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29 September 2011
On September 7 2011 an antitrust case was brought against Taiyuan Railway Bureau before the Court of Taiyuan Xinghualing. It is claimed that an administrative omission on the part of Taiyuan Railway Bureau violated the Anti-monopoly Law and the Unfair Competition Law.
The lawsuit was triggered by a claim that Taiyuan Railway Bureau failed to respond to an application from Shanxi Transport Group Co Ltd to open additional rail ticket outlets, despite the fact that the claimant has been applying for authorisation since 2007.
The indictment against the defendant highlights the following key points:
The United States and the European Union both have a long history of antitrust enforcement. In these jurisdictions, suing an agency of the public administration on antitrust grounds is rare, as the main aim of antitrust law is to regulate the conduct of undertakings, not administrative bodies. However, the Chinese antitrust regime has established the concept of 'administrative monopoly', which is defined as the executive abuse of administrative power to eliminate or restrict market competition. Apart from the general features of an economic monopoly, in most cases it occurs in the pursuit of local or sectoral interests related to an administrative body; as such, it may have a greater anti-competitive effect.
Given the unique historical situation of monopolies in China, the Anti-monopoly Law firmly establishes a basis for addressing administrative monopolies. Chapter 5 enumerates the most frequent illegal actions of this kind, such as the application of administrative influence to compel another party to agree on a deal, the imposition of regional economic barriers and the general use of administrative power in anti-competitive conduct. It also prohibits other non-specific administrative actions which have anti-competitive elements. However, there are no specific provisions in relation to the existence of a negative administrative monopoly, as in the case at issue.
Companies and competition practitioners will follow the case closely. In particular, it will be interesting to analyse the rationale that the court applies in its judgment, which should provide valuable guidance on judicial practice in relation to administrative monopolies.
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