Addressing legitimacy concerns in antitrust private litigation involving China's state-owned enterprises

Cahill, Dermot and Wang, Jing (2022) Addressing legitimacy concerns in antitrust private litigation involving China's state-owned enterprises. World Competition: Law and Economic Review, 45 (1). pp. 75-122. ISSN 1011-4548

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Abstract

China's Anti-Monopoly Act (AML) incorporated key antitrust provisions inspired by EU antitrust concepts into China's law in 2007. By analysing leading post-2007 antitrust cases heard before China's courts taken by private parties challenging State-Owned Enterprises (SOEs) anti-competitive activities, the authors argue in this significant and original contribution that, despite the AML's enactment, China's Judiciary has not accepted antitrust Legitimacy. Leading antitrust cases challenging SOEs anti-competitive activities, taken by either consumers or enterprises are analysed, highlighting the contrast with how EU antitrust jurisprudence deals with similar matters. The analysis illustrates how China's courts have applied key antitrust concepts (such as abuse of dominant position, prohibition of market-sharing; price-fixing; etc.) in a questionable manner. Given that the understanding of such concepts are accepted in over 125 jurisdictions, this raises major questions about the Legitimacy and Effectiveness of antitrust principles in the legal system of the world's most dynamic economy. That there is an antitrust Legitimacy and Effectiveness problem to be addressed has been recently partially recognized by the State in China, with the putting forward of reform proposals by its antitrust regulator (the State Administration of Markets Regulator (SAMR)) in 2020 in an effort to get major State agencies to recognize the primacy of antitrust. However, these reform proposals omitted reference to the Judiciary's role in antitrust enforcement against SOEs, even though they play a large role in the economy. The article demonstrates how the reform proposals, which appeared in October 2021 in the AML Amendment Bill 2021, will not solve the private antitrust enforcement Legitimacy problems identified by the authors in cases involving SOEs. Several suggestions to overcome judicial deference to SOEs'overly robust anti-competitive practices are proposed by the authors, including soft measures that in the long run may be more effective than legislative change. The article also discusses the need for the AML to incorporate a single economic entity test and a collective dominance test in order to give the courts dealing with allegations of SOE anti-competitive behaviour a more comprehensive conceptual toolbox to assist the courts make findings of dominance. Without movement also on the judicial side, the authors conclude that the Legitimacy of antitrust principles will continue to be in question inside China's legal framework, and consequently the Effectiveness of private antitrust remedies will continue to be weak in one of the world's largest economies.

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