● Merger Control Review

○ Non-conditional Clearance: In July and August 2022[3], 64 and 55 cases were respectively cleared without conditions by the SAMR, involving industrial sectors of food, automobile, logistics, hotels, energy, technology, chemical, packaging, real estate, construction, supermarket and retail, electricity, materials, pharmaceutical, private equity investment fund management, etc.

○ Gun-jumping: In July and August 2022, the SAMR imposed and announced administrative penalties on 28 cases of failure to notify, mainly involving Internet companies. No antitrust review was pre-notified regarding these 28 cases, however, none of them has the effect of eliminating or restricting competition, thus the SAMR imposed fines ranging from RMB300,000 to RMB500,000 on the enterprises involved.

● Cartel Agreements: In July and August 2022, the SAMR announced five administrative penalty decisions of cartel agreements, involving the illegal monopolistic behaviors of price fixing and market allocation in the industrial sectors of cement, concrete, credit evaluation service and motor vehicle inspection. 

○ On July 6, 2022, the SAMR published an administrative penalty imposed by Fujian Administration for Market Regulation (“Fujian AMR”) on seven concrete enterprises including Fujian Guangxia Concrete Co., Ltd., HangDe (Jianyang) Concrete Co., Ltd., etc.. These companies took advantage of the non-legally registered association in entering into and implementing the agreement on market share allocation and sales price of commercial concrete in the Jianyang District, which has constituted the illegal cartel agreement. When determining the specific amount of fine, Fujian AMR took into account of the nature, degree and duration of the illegal behaviors, and ordered the parties to cease the illegal behaviors and imposed a fine of 4% of their sales in the last year accordingly.

○ On July 9, 2022, the SAMR published an administrative penalty imposed by Shaanxi Administration for Market Regulation (“Shaanxi AMR”) on Shaanxi Cement Association (“Cement Association”), and five enterprises, including Shaanxi Ecological Cement Co., Ltd., Shaanxi Shengwei Building Material Group Co., Ltd, etc. In this case, the Cement Association organized the parties concerned to reach a consensus on the prices of cement products through industry conferences, gatherings, WeChat communication, etc. and reached the agreements on jointly raising the sales price of cement for multiple times, which has constituted illegal acts of price fixing and adjusting. Shaanxi AMR believed that the off-peak production, cost increase and transmission of external factors are factors to be considered by enterprises in adjusting prices, but are not justifiable reasons for the parties to jointly fix or increase the sales price of cement. Thus, Shaanxi AMR ordered the Cement Association to stop the illegal activities and imposed a fine of RMB500,000. Meanwhile, the five companies involved were imposed fines of 3% of their sales in the last year. 

○ Henan Administration for Market Regulation (“Henan AMR”) on the Henan Credit Construction Promotion Association (“Credit Promotion Association”) and 30 credit assessment enterprises, which is the first case where credit assessment enterprises were penalized for monopolistic activities. In this case, from 2015 to 2019, the Credit Promotion Association organized 30 member companies to reach a fixed price cartel agreement and fix the charging standards for credit assessment services provided by the member companies through the industry self-regulatory conventions. Henan AMR, therefore, ordered the Credit Promotion Association to cease the illegal acts and imposed a fine of RMB300,000. At the same time, the 30 companies concerned were imposed fines of 1% of their sales in the last year. 

○ On August 22, 2022, the SAMR published an administrative penalty imposed by Shanxi Administration for Market Regulation (“Shanxi AMR”) on the seven motor vehicle inspection companies in Shuozhou. In this case, Lantian and other six motor vehicle inspection companies reached and implemented a cartel agreement to fix the commodity prices and divide and allocate the sales market. Lantian was imposed a fine 5% of its annual sales in 2020, while the other six companies were fined 3% of their annual sales in 2020. The seven companies were fined more than RMB200,000 in total. 

● Vertical Monopoly Agreements: In July and August of 2022, the SAMR imposed administrative penalties in 2 cases regarding vertical monopoly agreements, involving resale price maintenance (“RPM”) in education and pharmaceutical industries. 

