Private Litigation

Last verified on Sunday 12th July 2020

Private Litigation: China

Jet (Zhisong) Deng and Ken Dai

Dentons LLP

Effect of public proceedings

1. What is your country’s primary competition authority?

China

On 13 March 2018, the State Administration for Market Regulation (SAMR) was established under an Institutional Reform Plan of the State Council. The antitrust supervision responsibilities previously shared by three authorities, namely, the National Development and Reform Commission (NDRC), the State Administration for Industry and Commerce, and the Ministry of Commerce, have been consolidated into one single institution.

Since 21 March 2018, the Antimonopoly Bureau (AMB), after its official establishment as a part of SAMR, has undertaken antitrust enforcement responsibilities. The AMB consists of 10 divisions: three review divisions, a monopolistic agreement division, an abuse of dominance division, an administrative monopoly division, a competition policy division, an administrative office, a supervision division and a coordination division.

In the Notice of the State Administration for Market Regulation on the Empowerment of Antimonopoly Law Enforcement, issued on 28 December 2018, SAMR delegates part of its antitrust responsibilities to its provincial branches. According to the notice, SAMR will directly take interprovincial cases; cases related to the abuse of administrative power by provincial governments; cases that are complicated or with significant impact across the country; and cases considered necessary by SAMR, while provincial administration will be responsible for cases within their respective administrative areas.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

2. Does your competition authority have investigatory power? Can it bring criminal proceedings based on competition violations?

China

According to Article 38 of the Antimonopoly Law of the People’s Republic of China (AML), the competition authority in China shall investigate any suspicious monopolistic conduct. Article 39 specifies that in its investigation, the enforcement authorities may take the following measures:

  • enter the business premises of the undertakings under investigation or any other relevant place to investigate;
  • inquire with relevant personnel;
  • review and make copies of relevant documents;
  • seize or detain relevant evidence; and
  • check the bank accounts of the undertakings under investigation.

The AML, however, has not stipulated any criminal liability for monopolistic conduct and thus criminal proceedings cannot be triggered.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

3. Can private antitrust claims proceed parallel to investigations and proceedings brought by competition authorities and criminal prosecutors and appeals from them?

China

Yes, private antitrust claims can be brought in parallel with investigations and proceedings brought by competition authorities.

The current AML provides for a dual-track remedy system. According to Article 50 of the AML, undertakings carrying out monopolistic conduct and causing damage to others shall be held responsible according to the law, which is the basis for private antitrust actions in the courts. However, investigations carried out by authorities are administrative proceedings and do not come before the courts, though Article 53 allows undertakings to challenge a decision of the enforcement authority through administrative litigation before the courts. The wording of the AML suggests that administrative enforcement is not a precondition for bringing private litigation, and private antitrust actions can be independent from administrative proceedings.

As mentioned before, there is no criminal liability in the AML. However, bid-rigging as an exception is subject to Article 223 of the Criminal Law of the People’s Republic of China. In the current Chinese legal system, private litigation can proceed parallel to criminal proceedings.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

4. Is there any mechanism for staying a stand-alone private claim while a related public investigation or proceeding (or an appeal) is pending?

China

Article 150 of the Civil Procedure Law of the People’s Republic of China (CPL) lists general grounds for suspending private litigation and it provides a catch-all provision allowing the courts to suspend the current proceedings when necessary. Therefore, a court may stay private litigation where there is an ongoing public investigation regarding the same matter. This is more likely to be seen in a more sophisticated case where the public enforcement authority has already undertaken some in-depth investigation.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

5. Are the findings of competition authorities and court decisions binding or persuasive in follow-on private antitrust cases? Do they have an evidentiary value or create a rebuttable presumption that the competition laws were violated? Are foreign enforcers’ decisions taken into account? Can decisions by sector-specific regulators be used by private claimants?

China

No, the findings of competition authorities and court decisions are not binding in follow-on private antitrust cases. In China, as a general rule, precedents are not binding on later proceedings. For years, the Supreme Court of China has gradually published some guiding cases for the purpose of providing lower courts with a more unified standard of ruling and increasing judicial transparency. However, in the Detailed Rules for the Implementation of the Provisions of the Supreme People’s Court on Case Guidance, the Supreme Court stressed that a guiding case shall be quoted only in part of the judgment setting out the reasoning, but not in the actual ruling.

But such findings do have certain evidentiary value. As a general rule, Article 93 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China (CPL Interpretation) states that parties to the proceedings do not need to prove facts confirmed by effective rulings issued by people’s courts unless there exists sufficient contrary evidence to overturn it. Further, Article 77(1) of the Provisions of the Supreme People’s Court on Evidence in Civil Procedures (Evidence Provisions) provides that the probative value of any documents issued by public authorities is generally higher than that of other documents. The same applies to decisions made by sector-specific regulators.

The probative value of a decision made by competition authorities has to be determined on a case-by-case basis. For example, in the Junwei Tian v. Beijing Carrefour Shuangjing Store and Abbott Trading Shanghai case, which is a follow-on private action after the public enforcement against resale price maintenance in the infant formula sector, the Beijing High Court ruled that an administrative decision alone was insufficient evidence of an anticompetitive agreement. Although Abbott was fined in the decision, no specific distributor was named, so the agreement between Abbott and Carrefour could not be proved.

