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Seeing the anti-monopoly law enforcement "three in one" from the glacial acetic acid case

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On December 5, 2018, the State Administration of Market Supervision announced a monopoly agreement ("glacial acetic acid case") for illegal enterprises to smash the price of glacial acetic acid raw materials by more than three times. On December 24, the full text of the three penalty decisions in the case was published on the official website of the bureau.

Penalty decision download link: samr.saic.gov.cn/gg/201


As the first price monopoly agreement accepted and publicly investigated by the Anti-Monopoly Bureau of the State Administration of Markets and the Anti-Monopoly Bureau of the Ministry of Commerce, the State Administration of Industry and Commerce and the Ministry of Commerce, the biggest highlight of the glacial acetic acid case was the confiscation of the law. Income. Among the three enterprises involved, the illegal income of Taishan Xinning was confiscated 1,369,900 yuan, and the fine was 2,763,400 yuan; the illegal income of Sichuan Jinshan was 2,359,100 yuan, and the fine was 1,060,500 yuan; the illegal income of Chengdu Huasheng was 2,682,200 yuan, and the fine was 1,247,700 yuan. Two of the companies were fined more than the fines for illegal gains.


Whether or not the illegal income has been confiscated has always been one of the important differences between the industrial and commercial system and the NDRC system in anti-monopoly law enforcement.


As of the beginning of September 2018, the industrial and commercial system had published 62 cases of violations of the Anti-Monopoly Law. Among them, 5 cases of non-price monopoly agreements and 9 cases of non-price abuse of dominance have confiscated illegal income, accounting for the aforementioned cases. The total number is 22.6%.


In the past, the NDRC system investigated and dealt with the price monopoly agreement. Only the compound Li Xueping case and the insurance powder case mentioned the confiscation of illegal income, and the rest did not confiscate the illegal income. Even on November 16, 2018, when the anti-monopoly law enforcement agencies of the provinces had not completed the integration, the State Administration of Market Supervision announced the punishment imposed by the Tianjin Development and Reform Commission on the price monopoly agreement of 17 enterprises in Tianjin port shore yard for 8 years . The decision still does not include the confiscation of illegal income.


After the anti-monopoly law enforcement officers of the former National Development and Reform Commission were integrated into the Anti-monopoly Bureau of the State Administration of Market Supervision, the Glacial Acetic Acid case was able to confiscate the illegal income, and it also marked that the future confiscation of illegal income would be expected to become the practice of anti-monopoly law enforcement in all provinces of the country.


Ten years after the entry into force of the Anti-Monopoly Law, by strictly complying with the existing provisions of Article 46 of the Law, the confiscation of illegal gains can be implemented, which will undoubtedly have the effect of strengthening anti-monopoly law enforcement. As a result, illegal enterprises may "stolen chickens and not anti-corruption", stop illegal activities early, and also warn other pharmaceutical companies to pay attention to compliance operations.

Aspects to be improved after the integration of anti-monopoly law enforcement agencies

However, from the punishment decision of the glacial acetic acid case, it can be seen that after the integration of the anti-monopoly law enforcement agencies, there are still many areas where there is room for complementarity and mutual integration.

1. Operators should be defined uniformly

First, the glacial acetic acid case once again exposed the old problem of the lack of a unified definition of the basic concept of “operator” in anti-monopoly law enforcement.


The premise of market competition is that the participants in the market can maintain independent and independent decision-making power, so that multiple market entities can compete in the market through decentralized decision-making (see also "Basic Principles of Anti-Monopoly Law" for related discussion ). It can be said that in the past 40 years of reform and opening up, whether it is to encourage the development of the private economy or the reform of state-owned enterprises and collectively owned enterprises, the core is to protect the independent and independent management rights of operators, so that competition becomes an endogenous order for optimal allocation of market resources.