○ RPM by Kairui Education: On July 27, 2022, the Beijing AMR imposed an administrative penalty on Beijing Kairui Alliance Education Technology Co., Ltd. (“Kairui Education”), who owns the exclusive right to use and to sublicense the “Sesame Street English” brand in China. Kairui Education reached and implemented a monopoly agreement on fixing the course prices by entering into cooperation agreements with franchises, publishing rules and regulations, issuing regional pricing and discount schemes and providing unified customer service replies, etc. from 2014 to 2021. The Beijing AMR believed that such activities have constituted RPM, which is one of the vertical monopoly agreements prohibited by Article 14 of the Anti-monopoly Law, and on July 12, 2022, imposed a fine of RMB942,386.47 (approximately USD139,231) on Kairui Education, equivalent to 3% of its 2020 annual sales. 

○ RPM by Yishun Pharmaceutical: On July 22, 2022, the Hainan Administration for Market Regulation (“Hainan AMR”) imposed an administrative penalty on Hainan Yishun Pharmaceutical Co., Ltd. (“Yishun Pharmaceutical”), which is mainly engaged in sales of various products including the Lianzhi Inflammation Reducing Pill. Yishun Pharmaceutical has reached but has not implemented RPM monopoly agreements with some distributors regarding the retail of Lianzhi Inflammation Reducing Pill from 2019 to 2020. Hainan AMR believed that such activity has constituted RPM, which is one of the vertical monopoly agreements prohibited by Article 14 of the Anti-monopoly Law, and on June 24, 2022, imposed a fine of RMB200,000 (approximately USD29,563) on Yishun Pharmaceutical.

● Abuse of Market Dominance: In July and August of 2022, the SAMR imposed administrative penalties in 3 cases regarding abuse of market dominance, involving industrial sectors of water supply, gas supply as well as online car-hailing services. The monopolistic conducts are mainly restriction of transactions. 

○ On July 18, 2022, the SAMR published an administrative penalty imposed by Guizhou Administration for Market Regulation (“Guizhou AMR”) on Guizhou Shuitou Water Group Weining Co., Ltd. (“Guizhou Shuitou”) who has exclusive right to supply water in Weining. When providing water supply services for high-rise residential buildings, Guizhou Shuitou, for a series of reasons, explicitly or implicitly, by means of entering into the Water Supply Installation Contract with the new real estate water using enterprises, etc., required new real estate water using enterprises to conduct water supply construction transaction only with Guizhou Shuitou itself, otherwise it will not conduct the acceptance inspection of the construction or will suspend water supply. Guizhou AMR believed that such behavior has constituted abuse of market dominance by restricting transactions, and decided to confiscate Guizhou Shuitou’s illegal incomes and imposed a fine of 3% of its annual sales in the last year.

○ On July 19, 2022, the SAMR published an administrative penalty imposed by Anhui Administration for Market Regulation (“Anhui AMR”) on Wuhu Wanzhi Zhongran Urban Gas Development Co., Ltd. (“Zhongran Gas”), who required the gas pipelines of new residential buildings to be only installed by itself when providing urban pipeline gas supply services, and Zhongran Gas is the sole business operator in the relevant market. Anhui AMR believed that such behavior has constituted abuse of market dominance by restricting transactions, and decided to confiscate its illegal incomes and imposed a fine of 2% of its annual sales in the last year.

The above two cases indicate, to a certain extent, that the monopolistic activities of public utility enterprises are still the focus of the attention of local law enforcement authorities. So far, the monopolistic activities of public utility enterprises punished by regulatory authorities have mainly involved the water supply and gas supply industries. 

○ On August 12, 2022, the SAMR published an administrative penalty imposed by Guizhou AMR on Guizhou Zhoufucheng Logistics Co., Ltd. (“Zhoufucheng Logistics”), who, as an agent of Didi (providing services such as assisting the Didi drivers in the application of the Online Car-Hailing Transport Certificates), required Didi drivers in Xingyi to handle the vehicle commercial insurances only through Zhoufucheng Logistics itself. Zhoufucheng Logistics’ share in the relevant market is 53.17%. However, considering that Didi’s share in the online car-hailing service market in Xingyi is 91.87%, and Zhoufucheng Logistics is Didi’s exclusive agent for application of Online Car-Hailing Transport Certificate and payment of GPS fee, it can be deemed to have relatively strong market dominance abilities. Guizhou AMR believed that Zhoufucheng Logistics has market dominance and its behaviors constituted monopolistic activities of restricting transactions. Therefore, Guizhou AMR confiscated its illegal incomes and imposed a fine of 4% of its annual sales in the last year.