Those rules apply only to domestic decisions and rulings; foreign enforcers’ decisions, therefore, can only serve as a reference.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

6. Do immunity or leniency applicants in competition investigations receive any beneficial treatment in follow-on private antitrust cases?

China

No legal provisions or judicial practices in China provide any beneficial treatment for immunity or leniency applicants in competition investigations in follow-on private litigation.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

7. Can plaintiffs obtain access to competition authority or prosecutors’ files or the documents the authorities collected during their investigations? How accessible is information prepared for or during public proceedings by the authority or commissioned by third parties?

China

Generally, enforcement authorities will publicise essential information, including both facts and findings, in the decisions released to the public; that information is publicly accessible and therefore can be used by plaintiffs.

As for other information or documents that the authorities have collected during investigations, plaintiffs cannot obtain that on their own but may apply for the court to do so. Article 64 of the CPL states that the people’s courts shall investigate and collect evidence that parties cannot acquire themselves because of some realistic reasons. The CPL Interpretation further elaborates that those reasons include that evidence is preserved by the relevant authorities and both the party and its litigation representative have no access to it, or that it concerns state secrets, trade secrets or personal privacy.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

8. Is information submitted by leniency applicants shielded from subsequent disclosure to private claimants?

China

The existing legal provisions in China have not provided any special treatment for information submitted by leniency applicants. In theory, a plaintiff may apply for disclosure via the court as mentioned in question 7.

However, in the Guidelines for Application of the Leniency Regime to Cases of Horizontal Monopoly Agreements (Draft for Comments), the former enforcement agency NDRC prohibits the enforcement authority from disclosing that information to the public without consent from the applicants. It also emphasises that such information cannot be used as evidence in a civil proceeding, except otherwise requested by law. However, as such guidelines remain a draft, we await further legislation by SAMR for confirmation.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

9. Is information submitted in a cartel settlement protected from disclosure?

China

Under the current Chinese legal system, there is no equivalent to the EU’s cartel case settlement system where parties of a cartel case may admit to the enforcement authority’s objections in exchange for a fine reduction. Nevertheless, the general leniency procedure remains available for parties involved in a cartel case. See question 8 for reference.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

10. How is confidential information or commercially sensitive information submitted by third parties in an investigation treated in private antitrust damages claims?

China

See question 7.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

Commencing a private antitrust action

11. On what grounds does a private antitrust cause of action arise?

China

The legal ground for private antitrust litigation is Article 50, which provides that if an undertaking implements monopolistic behaviour and causes loss to others, it shall bear civil liability according to law. The course of action could be based on Article 13 (horizontal monopoly agreements), Article 14 (vertical monopoly agreements) or Article 17 (abuse of dominant position).

Answer contributed by Jet (Zhisong) Deng and Ken Dai

12. What forms of monetary relief may private claimants seek?

China

A private claimant may seek compensatory damages and litigation fees if successful. However, no punitive damages, or statutory treble damages as in the US, are available under the AML to private claimants.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

13. What forms of non-monetary relief may private claimants seek?

China

The AML has not provided for any non-monetary relief for private claimants. However, a private claimant may rely on the general rules under the General Provisions of the Civil Law of the People’s Republic of China (PRC Civil Law). According to Article 179 of the PRC Civil Law, a claimant may also claim for a cease-and-desist order, the removal of obstructions, restitution, restoration of the original conditions, actual performance, etc.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

14. Who has standing to bring claims?

China

In general, any citizens, legal persons and organisations can bring private antitrust claims if they suffer loss as a result of monopolistic conducts. In Junwei Tian v. Beijing Carrefour Shuangjing Store and Abbott Trading Shanghai (2014), the People’s Court confirmed that an indirect purchaser may also bring a private litigation claim. The same applies to all customers, distributors and competitors, direct and indirect alike.

In addition, consumer associations and people’s procuratorates may be able to bring public interest lawsuits. See question 49.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

15. In what fora can private antitrust claims be brought in your country?

China

According to Article 3 of the AML Judicial Interpretation, private antitrust claims can be brought in the intermediate people’s courts in the capital cities of provinces or autonomous regions; the municipalities directly under the central government; and in the cities under separate state planning. They can also be brought at intermediate people’s courts that are designated by the Supreme People’s Court. A lower court may also hear the civil antitrust litigation with approval from the Supreme People’s Court.

In 2014, the Standing Committee of the National People’s Congress decided to set up IP courts in Beijing (municipality), Shanghai (municipality) and Guangzhou (city). The Supreme People’s Court issued a notice to authorise these IP courts as having exclusive jurisdiction over, respectively, antitrust cases in Beijing, Shanghai and Guangdong Province (where Guangzhou city is located, although Shenzhen city, which is also in Guangdong Province, is outside the jurisdiction of the Guangzhou court).

In addition, the Supreme People’s court has set up specialised IP panels in the intermediate people’s courts of some cities. These specialist panels will have jurisdiction over antitrust cases brought in the province to which the city of the court belongs.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

16. What are the jurisdictional rules? If more than one forum has jurisdiction, what is the process for determining where the claims are heard?

