Why Johnson & Johnson’s Limitation on Resale Prices Constitute a Monopoly Agreement?

Johnson-Johnson

(By You Yunting) Yesterday, we posted on our blog an article titled, Why Did the Court Not Rule in Accordance With Article 14 of the Anti Monopoly Law in order to introduce the first legal issue in Johnson’s limitation on resale prices litigation. Today, we will continue our introduction regarding why the Shanghai court determined that Johnson’s limitation on resale prices constituted a monopoly agreement, as well as commentary on an extract from court’s decision.

In this post, the “appellant” and “plaintiff” both refer to the “Beijing Rui Bang Yong He Science and Trading Co., Ltd” while “appellee” and “defendant” refers to “Johnson & Johnson Medical Ltd”.

READ MORE

Why Did the Court Not Rule in Accordance With Article 14 of the Anti Monopoly Law? Part II

(By You Yunting) August 1, 2013 was the fifth anniversary of the enactment of China’s AntiMonopoly Law. On the same day, Shanghai Higher People’s Courts handed down the first decision that supported a plaintiff’s claim in an anti-monopoly civil ligation in China. The court determined that Johnson & Johnson Medical Co. Ltd action constituted as a vertical monopoly for restricting the minimum sales price, and the company was ordered to make civil compensation for the plaintiff’s loss.

READ MORE

Full Text of NDRC’s Public Announcement on Milk Powder Manufactures’ Vertical Monopoly of Price Control

未命名

(By You Yunting) According to the latest announcement on Chinese National Development and Reform Commission website, NDRC’s carried out anti-monopoly investigations into milk powder manufacturers and imposed fines. Based on this announcement, we found that there are different views between NDRC and Chinese courts on the understanding of Article 14 of the Anti Monopoly Law. With regard to the court’s understanding that milk powder formula in this case is effective competitive, the milk powder manufacturers shall not the determined as violating the the Anti Monopoly Law even if they conducted price control. Following is our translation for this public announcement.

READ MORE

Why Did the Court Not Rule in Accordance With Article 14 of the Anti Monopoly Law? Part I

(By You Yunting) August 1, 2013 was the fifth anniversary of the enactment of China’s AntiMonopoly Law. On the same day, Shanghai Higher People’s Courts handed down the first decision that supported a plaintiff’s claim in an anti-monopoly civil ligation in China. The court determined that Johnson & Johnson Medical Co. Ltd action constituted as a vertical monopoly for restricting the minimum sales price, and the company was ordered to make civil compensation for the plaintiff’s loss.

READ MORE

Plaintiff First Wins Chinese Anti Monopoly Civil Case

图片1

(By You Yunting) The fifth anniversary of enforcement of Chinese Anti Monopoly Law fell on August 1, 2008. Just on this day, Shanghai Higher People’s Courts first supported plaintiff’s claim in anti-monopoly civil case. The court determined that Johnson & Johnson Medical Co. Ltd constitutes a vertical monopoly for restricting on the minimum sales price and shall make civil compensation on plaintiff’s loss.   Past essays on this website have introduced the first instance judgment on this case made by Shanghai No.2 Intermediate Court; the summary of the judgment is as followed: Do All Minimum Price Limits Violate the Anti-trust Law in China?   The plaintiff, Beijing Rui Bang Yong He Science and Trading Co., Ltd. (the “plaintiff”) used to be the dealer of Johnson & Johnson Medical (Shanghai) Ltd. and Johnson & Johnson Medical (China) Ltd. (the “defendants”). Cooperation between the parties lasted for nearly fifteen years, and the distribution contract was renewed each year. On January 2, 2008, the defendants entered into a distribution contract with the plaintiff stipulating that the plaintiff could not sell the product below the price set by the defendants.   On July 1, 2008, the defendants sent a letter to the plaintiff, saying that they would deduct the RMB 20,000 yuan deposit paid by the plaintiff due to the plaintiff’s unlicensed markdown sale. In the meantime, the defendants ordered plaintiff to stop its lower priced sales and stated that the plaintiff’s product supply would be cancelled and that the plaintiff would no longer be the defendants’ dealer.   The plaintiff believed that the defendants’ limit on the minimum sales price has constituted the floor price setting as prohibited in Paragraph 2 of Article 14 in the Anti Monopoly Law, and thereby caused damages to the plaintiff. Basing on these, the plaintiff filed a lawsuit in the court, claiming the compensation.   After the hearing, the Shanghai No.1 Intermediate People’s Court held that the decision on the existence of monopoly agreements as regulated by Article 14 of the Anti Monopoly Law could not only consider whether the undertakings have concluded a monopoly agreement with their trading counterparts that would fix or limit sales prices, but also consider Paragraph 2 of Article 13. This means it is necessary to further check whether the agreement excludes or limits competition. Considering the evidence presented by the plaintiff could not prove the above issues, the court refused all the claims of the plaintiff.   Shanghai Higher Court held after the trial that Anti Monopoly Law shall be applied in the case, since the distribution contract between the plaintiff and the defendants containing clauses restricting the plaintiff to sell the product at a minimum price constitutes such effects of eliminating or restricting competition without clearly sufficient promotion for competition. For these reasons, the higher court determined the distribution contract constituted a monopoly agreement as regulated by Article 14 of the Anti Monopoly Law. Concerning the fact that the defendant took such actions that could be involved in the monopoly as provided in the Anti Monopoly Law, the court determined that those actions concluded a monopoly agreement prohibited by the Anti Monopoly Law and accordingly the defendant shall make compensation for loss to the plaintiff. On these grounds, the higher court reversed the original judgment and decided that the defendant shall make compensation in the amount of RMB 530, 000 yuan to the plaintiff in 10 days. In addition, the higher court refused the other claims made by the plaintiff.   Our lawyers have already obtained the second instance judgment. We would interpret it in the next week’s post.