Therefore, when defining whether an enterprise is an operator in the sense of the Anti-Monopoly Law, it is necessary to first determine whether the enterprise has independent and independent operational decision-making power. If a company is controlled by a group of companies or natural persons, or is controlled by multiple civil entities, then it is the operator in the sense of anti-monopoly law that has single or joint control. This means that the anti-monopoly law does not interfere with the restriction of competition between subsidiaries of the same enterprise group; mergers and acquisitions between subsidiaries controlled by the same operator do not need to be declared under the Anti-Monopoly Law. For example, on September 26, 2014, the Anti-Monopoly Bureau of the Ministry of Commerce unconditionally approved the acquisition of Hang Seng Electronics by Zhejiang Rongxin, which was actually controlled by Ma Yun, and then resold the latter to the Ant Financial, which was also controlled by Ma Yun, and did not revert to the Ministry of Commerce. The monopoly bureau conducts centralized anti-monopoly declarations by operators.

(Related to the acquisition of Ma Hang Seng electronic case discussion see: zhuanlan.zhihu.com/p/25 )


Specific to the glacial acetic acid case, Guangdong Taishan Xinning Pharmaceutical Co., Ltd., which was involved in the case, was completely acquired by the listed company Guangdong Taicheng Pharmaceutical Co., Ltd. on August 7, 2015. The latter was renamed Teyi Pharmaceutical in November 2016. Therefore, the illegal operator of the case is not Guangdong Taishan Xinning Pharmaceutical Co., Ltd., but should be a special pharmaceutical.


According to the provisions of Article 46 of the Anti-Monopoly Law, and the management of Europe and the United States, the fines of 1% to 10% should be imposed on the global sales of the Special Pharmaceutical Group last year , in order to encourage the parent company to awe. The law strictly restricts subordinate subsidiaries and Sun companies from strictly abiding by the Anti-Monopoly Law. Otherwise, as stated in the announcement made by Special Pharmaceuticals on the day of receiving the penalty decision, the penalty will not have a significant impact on the company's production and operation, because the sales of the glacial acetic acid API of the subsidiary Xinning Pharmaceutical in 2017 is RMB 651.87 million, accounting for only 0.95% of the company's sales, the fines and confiscation of illegal income is only 0.6% of its group's revenue. Such penalties are obviously a big deal for the big companies, eucalyptus. However, in the past ten years, most of the monopolistic agreement cases investigated and dealt with by anti-monopoly law enforcers in China have almost all such cases in which the calculation of the fines is wrong due to the misclassification of illegal operators and the punishment is extremely mild.



2. Information disclosure should be more timely

Regardless of Chinese and foreign, information disclosure is relatively timely, and it is the necessary respect and protection of law enforcement officials to investors involved in listed companies.


In contrast, in addition to the fact that it has not disclosed whether the case of the abuse of market dominance of Alibaba in Beijing in November 2015 was filed, the SAIC has compared the four cases of the Tetra Pak case and the five-year unresolved case of Microsoft. Attention to information disclosure, especially after each surprise inspection, will be announced through the official website, so that domestic and foreign investors can reasonably assess investment risks.


On the contrary, in addition to the large-scale media cases involving high-quality media such as Qualcomm, the information disclosure of the NDRC system and the Ministry of Commerce system during the anti-monopoly investigation was not satisfactory, and it relied more on the conscious of the parties. This makes it easy to leave room for insider trading for the company's executives.


According to the punishment decision of the glacial acetic acid case, the Anti-Monopoly Bureau of the State Administration of Market Supervision received a report in July 2018, and then organized an investigation. As a listed company, the dialysate manufacturer Bao Laite publicly disclosed on October 17, 2018 that "the main raw materials of the company's hemodialysis products are expected to be reduced by 40%." ( company.cnstock.com/com )


It can be seen that the upstream glacial acetic acid case has been basically ascertained before October 17, 2018, and the enterprises involved have begun to rectify. However, it was not until December 7, 2018 that the State Administration of Market Supervision first disclosed the Guangdong Taishan Xinning Pharmaceutical Co., Ltd., a subsidiary of the listed company Teyi Pharmaceutical, for illegal disclosure.