China

The AML has not provided a special jurisdictional rule for antitrust litigation. Article 4 of the AML Judicial Interpretation indicates that the jurisdiction of antitrust disputes shall be determined based on the underlying cause of action.

For claims over contractual disputes, the courts at the places where the defendant is domiciled or where the contract is performed jurisdiction under Article 23 of the CPL. According to Article 34 of the CPL, if the parties of the contract have so agreed, the courts at the place with an actual connection to the contract may also have jurisdiction. These places could be, for example, where the contract is signed or where the claimant is domiciled.

For claims in tort, the courts at the place where the defendant is domiciled; where the tort is committed; or where the tortious consequence takes place shall have jurisdiction under Article 28 of the CPL.

A claimant can choose any one of the courts that have jurisdiction. However, if the same case is brought at two different courts, the first court that registers the case will hear it.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

17. Can claims be brought based on foreign law? If so how does the court determine what law applies to the claim?

China

Article 2 of the AML provides that the AML regulates monopolistic conduct outside the territory of China if that conduct has the effect of eliminating or restricting competition in the domestic market. According to Article 4 of the Law of the People’s Republic of China on Choice of Law for Foreign-related Civil Relationships, the AML prevails over antitrust rules under foreign law.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

18. Give details of any preliminary requirement for starting a claim. Must plaintiffs post security or pay a filing fee? How is service of claim affected?

China

To bring a private litigation claim, the plaintiff must meet the requirements set out by Article 119 of the CPL, which include the following:

  • that the plaintiff is a citizen, legal person or other organisation with a direct interest in the case;
  • that there is a specific defendant;
  • that the plaintiff has specific claims, facts and arguments; and
  • that the claim falls within the scope of civil litigation and the relevant court has jurisdiction.

A plaintiff must pay a fee for the service of a claim to process. The amount of the fee depends on the value of the object in dispute, and shall be paid in regressive rates ranging from 0.5 per cent to 4 per cent.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

19. What is the limitation period for private antitrust claims?

China

The limitation period rules in China have been changed by the PRC Civil Law. According to Article 188 of the PRC Civil Law, the normal limitation period for private litigation is three years from the date the right holder knows or should have known of the infringement, except as otherwise prescribed by any law. The same Article also provides a maximum limitation period of 20 years, which is calculated from the date the infringement occurs.

Article 16 of the AML Judicial Interpretation states that the limitation period for private antitrust claims commences from the day when the claimant knows or ought to have known of the breach. It further adds that where the monopolistic conduct persisted for over two years and the defendant raises the limitation period defence, damages shall be calculated two years back from the day the lawsuit is filed.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

20. Are those time limits procedural or part of the substantive law? What is the effect of their expiry?

China

The limitation periods are part of the substantive law. According to Article 192 of the PRC Civil Law, once the limitation period expires, it bars the claim and the defendant may use it as a defence for non-performance of its obligations. However, if the defendant agrees to perform, it cannot use it as a defence. If the defendant has voluntarily performed, a claim for restitution may not be allowed.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

21. When does the limitation period start to run?

China

Please see question 19.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

22. What, if anything, can suspend the running of the limitation period?

China

Article 194 of the PRC Civil Law provides for the suspension of the limitation period because of force majeure and other factors, which will have suspensory effect only within the last six months of the limitation period. When the situation is removed, the limitation period is no longer suspended.

Article 195 of the PRC Civil Law also provides for the interruption of the limitation period, which enables the limitation period to run anew. The limitation period shall be interrupted and recalculated in the following circumstances:

  • the obligee requests the performance from the obligor;
  • the obligor agrees to perform;
  • the obligee files in the court or applies for arbitration; and
  • any other situations with effects equating with filing a lawsuit or applying for arbitration.

Article 16 of the AML Judicial Interpretation states that if the claimant reports the alleged monopolistic behaviour to the antitrust enforcement authorities, the limitation period will be suspended from the date of its reporting and shall be recalculated from the date that the authorities decide to revoke a case or to terminate an investigation, or that it will not file a case; or the date that a decision by the authorities that the alleged conduct constitutes monopolistic conduct comes into effect.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

23. What pleading standards must the plaintiff meet to start a stand-alone or follow-on claim?

China

The plaintiff should meet the requirements set by Article 119 of the CPL, as detailed in question 18, to have standing. There is no additional pleading standard for the plaintiff, as the CPL provides nothing like a motion to dismiss under the US system. Once the court accepts the case, the plaintiff can get both factual and legal issues thoroughly litigated and the case will not be dismissed merely for insufficient pleading.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

24. Is interim relief available? What must plaintiffs show for the court to grant interim relief?

China

Interim relief is available in private civil litigation as provided by the CPL. According to Article 100 of the CPL, where the enforcement of a future judgment may become impossible or extra damage may occur because of the acts of one party, or for other reasons, the people’s court may issue, at the application of the other party or at the discretion of the court, property preservation orders, cease-and-desist orders or demand that the relevant party perform certain acts. A court may request the plaintiff to provide a security deposit when issuing a property preservation order, and if the plaintiff fails to do so, the application will be denied.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

25. What options does the defendant have in responding to the claims and seeking early resolution of the case (eg, answer, counterclaim, motion to dismiss, summary judgment)?

