A New Phase of AML Enforcement by SAIC - Liaoning AIC Publishes Guidelines on Evidence Handling for Antitrust Violations

Announced on the State Administration of Industry and Commerce (SAIC) website on 3 May 2013, the Guideline on the Handling of Evidence for Anti-monopoly Cases (Liaoning Guideline) issued by Liaoning Administration of Industry and Commerce (AIC) represents the next phase of Anti-Monopoly Law (AML) enforcement activity by the SAIC.

Under the AML, SAIC is charged with the responsibility of policing non-merger- and non-price-related monopolistic behaviour. The following implementation rules which outline a national enforcement framework for specific AML behavioural prohibitions within the authority of SAIC were finalised in, and have been in effect since, early 2011:

• Rules on the Prohibition of Monopoly Agreements;
• Rules on Prohibition of Abuse of Dominant Market Position; and
• Rules on Prohibition of Abuse of Administrative Powers to Eliminate or Restrict Competition.

Although the Liaoning Guideline comes out more than two years after the SAIC finalised the above implementation rules, it builds upon, and should be read in context with the above rules which formally delegate some aspects of AML-related enforcement to provincial-level AICs. The Liaoning Guideline requires information received by Liaoning AIC agencies about possible antitrust violations to be escalated for further investigation within seven business days. Where such evidence collected is considered to be relevant, Liaoning AIC will report the information to the SAIC, which may formally launch an investigation or authorise the provincial AIC to do so. Sources of evidence relating to anti-monopoly investigations may include information collected from individuals and corporations, and other regulatory bodies (including from other on-going and routine antitrust investigations).

Liaoning is the first provincial AIC to issue implementation rules for the enforcement of the AML. This could be indicative of a higher level of AML enforcement activities in Liaoning relative to other provinces, which created a need for the issuance of the Liaoning Guideline. Liaoning AIC has already referred a concrete price fixing case to the SAIC, in which the suppliers engaging in price fixing were ultimately fined RMB16.37 million, back in mid 2011.

Liaoning is also one of the larger provincial economies in China in terms of GDP and one of the largest sources of petroleum and natural gas in China. The province is rich in mineral resources as well as an important industrial base for machinery, electronics, automobiles, pharmaceuticals, textiles, metal refining, petroleum and chemicals. The types of industries which are based or have substantial operations in Liaoning may also explain the high level of AML investigation or enforcement activities in Liaoning.

It is therefore not so surprising that Liaoning has taken the lead in issuing provincial-level implementation rules for the AML and we would expect that other provinces with a similar level of AML enforcement activities will soon follow suit.

Please click here for the Liaoning Guideline in Chinese.