READ MORE

Analysis on the Anti-monopoly Dispute Filed by Qihoo against Tencent, III

(By Luo Yanjie) In our previous two posts, we introduced the reader to the facts involved in the monopoly dispute between Qihoo and Tencent, as well as the Court’s decision. Today, we continue that discussion of the case and would like to share our opinions on it.

Lawyer’s comments and analysis

It is not difficult to find from the above judgement that Qihoo lost the lawsuit mainly because the court in the first instance denied its allegation that Tencent held a dominant position in the market; ithe court’s decision was primarily based on a broad definition of “relevant market” in regard to Tencent’s QQ instant messaging software. The following is our analysis on the issue:

READ MORE

Analysis on the Anti-monopoly Dispute Filed by Qihoo against Tencent, II

Today we will continue our introduction of the opinions of the Guangdong High People’s Court, the first instance court in the anti-monopoly dispute, concerning the facts in the case as well as its judgment.

II. About the dominant position of the defendant in the relevant market

As held by the court in the first instance, the plaintiff had a much narrower definition of the relevant product market and regional market, and its calculation for the market share was thus not accurate.Especially taking into account that the product scope shown was the plaintiff’s most important evidence; more importantly, that the report from the Ai Rui research institution presented data contrasting with the scope determined by the court.

READ MORE

Analysis of the the Anti-monopoly Case Filed by 360 Against Tencent, I

(By Luo Yanjie) Starting today, we will have three posts introducing the decision in China’s most closely followed anti-monopoly case. Today’s post will first introduce the facts of the case. Qihoo 360 Technology Co. Ltd. (NYSE: QIHU) (“Qihoo”) is a company whose primary business is security software. In October of 2010, Qihoo released software named “360 Privacy Protector,” which was claimed to prevent QQ, the instant messenger of Tencent Holdings Limited (SEHK: 700) (“Tencent”), from uploading the user’s personal information. Tencent issued a notice to its users, demanding that users who installed QQ not install any of Qihoo’s software. At the same time it took technical steps to check the computers for any Qihoo’s software. If any Qihoo software was found, the user was not allowed to sign in to QQ. This led to a large dispute on the Internet in China. After the Ministry of Industry and Information Technology (the “MIIT”) intervened, Qihoo recalled its 360 Privacy Protector, and Tencent revoked its regulation prohibiting QQ users from using Qihoo.

READ MORE

The Shanghai Branch of CIETAC Changed Its Name

Today, we noticed an announcement published on the website of the Shanghai Branch of the China International Economic and Trade Arbitration Commission stating that it has changed its name to the Shanghai International Economic and Trade Arbitration Commission (the “Shanghai Commission”). At the same time, it will begin to use the name of Shanghai International Arbitration Center. Additionally, starting on May 1, 2013, the Shanghai Commission will begin using new Arbitration Rules and a new arbitrator name list.