China

Upon receiving a copy of the statement of complaint, a defendant may provide its answer within 15 days. According to Article 125 of the CPL, even if the defendant does not submit an answer, it will not affect the processing of the case. According to Article 34 of the Evidence Provisions, a defendant may raise a counterclaim at any time before the expiry of the evidence-adducing period.

If the defendant objects to the jurisdiction of the court, that objection should be raised in its answer. However, even when that objection stands, the case will not be dismissed but be transferred to the competent court under Article 127 of the CPL. Although, in practice, the people’s courts may decline to accept cases that do not satisfy the requirements of Article 119 of the CPL (see question 23), the duty lies with the court; a defendant does not have the right to apply for such a dismissal.

The summary procedure, which is designed to solve cases with clear facts and simple legal relationships in a simplified litigation process, does not apply to antitrust litigation involving complicated economic analysis. And there are no procedures like motions to dismiss or summary judgment in China.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

Disclosure/discovery

26. What types of disclosure/discovery are available? Describe any limitations and the courts' usual practice in ordering disclosure/ discovery.

China

In China, there is no equivalent to the discovery procedure in common law jurisdictions. Each party has to produce its own evidence to support its claims. However, Article 37 of the Evidence Provisions suggests that the people’s court may arrange a pre-trial evidence exchange on request by the parties. In complicated cases or cases with abundant evidence, people’s courts arrange such exchanges ex officio.

The exchange of evidence is conducted under the supervision of judges. Records are made as to whether or not parties have agreed on the relevant evidence. The people’s court identifies the major issues through the exchange of evidence. A new exchange will be arranged if any party rebuts the evidence from the other party and submits new evidence.

Article 40 of the Evidence Provisions specifies that evidence exchange shall be conducted no more than two times except in difficult, significant or complicated cases where people’s courts consider additional exchanges necessary. Antitrust cases could be one of the exceptions where the complexity requires more rounds of exchanges.

In addition, as explained in question 7, the court can collect evidence upon the application by the parties, or on its own initiative when deemed necessary, under extraordinary situations under Article 64 of the CPL.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

27. How do the courts treat confidential information that might be required to be disclosed or that is responsive to a discovery proceeding? Is such information treated differently for trial?

China

As discussed in question 10, evidence that involves state secrets, trade secrets or individual privacy should not be presented in a public trial under Article 68 of the CPL. Article 11 of AML Judicial Interpretation further provides that the people’s courts may adopt protective methods such as conducting private hearings, restricting or prohibiting duplication, limiting accessibility to attorneys and requiring the parties to sign non-disclosure agreements, upon request by the parties or where it finds necessary. This applies to both pre-trial evidence exchange and trial.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

28. What protection, if any, do your courts grant attorney–client communications or attorney materials? Are any other forms of privilege recognised?

China

Attorney–client communications do not enjoy any privilege in the courts in China under any law. However, since there is no discovery, it is difficult for one party to access the other party’s attorney–client communications or otherwise ‘privileged’ documents, and applications to collect such information is rarely granted by the courts in practice.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

Trial

29. Describe the trial process.

China

After the plaintiff has filed the complaint, the court shall serve the copy of the complaint to the defendant within five days. The defendant may challenge the jurisdiction within 15 days upon receipt of the complaint, or 30 days if the defendant is domiciled outside the People’s Republic of China. If the defendant fails to raise objections to jurisdiction but submits the statement of defence within the above time frame, the court shall be deemed to have jurisdiction except where the provisions on levels of jurisdiction or exclusive jurisdiction are violated. The court will serve the statement of defence to the plaintiff within five days upon receiving it.

The court will serve a notice for the production of evidence on both parties at the same time as it serves the notice of acceptance of the case and the notice requesting a response to the case. The time period for producing evidence may be agreed upon by the parties and confirmed by the court. If the time period for producing evidence is set by the court, it shall be no less than 30 days upon receipt of the notice of acceptance of the case and the notice requesting a response.

Next, the court notifies the parties of the proceedings, three days before the scheduled trial. The procedures for trial include the opening statement, evidence presentation, cross-examination, argument and the final statement. Mediation presided over by the court may be carried out before the judgment is made; where mediation is unsuccessful, the court shall make a judgment.

If the defendant fails to attend the court hearing or submit the answer, the court will still render a judgment based on materials submitted by the plaintiff.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

30. How is evidence given or admitted at trial?

China

As a general rule, evidence admitted at trial shall be legal, authentic and relevant. According to Article 69 of the CPL, notarised facts and documents are accepted by the court except if invalidated by sufficient contrary evidence. According to Article 70 of the CPL, copies of documentary evidence and physical evidence are only admissible if there is a real difficulty in presenting the originals. A Chinese translation shall be attached to documentary evidence in a foreign language.

The parties will be given opportunities to argue against the admissibility of evidence. As explained in question 26, the court may arrange one or more rounds of exchange of evidence before any hearing proceeds. According to Article 50 of the Evidence Provisions, evidence shall be presented at court and cross-examined by both parties to test authenticity, relevance and legitimacy.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

31. Are experts used in private antitrust litigation in your country? If so, what types of experts, how are they used, and by whom are they chosen or appointed?

