Follow-on antitrust lawsuits are claims for civil damages for suffering losses from monopolistic conduct filed after antitrust administrative investigations and penalty procedures.
As pointed out by the Supreme People’s Court (SPC) in its Q&A on civil trial practice, the plaintiff in antitrust civil lawsuits may find it challenging, or lack the necessary expertise, to obtain evidence. Where alleged monopolistic practice has been investigated and confirmed by an antitrust agency, it will greatly facilitate plaintiffs’ efforts to protect their rightful interests and secure compensation if they are allowed to initiate lawsuits after the administrative decision takes legal effect.
Such follow-on action is also a common form of antitrust civil lawsuits internationally.
Apart from the general provisions related to antitrust civil lawsuits under the Anti-Monopoly Law (AML), article 2 of the SPC’s Provisions on Several Issues concerning the Application of Law in the Trial of Civil Dispute Cases Arising from Monopolistic Conduct (the 2012 interpretations) provides that where the plaintiff directly files a civil lawsuit to a people’s court – or does so after an antitrust agency’s determination of monopolistic conduct takes legal effect – the court should accept the case, as long as all lawful conditions of case acceptance are met. This provides an explicit basis for the acceptance of follow-on action.
Conditions for accepting follow-on lawsuits were further relaxed under article 2 of the SPC’s Provisions on Several Issues Concerning the Application of Law in Hearing Civil Dispute Cases on Monopoly (Draft for Public Consultation) (the 2022 interpretations), with plaintiffs allowed to file after determination of monopoly instead of having to wait for it to take legal effect.
BURDEN OF PROOF
While there is no legal provision that specifically covers burden of proof in follow-up antitrust lawsuits, under the general rules of a civil lawsuit the plaintiff is still required to submit proof to validate its subsequent litigation request, even if the antitrust agency had affirmed the practice as monopolistic and imposed a penalty.
Neither the AML nor the 2012 interpretations provided for the evidential validity of an existing verdict, or penalty on monopolistic conduct.
But article 114 of the SPC’s interpretations on the application of Civil Procedure Law states that: “Matters recorded in instruments produced by state organs or other organisations with lawful social administration functions are presumed to be true unless there is sufficient evidence to the contrary. Where necessary, the court may request the producer of such instrument to illustrate its authenticity.”
The article subsequently became the main legal basis for courts to recognise the instruments made by administrative authorities in relation to monopolistic practice.
On that basis, article 11 of the 2022 interpretations further provided that where the antitrust agency determined conduct to be monopolistic, as long as no administrative lawsuit was filed in relation to the decision within the statute of limitation, with the decision affirmed by a valid court verdict, the plaintiff in a follow-on lawsuit does not need to resubmit proof to support determination of monopolistic conduct, unless there is sufficient evidence to the contrary. Evidently, this is a continuation of article 114 of the SPC’s interpretations.
However, this only eliminates necessity to prove the monopolistic nature and its illegality. According to the above-mentioned Q&A on civil trial practice, a lawsuit arising from damages for monopolistic practices is a tort claim, which means it is not enough to simply prove the conduct monopolistic, but also that it caused actual losses (including the amount and calculation basis), as well as a causal link between such losses and the conduct.
Determination, handling and penalty on monopolistic practices tend to focus on the illegality and liability for administrative penalties according to the law. Authorities rarely, if ever, are concerned with the causal relationship between the conduct and a certain subject’s sustained losses, or how such losses are calculated.
Consequently, the burden of proof for these highly specialised issues remains with the plaintiff, making it difficult to secure a victory.
For example, in Tian Junwei v Carrefour and Abbott, the decision of a penalty issued by the National Development and Reform Commission in August 2013 found that Abbott, in violation of article 14.1 of the AML, entered into and implemented a monopolistic agreement with a counterparty that fixed the resale price of goods to a third party. Accordingly, Abbott was penalised for excluding and restricting market competition, as well as harming the interests of consumers and the public.
But when Tian Junwei, a consumer, filed a follow-on lawsuit to the Beijing Intellectual Property Court requesting Abbott and Carrefour Shuangjing to assume liability for damages caused by their monopolistic practice, the court of first instance held that Abbott’s action was monopolistic according to the interpretations to the Civil Procedure Law, but nevertheless dismissed the claim as it failed to substantiate a causal link between losses and the monopoly.
In a subsequent appeal, the court of second instance further held that the decision of penalty did not clarify that the defendants were in a vertical monopoly agreement, and therefore upheld the first-instance judgment on the grounds that the claim did not meet its burden of proof regarding the monopolistic conduct.
As far as the plaintiff was concerned, the second-instance verdict actually took a step back in affirming its burden of proof.
More recently, the SPC, in a 2020 verdict on the alleged monopolistic agreement of Straumann (Beijing) Medical Device Trading, supported the consumer’s follow-on claims. The case was a follow-up to the administrative penalty on the monopolistic practice of resale price maintenance of SAIC-GM, imposed by the Shanghai Bureau of Price in 2016.
According to the WeChat official account “Monopoly Watcher”, the SPC’s conclusion was largely consistent with the 2022 interpretations, namely that since the antitrust agency had confirmed the monopolistic nature of the practice, the plaintiff did not need to provide proof for the same issue during the follow-on civil lawsuit, unless there was sufficient evidence to the contrary.
In addition, the SPC found that the parties and implementers to the monopolistic agreement also infringed on the plaintiff’s interests, determining the amount of compensation as the difference between the lowest resale non-competitive price limited between the parties and the competitive price.
Ryan Fang is a partner and Simon Shi is a counsel at Jingtian & Gongcheng
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