China’s courts and administrative authorities continue to wrestle with the complexities involved in interpreting the Anti-monopoly Law of the People’s Republic of China(“AML”). Several high profile matters involving alleged monopolistic agreements were in the news recently, including the levy of administrative fines against premium liquor producers Wuliangye and Maotai for improperly imposing fixed or minimum resale prices, known as a Resale Price Maintenance or “RPM” arrangements, and the dismissal of a lawsuit between Chinese internet giants Qihoo 360 and Tencent alleging that Tencent had engaged in anti-competitive bundling and exclusionary practices.The AML prohibits RPM arrangements, except for situations where a market operator can establish that the RPM had a pro-competitive purpose and a limited adverse competitive impact on the market and on consumers, but it does not provide a test for determining when a RPM arrangement becomes anti-competitive. A conflict between administrative and judicial officials on how to evaluate the legitimacy of a RPM arrangement makes it difficult for producers to develop a lawful marketing strategy.The decision in the Qihoo 360 v. Tencent case relied heavily on the definition of the relevant market, and the court employed a hypothetical monopolist test called SSNIP for the first time. Significantly, the court also permitted both sides to provide expert testimony.

(Source: Zhong Lun Law Firm)