China

Yes. According to Article 76 of the CPL and Article 13 of the AML Judicial Interpretation, the parties may apply to the court for an expert’s assistance, who is called an ‘examiner’. The examiner can be appointed by agreement between the parties or by the court. The examiner is supposed to be neutral and opine on issues that requires specialist knowledge.

On the other hand, Article 61 of the Evidence Provisions allows each side to apply to the court for ‘one or two persons with specialist knowledge’ to explain the specific issues to the court. These are experts employed by, and advocating for, one party.

As with other jurisdictions, economists are most commonly seen in antitrust litigation in China. And the growing trend in China is that neutral examiners are rarely seen in antitrust cases, and the parties usually prefer choosing their own economic experts according to Article 61 of the Evidence Provisions. The experts will testify in court and can be cross-examined.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

32. What must private claimants prove to obtain a final judgment in their favour?

China

As a general principle in civil procedure, the burden of proof is borne by the party that raises the claim. However, the AML and the AML Judicial Interpretation established special rules to alleviate the burden of proof on the plaintiff in cartel cases.

In a cartel case, the plaintiff shall prove the existence of a cartel agreement, damage, and the causal relationship between the agreement and damage. The burden of proof is then shifted to the defendant to demonstrate that the corresponding agreement will not have an anticompetitive effect on the relevant market.

In a case of vertical monopoly agreement, the plaintiff shall prove not only the existence of a vertical monopoly agreement, damages, and the causal relationship between the agreement and damages, but also the anticompetitive effect on the relevant market.

In a case of abuse of dominance, the plaintiff shall prove that the defendant possesses and leverages the dominant power in the relevant market.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

33. Are there any defences unique to private antitrust litigation (eg, Noerr-Pennington defence, passing-on defence)? If so, which party bears the burden of proving these defences?

China

The defendant may rely on exemptions from the prohibition on horizontal or vertical monopoly agreements under Article 15 of the AML, if the purpose of the agreement is to improve technology and research and development into new products; improve product quality, reduce costs, improve efficiency, unify product specifications, standards or implement a specialised division of labour; improve the operational efficiency of and enhance the competitiveness of small and medium-sized undertakings; achieve social and public benefits, such as energy conservation, environmental protection, disaster relief, etc.; alleviate the serious decline in sales or the obvious overproduction caused by an economic recession; or protect the legitimate interest in foreign trade and foreign economic cooperation. The defendant has to prove one of the purposes, and also prove that the agreement does not severely restrict competition in the relevant market and consumers can benefit from the agreement.

As for dominance abuse, the defendant may raise justifications of its behaviours and has the burden to prove it.

The Noerr-Pennington defence does not exist in China; nor does the state action defence. There has been a public enforcement case where the investigated undertakings tried to argue that the cartel was mandated and organised by the central bank, a government institution. The undertakings were fined nonetheless, and the penalty decision was confirmed by the court through an administrative litigation. In the newly released Interim Provisions on Prohibiting Monopoly Agreements, Article 32 stipulates that monopolistic conduct involving the abuse of administrative power by administrative authorities and organisations authorised by laws and regulations to manage public affairs shall not be exempted from liability. Though it is an administrative regulation, it could be referred to in a private litigation. Therefore, state action or political action is not an available defence in China.

Moreover, the passing-on defence is not specifically provided by the AML or other laws or regulations. However, since both direct and indirect purchasers can sue in China, the availability of the passing-on defence remains to be tested in practice.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

34. How long do private antitrust cases usually last (not counting appeals)?

China

Usually, the trial of a case applying general procedures should be completed within six months of the filing of the case. An extension is possible with the approval of the head of the court but a further extension is only possible with the approval of the higher-level court. If the case is foreign-related (e.g., one or more party is a foreigner), the court is not bound by any time limitation.

Time does vary greatly depending on the case. To our knowledge, the length of time from the filing of a claim to judgment at the court of the first instance can sometimes be 18 months. For example, Rainbow v. Johnson & Johnson (2013) lasted for 18 months, Qihoo 360 v. Tencent (2014) lasted for 16 months, Huawei v. InterDigital (2013) lasted for 14 months, while Beijing Emiage Tech. Co. v. Qihoo 360 (2015) lasted for only six months.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

35. Who is the decision-maker at trial?

China

According to Chapter 3 of the CPL, the collegial bench is the decision-maker at trial. A collegial bench can have three, five or seven members, and is made up of judges and jurors. Legal or factual issues are not separated and are all decided by the bench together.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

Damages, costs and funding

36. What is the evidentiary burden on plaintiffs to quantify the damages?

China

As mentioned in question 3, Article 50 of the AML provides that undertakings carrying out monopolistic conduct and causing loss to others shall be held responsible according to the law. A plaintiff needs to prove the existence of loss, how it is calculated and the causation between the loss and the concerned monopolistic conduct.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

37. How are damages calculated?

China

The calculation of damages in private antitrust litigation is, in general, very complicated. Currently, there are no specific guidelines on the calculation of damages. In practice, the specific calculation varies from case to case. It depends on the specific facts of the case and the kind of monopolistic conduct involved. In theory, the measure of damages is the difference between the actual profit and the profit that would have been obtained without the monopolistic agreement.