Undoubtedly, after 10 years of the entry into force of the Anti-Monopoly Law, can it be like the countries with high transparency such as Europe, America, Singapore and Australia, accepting reports, formally filing cases, conducting surprise inspections, ascertaining facts, holding hearings and making preliminary decisions. The disclosure of information in all aspects is still a test for China's anti-monopoly law enforcement agencies.


3. The chain of evidence should be more detailed

Before the integration of the three anti-monopoly law enforcement agencies of the State Council, the anti-monopoly law enforcement of the industrial and commercial system has always been known for the strict and detailed evidence chain, and even each punishment decision has a clear list of evidence, explaining each piece of evidence. This is very helpful for the outside world to understand and supervise the law enforcement practice. After the parties file a reconsideration or lawsuit, the reconsideration agency and the judicial organs can find out the facts. However, in the penalty decision for the glacial acetic acid case, there is a lack of such a detailed list of evidence. Instead, a simple list of relevant types of evidence is used. This shows that the case is obviously still handled entirely by the anti-monopoly law enforcement officers of the former National Development and Reform Commission. The integration of law enforcement personnel has not yet been achieved, and the formalization of the previous punishment decisions of the industrial and commercial system has not yet been achieved. How to standardize the evidence-picking work and the production of documents in the national anti-monopoly law enforcement is also one of the questions before the general situation of national market supervision and management.



4. Law enforcement preparation must be substantially improved

Considering that the Anti-Monopoly Law has been in operation for more than 10 years, it is not ruled out that the enterprises involved in the glacial acetic acid case have already had the awareness of counter-investigation and even received relevant training, which made it difficult for law enforcement officials to obtain documentary evidence such as the original monopoly agreement and mail correspondence. The difficulty of obtaining evidence will also lead to a weaker chain of evidence, and it is necessary to rely on the transcript of the inquiry and the comparison of the operational data. This also puts more demands on the number of law enforcement personnel, because the investigation involving monopoly agreements often requires simultaneous on-site investigations by all enterprises involved in the monopoly agreement.


In the past, the NDRC system and the industrial and commercial system have made a team of 40 or 50 people by mobilizing anti-monopoly law enforcement personnel from various provinces. At the same time, they conducted on-site investigations on multiple enterprises or branches of a company in several cities across the country. In fact, this has already exposed that the anti-monopoly law enforcement personnel in our country are too low, and it is difficult to maintain the necessary efficiency of handling cases. It is difficult to cope with the nationwide anti-monopoly law enforcement work, and even let foreign counterparts worry about the degree of determination and sincerity of China's anti-monopoly law enforcement.


After the integration of the three anti-monopoly law enforcement agencies of the State Council, according to the report of the "New Century Weekly" reporter Wang Mengyao in early December, "Anti-monopoly three-in-one", the Anti-Monopoly Bureau of the State Administration of Market Supervision has only 52 staff members, which is the third largest in the State Council. The number of personnel in anti-monopoly law enforcement agencies has decreased significantly. According to Lu Wanli, deputy director of the Anti-Monopoly Bureau of the State Administration of Markets, at the 10th anniversary of the implementation of the China Anti-Monopoly Law of the China Competition Policy and Law Annual Conference on December 19, 2018, the actual number of the bureau is only 41. Compilation. That is, 11 of the 52 staff members in the bureau are over-edited. Therefore, according to a monopoly agreement case, the three companies involved in the case need 40 law enforcement personnel to calculate, at present, the preparation of the anti-monopoly bureau approved by the State Administration of Market Supervision is only enough to concentrate on one case.


On the contrary, Germany, which is close to China's Yunnan Province and close to the population of Henan, is responsible for the enforcement of the Anti-Restriction Competition Law. The Federal Cartel Office has 350 employees in Bonn, and each federal state has its own independent state cartel bureau. . Similarly, there are very few anti-monopoly law enforcement officers in the industrial and commercial development and reform commissions of various provinces in China. In some provinces , the National Development and Reform Commission system has only 2 law enforcement personnel responsible for the anti-monopoly law, even if the anti-monopoly case has the largest number of Inner Mongolia Autonomous Region Industrial and Commercial Bureaus. There are only four people in the establishment of monopoly law enforcement.