READ MORE

Dissatisfied with the First Instance Judgment, Qihoo Has Appealed in Its Anti-Monopoly Lawsuit Against Tencent

Our website has analyzed the case filed by Qihoo (NYSE: QIHU) against Tencent (SEHK: 700) stating that Tencent’s abuse of market dominance constituted a monopoly. The first instance of the case was decided by the Guangdong High People’s Court, which denied all of Qihoo’s claims. As recently disclosed by Qihoo, the company has appealed to the Supreme People’s Court, demanding either revocation of the first instance judgment and remand for the retrial, or amendment of the first instance legal judgment based on the facts such that all of Qihoo’s claims are supported.

READ MORE

Analysis on the Anti-monopoly Dispute Filed by Qihoo against Tencent, III

(By Luo Yanjie) In our previous two posts, we introduced the reader to the facts involved in the monopoly dispute between Qihoo and Tencent, as well as the Court’s decision. Today, we continue that discussion of the case and would like to share our opinions on it.

Lawyer’s comments and analysis

It is not difficult to find from the above judgment that Qihoo lost the lawsuit mainly because the court in the first instance denied its allegation that Tencent held a dominant position in the market; in addition, it’s evidence that the court’s decision was primarily based on a broad definition of “relevant market” in regard to Tencent’s QQ instant messaging software. The following is our analysis on the issue:

READ MORE

Analysis on the Anti-monopoly Dispute Filed by Qihoo against Tencent, II

(By Luo Yanjie) Today we will continue our introduction of the opinions of the Guangdong High People’s Court, the first instance court in the anti-monopoly dispute, concerning the facts in the case as well as its judgment.

II. About the dominant position of the defendant in the relevant market

As held by the court in the first instance, the plaintiff had a much narrower definition of the relevant product market and regional market, and the plaintiff calculated the market share based on the relevant product and regional market as it advocated, and that could not truly reflect the share and position of the defendant in the relevant market objectively. Especially taking into account that the product scope shown was the plaintiff’s most important evidence; more importantly, that the report from the Ai Rui research institution presented data contrasting with the scope determined by the court.

READ MORE

Analysis on the Anti-monopoly Dispute Filed by Qihoo against Tencent, I

(By Luo Yanjie) Starting today, we will have three posts introducing the decision in China’s most closely followed anti-monopoly case. Today’s post will first introduce the facts of the case. Qihoo 360 Technology Co. Ltd. (NYSE: QIHU) (“Qihoo”) is a company whose primary business is security software. In October of 2010, Qihoo released software named “360 Privacy Protector,” which was claimed to prevent QQ, the instant messenger of Tencent Holdings Limited (SEHK: 700) (“Tencent”), from uploading the user’s personal information. Tencent was very dissatisfied with this claim, and believed that Qihoo actually intended to steal QQ users’ information and then replace QQ with its own product. For this reason, Tencent issued a notice to its users, demanding that users who installed QQ not install any of Qihoo’s software. At the same time it took technical steps to check the computers of its users to see whether they had installed Qihoo’s software. If any Qihoo software was found, the user was not allowed to sign in to QQ. This led to a large dispute on the internet in China. After the Ministry of Industry and Information Technology (the “MIIT”) intervened, Qihoo recalled its 360 Privacy Protector, and Tencent revoked its regulation prohibiting QQ users from using Qihoo.

READ MORE

How Does the Federal Trade Commission Decide Whether Intellectual Property Licenses Violate Anti-trust Laws?

Day Five of the US Visit II

In late March, the author had the opportunity to make a journey to the United States at the invitation of the U.S. government in order to better understand how the US intellectual system operates. On the fifth day of the visit, the author went to the Federal Trade Commission (the “FTC”), and the following is a brief record of his visit there.

The FTC is the administration in charge of investigating and taking action against unfair competition and anti trust in the US. During the visit, FTC officials showed us a map showing that as of 1900, only the US and Canada had enacted competition laws, including unfair competition law and the anti trust law. Later by 1960, Sweden, France, and Japan passed legislation on competition. By 1980, many countries in Europe and South America passed competition laws, as well as Australia, India, Thailand, and South Africa. By 2012, almost all states of the world had laws in that field, except for a few African countries.

READ MORE

Full Text of the Anti-trust Punishment Ordered by China NDRC against MaoTai and WuLiangYe Vertical Pricing Monopoly

360截图-94650845_副本

The Price Bureaus under the Provincial Development and Reform Commissions in Sichuan Province and Guizhou Province published their orders for punishment against the vertical pricing monopoly by MaoTai and WuLiangYe on their official websites. By the orders, the two distilleries were fined totaled RMB 449 million yuan (approximately $ 72, 064, 500 dollar). The following is our translation of the full text of the administrative punishments already ordered.

The punishment ordered by Sichuan Provincial Development and Reform Commission:

READ MORE