Usually, only consequential economic loss can be recognised and not pure economic loss. For example, in Rainbow v. Johnson & Johnson (2013), Shanghai Higher People’s Court granted Rainbow the profit loss but denied its other claims as to promotion costs, employees pay-off fees, etc.

A senior judge from the Supreme Court, Zhu Li, has stated in a published report that the calculation method is expected to be included in the next AML judicial interpretation.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

38. Does your country recognise joint and several liabilities for private antitrust claims?

China

Though not specifically provided for in the context of antitrust claims, China recognises joint and several liability for private actions as a general rule. When two or more persons commit a tortious act together, they will bear joint and several liability.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

39. Can a defendant seek contribution or indemnity from other defendants, including leniency applicants, or third parties? Does the law make a clear distinction between contribution and indemnity in antitrust cases?

China

Yes, according to Article 178 of the CPL, where the defendants are found jointly and severally liable, one defendant has the right to demand payment from other defendants in respect of liability that goes beyond its share. This applies to antitrust cases.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

40. Can prevailing parties recover attorneys’ and court fees and other costs? How are costs calculated?

China

Attorneys’ fees as a general rule are not recoverable unless otherwise specified by laws and regulation. Antitrust private litigation is one of the exceptions: according to Article 14 of the AML Judicial Interpretation, the courts may, at the application by the claimants, include the reasonable expenses undertaken by the claimant when investigating or preventing the concerned monopolistic conduct. Those expenses include attorneys’ fees and other reasonable expenses related to the investigation and the prohibition of the monopolistic conduct. If the parties dispute what is a ‘reasonable’ amount, the court will make a final decision.

According to Article 519 of the Administrative Measures for the Litigation Fees of People’s Courts, the losing parties shall pay court fees and if both parties are liable then they shall pay court fees jointly. In addition, Article 74 of the CPL provides that the losing party shall bear the witness fees, which includes but is not limited to the necessary expenses for the travel and accommodation of the witness.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

41. Are there circumstances where a party’s liability to pay costs or ability to recover costs may be limited?

China

According to Article 4 of the Administrative Measures for the Litigation Fees of People’s Courts, a party may apply for postponement, reduction or exemption to pay court fees. Such juridical assistance is only applicable to a natural person.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

42. May attorneys act for claimants on a contingency or conditional fee basis? How are such fees calculated?

China

Yes. According to Article 13 of the Administrative Measures on Fees for Lawyer Services, attorneys acting on a contingency fee basis shall enter into a contingency fee contract with the client, in which the calculation method will be agreed by both parties. The highest contingency fee shall not exceed 30 per cent of the total amount of the subject matter in the fee contract.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

43. Is litigation funding lawful in your country? May plaintiffs sell their claims to third parties?

China

There is no particular prohibition on funding litigation. In practice, it is rare in China. Plaintiffs may borrow from a third party to bring the lawsuit, but such a third party will not benefit or bear any consequences from the lawsuit.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

44. May defendants insure themselves against the risk of private antitrust claims? Is after-the-event insurance available for antitrust claims?

China

There is no particular prohibition on litigation insurance. However, generally it is rare in China.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

Appeal

45. Is there a right to appeal or is permission required?

China

There is a right to appeal and no permission is required. According to Article 164 of the CPL, an appeal should be made within 15 days of the issue of first instance judgment, or 10 days if it is an order on procedural issues. As an exception, Article 269 extends that period to 30 days for parties that are not domiciled in China.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

46. Who hears appeals? Is further appeal possible?

China

On 1 January 2019, a special IP appellate tribunal was established under the Supreme People’s Court. Appeals against all first instance rulings in antitrust disputes that are issued after this date will now be heard by this special tribunal. Before its establishment, antitrust cases, heard by courts of intermediate level at first instance, were appealed to higher level courts, usually at the provincial level. The change leads to a ‘leapfrog appeal’ system for antitrust cases in China.

Usually, the judgment or ruling at second instance will be final. However, a ‘re-trial’ application to the Supreme People’s Court is possible if a party considers that there is an error in a legally effective judgment or ruling. Re-trial applications are also available in the leap-frog system. However, a re-trial needs permission from the Supreme People’s Court.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

47. What are the grounds for appeal against a decision of a private enforcement action?

China

Under Article 170 of the CPL, the grounds for appeal include the following:

  • the facts in the case are unclear;
  • there exist errors in the application of law; and
  • the litigation process seriously violates procedural rules.

