Govt regulators, not judges, lead antitrust cases

Government agencies, instead of judges, will continue to play the leading role in investigating anti-monopoly practices in China, legal professionals said.

Wu Peng, an antitrust lawyer and partner of Beijing-based Zhong Lun Law Firm, said domestic companies are more willing to seek help from government regulators when they believe they have encountered unfair market competition.

In addition to companies' long-standing mindset of resorting to the government in settling competition disputes, the government has more resources and law enforcement ability to fix antitrust issues than business owners, Wu said.

Mu Ying, a judge at Beijing No 1 Intermediate Court who deals with antitrust lawsuits, said plaintiffs usually have a slim chance to win cases due to the lack of ability to collect evidence.

"Even if they win the lawsuit, the fines can hardly compensate their losses," she said.

Mu said the difficulty in winning a lawsuit, as well as the lengthy legal procedure, has compelled many companies to resort to administrative agencies for help.

According to the Supreme People's Court, judges heard more than 61 antitrust lawsuits from 2008 to 2013, a number rising faster in recent years as more companies have become aware of using antitrust rules to protect their rights.

The antitrust regulators - the National Development and Reform Commission, the Ministry of Commerce and the State Administration for Industry and Commerce - did not release the number of cases they have handled over the same period.

The NDRC said last week that 12 Japanese auto companies have been investigated for suspected price manipulation of automobile parts. NDRC bureaus in Shanghai and Hubei province are also completing probes into US carmaker Chrysler and German manufacturer Audi.

In the latest move, the NDRC's Tianjin bureau said on Sunday that it is investigating price inflation by two major real estate agents, who raised their commission fee from 2 percent of a house's total value to 3 percent.

"Because of different calculations of illegal gains, penalties issued by regulators are usually higher than those of the courts," Mu said. "What the plaintiffs expect is not simply a ruling in favor of them, but a timely penalty that can remedy their losses."

In a high-profile case last year being hailed as the first court ruling in favor of a plaintiff in an antitrust case in China, Shanghai High People's Court ordered Johnson &Johnson Medical China and Johnson &Johnson Medical Shanghai to pay 530,000 yuan ($86,400) in compensation to a former dealer for setting a price floor.

In a recent case released by the NDRC, Johnson &Johnson, Bausch &Lomb and several contact lens and eyeglass manufacturers were fined a total of 19.6 million yuan ($3.18 million) for vertical price fixing.

"Government regulators can drop into the office of an alleged market power abuser to seize the evidence. It is certainly more resourceful in evidence collection than the plaintiffs themselves," Mu said.

She said that even in Beijing, where there are many multinational headquarters, only several judges deal with antitrust cases.

But two major government regulators, the NDRC and the State Administration for Industry and Commerce, have added plenty of new hands in the past two years to beef up enforcement.

Ye Guangliang, a professor of economics and finance at Renmin University of China, said judges are in a better position to deal with antitrust disputes in the long run.

No matter who is in charge, the nation's antitrust agencies and judges face similar challenges in the economic field, as the calculation of illegal gains and the judgment of a product's market share are increasingly difficult.