In the case of analogic glacial acetic acid, the provincial anti-monopoly bureaus need at least 50 anti-monopoly law enforcement preparations before they can independently investigate small-scale monopoly agreements within the province. If multiple cases are to be investigated at the same time, at least 100 anti-monopoly enforcements are required. In the past ten years, the actual situation of the anti-monopoly law enforcement in the provinces has been far from the difference, so that the anti-monopoly law enforcement agencies of the industrial and commercial and development and reform commissions of one-third of the provinces have not investigated any operators who violated the Anti-Monopoly Law for 10 years. Case (see the author's "Anti-Monopoly Ten Difficulty (below)", serialized on the news network on September 12, 2018).


It can be foreseen that due to the long-term bottleneck of anti-monopoly law enforcement in the past decade, there are still a large number of violations of the Anti-Monopoly Law, which distort the relationship between supply and demand, curb innovation power, endanger consumer welfare, and seriously hinder the domestic economy from driving to innovation and consumption. Transformation.



5. The defense hearing procedure must be guaranteed

In the past ten years, another highlight of the anti-monopoly law enforcement of the industrial and commercial system is that it generally guarantees the procedural rights of the parties involved in the defense and hearing, and in most of the punishment decisions, whether the parties have defended or heard, and enforced the law. The agency's response is explained. In this regard, the NDRC and the Ministry of Commerce's anti-monopoly law enforcement practices are inadequate, or at least not public disclosure. Similarly, this problem was also exposed in the glacial acetic acid case.


The three penalties for the glacial acetic acid case did not mention the defenses that the enterprises involved raised for the price increase, or whether they requested a hearing for the setting of fines, the calculation of illegal income, the corrective measures, and the pricing of the products involved after stopping the illegal activities. From the announcement of the downstream dialysate manufacturer Bao Laite about the 40% drop in the price of glacial acetic acid API, the average price of glacial acetic acid API has not dropped from 28 yuan to 33 yuan after the implementation of the monopoly agreement to 7.4 yuan to 9.5 in 2017. Between the yuan, but fall back to the average price of 16.8 yuan to 18 yuan. If the Anti-Monopoly Bureau believes that it is unreasonable for an illegal enterprise to raise the average price of glacial acetic acid raw materials by three times, then why is it reasonable to increase it by two times? There is no public hearing, no explanation of the corrective measures, and no disclosure of any expert opinions provided by real names of experts and scholars in related fields . It is difficult for the outside world to understand the subtlety and legitimacy, and it is even more difficult to fundamentally prevent law enforcement personnel. The possibility of being rented or misled.



6. From the light punishment scale needs to be limited

In addition to the aforementioned mistakes in the definition of the operator, resulting in a significant reduction in the base of the fines, which seriously affects the penalties, in the assessment of the lighter punishment, the previous anti-monopoly law enforcement has a lot of arbitrariness.


For example, in the case of glacial acetic acid, all three illegal enterprises were fined 4% of the sales of glacial acetic acid raw materials in the previous year, but not 10% according to the upper limit of Article 46 of the Anti-Monopoly Law. One of the reasons why law enforcement officials decide to punish lightly is that the parties have a short time to violate the law.


According to Bao Laite's announcement on the price of dialysate bulk drug falling 40%, the price of glacial acetic acid bulk drug is only from March 2018 to mid-October, less than 8 months before and after. However, comparing the past anti-monopoly law enforcement practices of the NDRC system is also a case in which the illegal acts continue to be shorter, and the scale of punishment is not the same. For example, in 2016, Jiangsu Price Bureau investigated the price manipulation of chlorinated phenol series products. Although the illegal behavior in this case lasted for 10 months, it was only punished according to 1% of the relevant annual sales of illegal enterprises. In addition, the NDRC system also investigated and prosecuted a number of cases for more than one year, but eventually imposed a penalty of 1%, such as the cases listed in the table below.