Article 200 of the CPL lists the grounds for a re-trial, which include:

  • there is new evidence sufficient to overturn the original judgment or ruling;
  • the basic facts ascertained by the original judgment or ruling lack evidence to support it;
  • the key evidence is forged;
  • the key evidence has not been cross-examined;
  • the parties are not able to collect the key evidence required for the trial of the case by themselves for objective reasons, they have applied in writing to the people’s court for investigation and collection, and the people’s court has not done so;
  • there are errors in the application of law;
  • the judge should have recused him or herself from the case but did not do so;
  • important parties are absent from the trial for reasons that cannot be ascribed to the parties;
  • the parties are deprived of the right to argue their case in violation of the law;
  • a default judgment is issued without a summons;
  • the original judgment or ruling has missed or exceeds the raised claims;
  • the legal documents on which the original judgment or ruling was made were revoked or changed; and
  • there is corruption, bribery, malpractice, and defamation in the original proceeding.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

Collective, representative and class actions

48. Does your country have a collective, representative or class action process in private antitrust cases? How common are they?

China

There are collective and representative action processes under the CPL.

A case could be certified as a collective action if there is more than one plaintiff in the litigation and their claims are of the same type, subject to the consent of all parties (including the defendant) and the approval of the court. Article 6 of the AML Judicial Interpretation also confirms that the court has the discretion to consolidate claims originating from the same monopolistic conduct, even when they are filed in different courts, with cases being transferred to one court.

If there are more than 10 plaintiffs in the collective action, the case could be certified as a representative action. In such a representative action, the plaintiffs can choose two to five of them to represent the whole group in the litigation, with each of the representatives having one to two counsel. The representatives’ actions in the litigation will be binding on all the plaintiffs, except if they seek the change or waiver of the claims, the acknowledgement of the opposing party’s claims, or settlements, for all, which they must seek the consent of the other plaintiffs who are represented.

There are two categories of representative actions, depending on whether the plaintiffs can be determined at the time of filing the lawsuit. If the plaintiffs cannot be ascertained at the time of filing, the court may issue a notice describing the particulars of the case and the claims, and notifying relevant right holders to register with the court within a certain period of time. Once a judgment is handed down, it will be binding on all registered right holders and those who did not register but brought a stand-alone lawsuit within the statute of limitations.

Although a representative action in which the plaintiffs cannot be ascertained at the time of filing the lawsuit is similar to a class action in the US sense, they are also different in some important repects. For example, it requires an ‘opt-in’ mechanism in China while a US class action adopts ‘opt-out’. Another example is that plaintiffs play fewer roles in a US class action while the court intervenes significantly (e.g., in reviewing settlement agreements and the distribution of the settlement amount). However, as mentioned above, in a representative action in China, the settlement or other substantive disposition of the claims is subject to the consent of all the represented plaintiffs.

However, so far, there has not been any collective or representative antitrust actions in China.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

49. Who can bring these claims? Can consumer associations bring claims on behalf of consumers? Can trade or professional associations bring claims on behalf of their members?

China

As stated in question 14, anyone who suffers from a monopolistic conduct can bring an antitrust claim, and multiple claims of the same type may be certified as a collective or representative action.

In addition to collective and representative actions, the CPL provides for public interest litigation. According to Article 55 of the CPL, institutions or relevant organisations stipulated by law may bring a lawsuit to the court in respect of acts that harm the environment or infringe on the legitimate rights and interests of consumers. The consumer associations are qualified organisations under the Law on the Protection of Consumer Rights and Interests, which empowers national consumer associations and consumer associations at provincial, autonomous regional, and municipal levels to file lawsuits against behaviour that infringes the legitimate rights and interests of consumers. Moreover, according to the Interpretation of the Supreme People’s Court on Several Issues concerning the Application of Law in the Trial of Consumer-related Civil Public Interest Litigation, effective as of 1 May 2016, institutions and social organisations authorised by the National People’s Congress and its Standing Committee can also bring public interest litigation. However, so far it is rare to see organisations other than consumer associations obtain the relevant authorisation and bring public interest litigation.

The CPL’s amendment in 2017 adds under Article 55 that the people’s procuratorates can support the institutions or organisations in such lawsuits or bring a public interest action on its own initiative, when no institution or organisation takes such action. The Supreme People’s Court and the Supreme People’s Procuratorate have jointly issued the Interpretation of Several Issues concerning the Applicable Law of Prosecuting Public Interest Litigation, effective as of 2 March 2018, to clarify how this power can be exercised in civil suits.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

50. What is the standard for establishing a class or group?

China

To qualify as a collective action, the following conditions should be satisfied: the plaintiff’s claims should be the same type; all parties should consent to the consolidation; and the court should approve the consolidation.

To qualify as a representative action, there must be more than 10 plaintiffs. If the number of plaintiffs cannot be ascertained at the time of filing the lawsuit, the court can issue a notice with an effective period for not less than 30 days. The relevant right holders who come to register upon the notice shall prove their relationship with the opposing party and the damage suffered.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

51. Are there any other threshold criteria that have to be met?

China

As to a representative action, there mush be more than 10 plaintiffs. Other than that, there is no threshold criteria on the amount of damage or other aspects.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

52. How are damages or assessed in these types of actions?

China

As mentioned in question 37, the damages are compensatory in antitrust actions in China, and should be based on the actual damage suffered by all the plaintiffs. However, as there has not been any collective or representative antitrust action sin China, the actual practice remains to be seen.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

53. Describe the process for settling these claims, including how damages or settlement amounts are apportioned and distributed.

