Trade Associations and Private Antitrust Litigation in China

Qian Ho

4/30/2014
(Original Publish Date: 4/16/2013)

Trade associations present a peculiar issue in China’s competition law, due to their unusual origin and development. To facilitate the still on-going government restructuring during the past three decades, most of China’s trade associations were created primarily to take over the redundant/retired officials and regulatory functions that reorganized administrative agencies had to divest. The inherent semi-government role of the trade associations in China often enables them to exert a greater influence on the market competition than their counterparts in mature market economies. Trade associations have figured largely in China’s competitive landscape. In the drafting process of the Anti-Monopoly Law (AML), cartels orchestrated by trade associations already posed a major concern regarding private monopolies. Since the AML entered into force in August 2008, trade associations have remained in the spotlight in enforcement activities. However, at the same time, not many private antitrust suits have been brought against trade associations. In fact, Article 50 of the AML generally states that a business operator “shall bear civil liabilities” if its monopolistic conduct causes losses to aggrieved parties. In the Provisions on Several Issues concerning the Application of Law in the Trial of Civil Dispute Cases Arising from Monopolistic Conduct published in May 2012, the Supreme People’s Court further lists “articles of association in violation of the AML” as a cause of civil action against trade associations. These provisions seem to have paved the way for private parties to bring a civil lawsuit against trade associations violating the AML. Yet they also leave much room for interpretation and point to general issues in civil law and procedure, the application of which in relation to the AML remains largely unexplored. In contrast to administrative sanctions on trade associations pursuant to Article 46(3) of the AML, the legal basis for enforcement activities, it is unclear in the law whether or to what extent in a civil lawsuit a trade association should be held liable for losses caused by monopolistic conduct by its members but organized by the association.