Chinese court provides guidance to litigants

Published On 30/05/2012 | By Smriti Arora | Litigation, Reform

On May 8 2012, China’s Supreme People’s Court (SPC) issued its guidance on private anti-monopoly litigation.  The new framework, including the following key changes, will come into effect 1 June 2012:

  • Standing: Plaintiffs can bring both stand-alone and follow-on civil actions relating to alleged infringements of China’s Anti-Monopoly Laws (AML). There is no requirement of a prior investigation or decision by an enforcement agency in order for an individual or company to pursue private action in court.
  • Jurisdiction: certain Intermediate People’s Courts will be the first instance of such cases (the number of such courts has been expanded), unless the SPC designates the AML case to the lowest “basic” level court.
  • Limitation periods: two-year limitation period for AML-related civil actions, with the period beginning on the day the plaintiff knows or should have known about the relevant violation.
  • Burdens of proof: for disputes concerning a horizontal monopoly agreement (such as price fixing, abuse of dominance and cartel cases, restricting sales or production, market-sharing, restricting technological development), the new rules shift the burden of proof to the defendant to prove that their conduct does not effectively eliminate or restrict competition.
  • Evidence Rules: the SPC has acknowledged the challenges facing plaintiffs in providing their case, and has accordingly included provisions designed to ease evidentiary burdens. Plaintiffs may rely on public statements made by the defendant as evidence of a dominant position; state owned enterprises facing abuse of dominance trials will be presumed to have a dominant market position unless proven otherwise; plaintiffs can apply for expert industry and economic witnesses in court.
  • Damages: although the new framework does not include a ‘double damages’ regime, a plaintiff can claim for ‘reasonable expenses’ incurred in investigations and in bringing the action (including retaining witnesses).
  • Class Actions: the Rules now permit limited class actions by allowing the consolidation of multiple actions, on the same alleged monopolistic conduct argued in different courts, into a single case.

The new interpretation of Chinese AML is likely to increase the amount of civil damage cases in China.  With the new approach to abuse of dominance cases, SOEs are likely to be significantly impacted.  Contrary to original belief in the system, this underlines that SOEs are not getting a free ride under AML.

Photo credit: User:Michel_r / / CC BY-SA

About The Author

is a Solicitor in the Competition team at King & Wood Mallesons, based in the Sydney office. She is an avid tennis fan and hopes to attend each grand slam.

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