China

A settlement always require the consent of all plaintiffs in a collective action, and also the represented plaintiffs in a representative action. The consent entails the method of allocating or distributing damages or settlement amounts. However, as there has not been any collective or representative antitrust actions in China, the actual practice remains to be seen.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

54. Does your country recognise any form of collective settlement in the absence of such claims being made? If so, how are such settlements given force and can such arrangements cover parties from outside the jurisdiction?

China

A collective settlement without any actual claims is not prohibited by the law in China. Generally, such settlements will be given the same binding force as a contract between the parties. Though disputable, there are cases in which the parties’ disposition of the right to sue under a contract is recognised by the court. Therefore, such settlements or arrangements, or the participation by parties from outside the jurisdiction, will be recognised by the court provided there is a valid contract.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

55. Can a competition authority impose mandatory redress schemes or allow voluntary redress schemes?

China

Such schemes are not available in China.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

Arbitration and ADR

56. Are private antitrust disputes arbitrable under the laws of your country?

China

In theory, private antitrust disputes are arbitrable under existing law and regulations. Articles 2 and 3 of the Arbitration Law of the People’s Republic of China has stipulated the scope of arbitration in China. Article 2 provides that contractual disputes and other disputes over rights and interests in property between citizens, legal persons and other organisations that are equal subjects are arbitrable. According to the current judicial practice, other disputes include tortious disputes. Article 3 excludes interpersonal relationship disputes and administrative disputes. The latter bars administrative antitrust litigation but not private litigation.

However, in Nanjing Songxu Technology Co., Ltd. v. Samsung (China) Investment Co., Ltd. (2016), Jiangsu Higher People’s Court ruled that antitrust disputes are not arbitrable since, currently, relevant laws and judicial interpretations only stipulate civil litigation as the solution for antitrust disputes; the public policy nature of antitrust matters is a key factor when considering its arbitrability, and no laws and regulations have explicitly provided for arbitration as a dispute resolution method; and the dispute in the instant case involved the interests of the public, third parties and consumers, and breaks the contractual relativity of the arbitration clause.

Nevertheless, as mentioned in question 5, precedents are not binding on later proceedings in China and therefore whether private antitrust disputes are arbitrable remains to be seen.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

57. Will courts generally enforce an agreement to arbitrate an antitrust dispute? What are the exceptions?

China

Generally, courts will give force to an arbitration agreement so long as the subject matter is arbitrable and the agreement is voluntary. However, as said in question 56, it is unclear yet whether an antitrust dispute is arbitrable in China.

Courts will generally enforce an arbitration award except in the following instances listed in Article 237 of the CPL:

  • the parties did not have an arbitration clause in the contract and have not subsequently reached a written agreement on arbitration;
  • the matter of the award is not arbitrable in its nature;
  • the composition of the arbitral tribunal or the arbitration procedures violate relevant legal procedures;
  • the evidence on which the award is based is forged;
  • a party has concealed from the tribunal evidence sufficient to influence the fair ruling; and
  • the arbitrator has corruption, bribery, malpractice, and defamatory behaviour in the case.

Moreover, if the people’s court decides that the enforcement would violate public interest, then it would not enforce the award

Answer contributed by Jet (Zhisong) Deng and Ken Dai

58. Will courts compel or recommend mediation or other forms of alternative dispute resolution before proceeding with a trial? What role do courts have in ADR procedures?

China

Mediation is a voluntary dispute resolution procedure. The parties can undertake mediation held by the people’s court or independently, but the courts will not compel mediation.

If the parties choose mediation conducted by the people’s court, a judge or the whole panel will host the mediation. Once the parties have reached an agreement, the people’s court shall draft a conciliation statement to include the relevant facts, the claims of the parties and the result of the mediation.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

Advocacy

59. Describe any notable attempts by policymakers to increase knowledge of private competition law and to facilitate the pursuit of private antitrust claims?

China

The AML Judicial Interpretation has established the fundamental legal framework of private antitrust litigation; it is a great supplement to the original simple wording of the AML. It confirms that public enforcement is not a prerequisite for initiating private litigation and that the findings of public enforcers are not binding but of evidential value. It specifies the rights of both direct and indirect customers to sue and provides them remedies.

Over the 11 years since the AML came into force, there has been a significant increase in the number of private antitrust litigation cases; the average yearly rate of increase is 35.6 per cent. By the end of 2018, over 700 cases have been filed and around 90 per cent are closed. The majority of such cases concern abuse of dominant position. It is through these cases that the people’s courts are able to prevent relevant monopolistic conduct, and establish and clarify competition rules and practice standards in related fields.

Last year on the 10th anniversary of the AML, the Supreme People’s Court issued 10 representative antitrust cases. Like the guiding cases provided by the Court, such cases provide some guidance for the processing of private antitrust litigation and raise public awareness of the AML.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

Other

60. Give details of any notable features of your country’s private antitrust enforcement regime not covered above.

China

Despite the rising number of private litigation cases, the success rate of antitrust litigation is relatively low. Only a small number of plaintiffs have won their case. The reason for this is the onerous burden of proof on the plaintiff. The senior judge, Zhu Li, mentioned that this would be one of the key issues to solve in the future.

Answer contributed by Jet (Zhisong) Deng and Ken Dai

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