducts of the 21 local concrete firms constitute a monopoly agreement to fix the or change commodity prices, restrict production or sales volume, or divide up the sales market, ordered the concerned parties to cease their unlawful act, and imposed on 21 local concrete firms each a fine of 2% or 5% of their turnover in 2017, approximately RMB 174 million in total.

On December 8, 2023, the Fujian Administration for Market Regulation ("Fujian AMR") published an administrative penalty on Fuzhou Real Estate Appraisement Association (the "Association") for entering into and implementing a monopoly agreement.[9]  In this case, the Association led relevant appraisal companies to sign a Commitment Letter in November 2019, stipulating the progressive fee standards for real estate appraisal services in Fuzhou, fixing the lowest service charges and discount rates for different types of services, as well as fixing the service charges for mortgage appraisal, bid appraisal, decoration appraisal in the Fuzhou area.  In August 2020, the Association formulated a Guidelines for Appraisal Quotation for Tendering and Bidding for Real Estate Appraisement Projects to standardize the bidding behavior of appraisement entities, and restricted their price competition by means of notifications, service suspensions, and economic penalties.  Based on these facts, the Fujian AMR determined that the conduct of the Association constituted organizing competitors in the industry to engage in a monopoly agreement made through an industry association, and ordered to rectify its unlawful act, and imposed on the Association a fine of RMB 300 thousand.

Abuse of Market Dominance

Facts: In March 2010, a trade association in Yibin ("Trade Association") was established with members including a brick factory under Zhang’s name ("Brick Factory").  In July 2009, the "Yibin Brick Industry Work Conference" was convened, during which the members negotiated and agreed on the establishment of the Brick Association Council and the Coordination Office, required that the brick factories in Cuiping District and within its 30-kilometers radius, in Baixi and within its 15-kilometers radius to cooperate with Yibin Ren Trading Co., Ltd. ("Ren Company") to jointly establish a local brick association and prevent outside suppliers from entering such area.  Discontinued manufacturers under such arrangement (including the Brick Factory) would receive monthly leasing and contracting fees from the Ren Company, while continued manufacturers would pay market management and technical guiding fees to Ren Company.  In July 2009, the predecessor of the Trade Association entered into a "Suspension and Rectification Contract" with the Brick Factory and other brick manufacturers.  On March 6, 2013, the Sichuan Industry and Commerce Bureau determined that the conducts of Trade Association constitute a monopoly agreement of organizing the member units in competition to jointly agreed to suspend the production of some factories, thereby controlling the production quantity of bricks and the direct withdrawal of the discontinued member units from competition in the brick and tile market in Yibin, which substantively limited market competition.  Zhang, as the Plaintiff, later sued the Trade Association and related members to the court, and alleged that he had suspended the production according to the "Suspension and Rectification Contract" and merely received an insignificant amount of suspension support fees before September 2011; the aforementioned actions essentially had the effect of excluding the Plaintiff’s participation in competition, constitute a monopolistic behavior, and infringed on the Plaintiff’s legitimate rights and interests.  Zhang claimed that the Trade Association and concerned sponsor member units, as well as Yibin Heng Investment Group Co., Ltd., should be ordered to jointly compensate for his economic losses and reasonable expenses.

Key findings and rulings: The SPC ruled that Zhang’s right to claim for compensation as the implementer of the horizontal monopoly agreement in question for his so-called economic losses from other implementers of the monopoly agreement should be considered in accordance with the legislative purpose of Article 50 of the Anti-Monopoly Law[12] ("AML"), the characteristics of the concerned monopolistic behavior, and the legal effect of compensation for damages.

(1) The legislative purpose of the foregoing provision is to provide a civil judicial channel for stopping and combating monopolistic behavior, and to provide civil remedies for persons who have suffered damage due to such monopolistic behavior.  If the Plaintiff is not a victim but instead the implementer of the monopolistic behavior under the AML, its claim for damages is essentially a demand for the allocation of monopolistic interest, which is not the in line with the object of remedy as intended under the AML.

(2) The person claiming for compensation of damages must act in a legitimate and lawful manner.  People who actually participate in and carry out illegal activities, even if suffering losses due to such illegal activities, should not receive any relief due to the illegitimacy of their own acts.

(3) Granting damages to the implementers of monopolistic behavior may have a negative legal effect of encouraging relevant monopolistic behavior.  The implementer of a horizontal monopoly agreement is not entitled to claim for compensation for his so-called economic damages by other parties to such agreement.