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Business Articles Awards > Asian Antitrust

Managing Distribution and Antitrust Compliance Issues in China: Post Medtronic & GM

Ken Dai, Jet Deng, CPI Asia Column, February 27, 2017

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According to article 14 of the AML, NDRC and its delegated local authorities investigated several major cases concerning RPM in 2016, including Medtronic Case and GM case, which indicates that enterprises in China face relatively high antitrust compliance risk in distribution practices. Ever since the AML came into effect, RPM has drawn attention from the perspectives of public and private antitrust enforcement. There are 13 cases investigated and fined by NDRC and its delegated local authorities, covering different sectors such as healthcare, autos and premium liquor. Regarding private enforcement, Johnson & Johnson case and Gree case imply that courts in China tend to adopt the rule of reason to determine the legality of RPM. In order to embody the article 14 of the AML, SAIC and NDRC is drafting a series of provisions and guidelines to provide a clearer standards for antitrust enforcement and compliance. Although no cases involving non-pricing vertical restraints has been released so far, there are signs that enforcement authorities have realized the potential adverse effect of such agreements on competition. They may take steps to regulate non-pricing vertical restraints in the near future. In regard of legislations stipulating vertical restraints, apart from article 14 and 15 of the AML, a number of guidelines will probably come into effect in 2017. In brief, antitrust risks enterprises face in China post Medtronic & GM may be increased, which reminds enterprises better to strengthen management level of antitrust compliance and ability to cope with investigations and lawsuits.

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