Legal Regulation On Vertical Price Monopoly Agreement

On February,2013, due to the implementation of minimum resale price behavior,Kweichow Moutai CO.,LTD.（hereinafter referred as“Kweichow Moutai”） andWuliangye Yibin Co.,Ltd（hereinafter referred as “Wuliangye Yibin”）are punished bythe National Development and Reform Commission(NDRC) with totally449millionantitrust fine, which regarded as“a sky high fine”in Chinese anti-monopoly history.The event, with the groundbreaking historical meaning, had a great impact on"anti-monopoly law", which have been implemented for5-years. Although the illegalbehavior of Kweichow Moutai and Wuliangye Yibin have been restrained, the legalissues involved are still worthy of our in-depth study.Based on the detailed description of this event, this paper makes an in-depthanalysis in law’s aspect, and points out some relevant countermeasures andsuggestions for resolving it well. This paper is composed of the following three parts:Part I: Introduces the punishment to Kweichow Moutai and Wuliangye Yibin.Since2012, Kweichow Moutai and Wuliangye Yibin not only set a "price-limitedorder" to their dealers，but also write out fine tickets and “critical announcement” todealers who violated the " price-limited order". This sort of “punishments”, such assuspend the implication of contract, deduce20%of the deposit, set a warn, whichrestrained by NDRC because of serious disruption of market order on February,2013.Part II: The identification of Kweichow Moutai and Wuliangye Yibin’s"price-limited" behavior. The author thinks, firstly, the direct reason of thepunishment to Kweichow Moutai and Wuliangye Yibin’s behavior is, they violatedthe fourteenth article of "anti-monopoly law". The behavior of limiting minimumresale price, which had been defined a behavior that violated the vertical pricemonopoly agreement, not only excluded and restricted the competition in the market,but also damaged the interests of consumers, affected the normal market’s order.Secondly, the vertical price agreement is the premise of vertical price monopolyagreement. In the progress of identifying vertical price agreements, the identificationscope, the industry accordance of vertical subjects, and the objectivity of affectingnormal market price fluctuation should be considered to the category of the "Agreement ". Thirdly，in order to identify the illegal standards of vertical pricemonopoly agreement, we should consider the following four factors, the intensity ofcompetition in the relevant market, the market positions of enterprises, thecompetitive effects of vertical price monopoly agreement caused, the impact on theconsumers’ rights.Part III: Suggestions. Based on the analysis of the second part, this part putforward some suggestions to resolve such event. At first, in the legislative level, weshould expand the scope of vertical price monopoly agreement and identify thestandards and the legal liability of vertical price monopoly agreement. Second, in theimplementation of law, starting with the setting of legal subjects and the justice ofproceedings, we should set up a powerful, unified implement organization, andconsolidate the justice of implement proceedings. Third，in the judicial level, weshould perfect judicial proceedings.