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Economics And Private Antitrust Litigation In China

 |  July 29, 2013

Dennis Lu, Guofu Tan, Jul 28, 2013

Since the introduction of China’s Anti-Monopoly Law in 2008, private litigation has been increasing in the areas of monopolistic agreements and abuses of dominance. In addition, China’s Supreme People’s Court recently issued its judicial interpretation concerning the application of the law in order to offer some guidance in resolving private disputes. The purpose of this paper is to explain how competition economics can help to provide evidence in these private litigations. We discuss how the Anti-Monopoly Law and the judicial interpretation seem to take a rule of reason approach, as well as what roles economic analyses and economists may play in related litigation. We describe the economic evidence being used and accepted in recent Chinese cases that have reached the Chinese courts of appeals and further provide our views on what other evidence could have been offered in these cases.

In 2008, China introduced its Anti-Monopoly Law (AML), possibly as a way to further competition in its economy. Even as public enforcement of the law develops, private litigation has become a fast-growing area.1 Complementing this growth, China’s Supreme People’s Court issued its judicial interpretation (JI), the Provisions on Several Issues Concerning the Application of the Law in Adjudication of Monopoly-Related Civil Disputes, on May 8, 2012, in order to offer some guidance in resolving private disputes. A challenge in enforcing the law is the need to develop supporting evidence, which requires an understanding of how business firms behave and compete. The field of industrial organization in economics helps to address this need. Its general focus is on the theory of the firm and business strategies; it expands the standard textbook model of perfect competition to imperfect competition, accounting for such more realistic factors as product differentiation, strategic interactions, and choice dynamics. Supporting evidence for litigation can then be developed from these factors, as well as from reasoning in this field. The purpose of this paper is to explain how economics, particularly antitrust economics, can help to provide evidence in the context of new and evolving private antitrust litigation in China.