Study On Legal Practices In Vertical Price Monopoly Agreement

Vertical monopoly agreement that typically reached between business operatorand its downstream distributors is prohibited under PRC Anti-Monopoly Law. Thispaper is to discuss the recommended approach for each party involved in themonopolistic conduct (i.e. business operator, distributor and consumer) to protect itslegitimate rights and mitigate its risks under Anti-Monopoly Law by analyzing thelaw enforcement in the vertical price monopoly agreement. The paper is composedof four main chapters.The first chapter is to discuss the key issues in law enforcement on verticalprice monopoly agreement. Based on the introduction, analysis and comparison ofthe two key cases (one is Rainbow v Johnson&Johnson Medical and the other isanti-monopoly investigation on infant formula companies), this chapter identifies thedifferences in civil proceeding and administrative enforcement procedure anddiscusses the implications on the parties involved in monopolistic conductrespectively.The second chapter is to discuss the principles taken by PRC anti-monopolyenforcement agency and People’s court, and the legal liabilities underAnti-Monopoly Law. First, this chapter analyzes the legal provisions of vertical pricemonopoly agreement under Anti-Monopoly Law. Second, by means of comparingthe pros and cons in the principles of “rule of reason” and “per se illegal”, it suggeststhat PRC anti-monopoly enforcement agency and People’s court should adopt “per se illegal” as the principle when enforcing the law based on the understanding ofputting efficiency as the priority while taking justice into consideration. It furtherdiscusses the practical implications caused by. Third, combining the analysis of thetwo cases, it discusses the value of applying leniency mechanism in the practice.The third chapter is to discuss how to build the connection betweenadministrative enforcement procedure and civil proceeding. First, it discusses thegaps between two legal procedures identified in two cases and raises the necessity inhaving private enforcement mechanism in PRC anti-monopoly law enforcementsystem. Second, to address the gaps between the two legal procedures, it analyzes thestatus of private enforcement of the United States and Japan. Third, this chapterforwards the suggestions to fill in the gaps between the two legal procedures anddiscusses the practical implications in depth.The forth chapter is to discuss the approach in improving the anti-monopoly lawcompliance system of business operator. To fulfill the legislation objectives ofAnti-Monopoly Law, it is important to improve the legal remediation mechanism tobetter protect the rights of downstream parties. What is more important thanprotecting the rights after violation is to prevent the violation from happening. Thepurpose of this chapter is to guide the business operator to better comply with theAnti-Monopoly Law when achieving its business goals, and to build its complianceculture.