In fact, there have always been scholars who advocate that the operators who violate the Anti-Monopoly Law are rashly focused on education. For example, the deputy head of the expert advisory group of the Anti-monopoly Committee of the State Council, Professor Huang Yong of the University of International Business and Economics and the teacher Liu Yannan of the University of International Business and Economics, suggested in the "Study on the Calculation Standard of Administrative Fines for Monopolistic Illegal Activities" (in "Price Theory and Practice", August 2013). :

"The EU and the United States both emphasize the deterrent effect of punishment when setting fines (penalties) , that is, punishment is not only a sanction against illegal enterprises, but also to encourage other operators to operate according to law, and to prevent potential monopolistic violations . In the administrative law enforcement of the Law, it is undoubtedly correct to strengthen the penalties of the Anti-Monopoly Law by increasing penalties . However, we oppose the view that neglecting the specific development stage of our country and unilaterally emphasizing the deterrent effect of the Anti-Monopoly Law. It should be squarely regarded that in addition to the moderate deterrent effect of China's current administrative penalties for monopolistic violations, it also has the purpose of propagating the Anti-Monopoly Law and raising the competition consciousness of operators . Therefore, we advocate that administrative punishment should be Moderate is appropriate."


Corresponding to the above-mentioned claims, on June 7, 2014, the National Development and Reform Commission issued the “Regulations on Regulating the Administrative Punishment Power of Price” issued by the National Development and Reform Commission [2014] No. 1223, of which Article 7 (4)

"From a light punishment can play an educational role"

Can be punished lightly.


However, such a provision cannot find any legal basis in the Administrative Punishment Law, and it is a blatant distortion of the principle of combining punishment and education in the Administrative Punishment Law, and it does not specify:

Under what circumstances,

What kind of illegal enterprises should be punished to a certain extent,

Can play an educational role,

How to accept such an educational role.


Therefore, the provisions of Article 7(4) of the “Regulations on Regulating the Administrative Penalty of Price” objectively can only expand the discretion of law enforcement, and the lawyers and scholars employed by the local government where the illegal operators are located. To open up the door for them, the law enforcement personnel face enormous moral hazard.


Taking the case of SAIC General's restriction on the minimum resale price at the end of 2016 as an example, there were media reports that “SAIC General received a Christmas gift” and was sentenced to an anti-monopoly fine of 201 million yuan ( finance.sina.com. Cn/rol ):

"Afterwards, some foreign media said that this punishment will not be too much, and more is based on education . The punishment will be based on the punishment of the relevant local authorities in Shanghai. If the local punishment is imposed, the amount of punishment will be based on local operating income. Calculate, multiply by the factor, and overall the amount will not be too much."


In fact, SAIC GM has engaged in similar crimes across the country, such as in Beijing. Some media reports "[JMedia] car antitrust penalty at the end of the year is a US-owned joint venture car company"

finance.sina.cn/2016-12

The author learned from the Buick dealers in Beijing that the Buick Beijing area is very strict with the dealers. In order to avoid the dealers' mutual price hikes, the dealers are required to publish a uniform retail price or a new car manufacturer's guide price on the vertical website of the car; In respect, dealers are not allowed to cooperate with group buying websites, and group buying activities may not be organized. In order to be able to implement, the third-party survey company is required to pay regularly, place orders on the vertical website, or participate in group purchase activities, collect the violations of the dealers through recording and video recording, and impose penalties; do not allow dealers to sell across regions, require dealers to Cross-regional sales are reported, verified for rewards, and penalties are imposed on dealers who sell vehicles. It is understood that the Buick Beijing dealers three or four stores were visited by the relevant departments of Beijing in the first half of the year.


However, in the end, only "educational", the province's illegal behavior was chosen for punishment, resulting in impunity in other provinces, consumers can not claim rights compensation, although Shanghai did not have SAIC GM's user rights success.


Behind this, there are lawyers and scholars who benefit from it, but the outside world does not know it, but it is certain that SAIC GM has saved a lot of fines. More importantly, because there is no illegal income, the illegal acts are still greatly profitable. . (For related criticism, see the author's "Hello, 20171 anti-monopoly case ushers in the consumer claims climax?" on December 28, 2016, in the news network).


It is precisely in 2016 that the National Development and Reform Commission’s Price Supervision, Inspection and Anti-Monopoly Bureau researched and drafted the “Guidelines for Determining the Illegal Income of Monopolistic Conducts of Operators and Determining Fines” according to the work plan of the State Council’s Anti-monopoly Committee and publicly solicited opinions. The guide still keeps a close eye on the proportion of lighter penalties and the corresponding situation, leaving a lot of discretion for law enforcement. So far, the guide has not been launched, and feedback from all walks of life has not been made public. It can be foreseen that after the integration of the three anti-monopoly law enforcement agencies of the State Council, the unified administrative punishment scale will remain the top priority, and it is one of the keys to preventing law enforcement officials from engaging in malpractices and abuse of power.


Outlook

Compared with the anti-monopoly investigation of the Uber China case, which has been pending for more than two years, the glacial acetic acid case can be settled within half a year, and the illegal income is confiscated, which undoubtedly let all walks of life see it by the pharmaceutical industry and the majority of patients. The State Administration of Market Supervision has strictly applied the initial determination of the Anti-Monopoly Law. However, as mentioned earlier, the case also revealed some problems still existing in the case practice after the integration of the three anti-monopoly law enforcement agencies. In addition, the anti-monopoly law enforcement and the State Council Anti-monopoly Committee carried out relevant industries in the relevant industries, such as how to punish enterprises such as Jiangxi Jinhan and other monopoly agreements, the refinement of illegal income calculation, the illegal income and the unjust enrichment return, and the damage compensation. Issues such as market research and competition policy formulation are in urgent need of great attention from the State Administration of Market Supervision.


At the Central Economic Work Conference held in December 2018, an important highlight was the emphasis on "basic status of strengthening competition policy." This is the basic premise for China's economy to achieve innovation-driven, consumption-driven, related to the national transport, but also related to people's livelihood. On December 27, 2018, Zhang Mao, director of the State Administration of Market Supervision, put forward six requirements for various work in 2019, including "strengthening competition enforcement, focusing on maintaining a unified national market and expanding China's economic development." Space. It can be seen that the Anti-Monopoly Bureau of the State Administration of Markets and Administration needs to issue military orders to the party and the state as well as to the majority of market entities and consumers. In the coming year, the anti-monopoly law will be implemented strictly, whether it is the traditional industry or the Internet. Emerging industries, whether private enterprises, foreign capital, state-owned economy, whether it is the pharmaceutical industry related to people's livelihood, or the overcapacity industry related to supply-side reform.


However, it is difficult for a clever woman to be without rice. In addition to clearing the "anti-monopoly law" in the sense of operators, the global sales of enterprise groups as the base for the calculation of fines, strictly limit the punishment scale, adhere to the confiscation of illegal income, increase anti-monopoly law enforcement, and improve the transparency of anti-monopoly law enforcement In the end, it is necessary to increase the establishment of anti-monopoly law enforcement personnel and the corresponding administrative resources. If the establishment of the Anti-Monopoly Bureau of the State Administration of Markets is still less than 11.8% of the German Federal Cartel Office, the province's anti-monopoly law enforcement full-time preparation is still in single digits, then with the increase of anti-monopoly law enforcement, the awards report illegal The measures have been gradually implemented in various provinces, and there is a blowout in violation of the anti-monopoly law. It will certainly fail to implement the solemn promise of “enhancing competition law enforcement” and face repeated criticisms of Chinese anti-monopoly law enforcement agencies at home and abroad. Blame.


The EU and the United States can grasp their important strategic opportunities and achieve strong innovation drive and consumption drive, which is closely related to the protection of market competition environment through strict implementation of competition law. And behind this there are thousands of anti-monopoly law enforcement officers who persist and tirelessly pay. This year's Central Economic Work Conference has clearly pointed out that China's development is still in the long-term and important strategic opportunity period. To this end, the anti-monopoly law enforcement work after the integration of institutional reforms must also be able to grasp the important strategic opportunity period for China and complete the mission of escort under the conditions of strengthening the law enforcement team and strictly regulating the law enforcement standards.


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