*AI-generated translation, for reference only.

[Case No.] the Supreme People's Court (2024) SPC IP Admin. Final 148 and the Beijing Intellectual Property Court (2023) Jing 73 Xing Chu No. 6605 (the Cement Association of [REDACTED] Province v. the Administration for Market Regulation of [REDACTED] Province and the State Administration for Market Regulation, a Case Concerning an Anti-Monopoly Administrative Penalty and Administrative Reconsideration)

[Case Facts] The Cement Association of [REDACTED] Province (hereinafter the "Cement Association") is a trade association established with approval. In May 2019, the Administration for Market Regulation of [REDACTED] Province received a report that the Cement Association had organized enterprises in the industry to jointly raise prices. After investigation, the Administration for Market Regulation of [REDACTED] Province issued an administrative penalty decision on June 28, 2022, finding that the Cement Association had violated the relevant provisions of the Anti-Monopoly Law by organizing and driving 13 cement enterprises in a certain region of [REDACTED] Province to repeatedly reach monopoly agreements to uniformly raise the prices of cement products, and by coordinating the enterprises involved to implement them. The Administration for Market Regulation of [REDACTED] Province therefore ordered the Cement Association to cease the illegal conduct and imposed a fine of RMB 500,000. Dissatisfied, the Cement Association applied for administrative reconsideration. Upon reconsideration, the State Administration for Market Regulation upheld the decision. The Cement Association filed an administrative lawsuit requesting the revocation of the administrative penalty decision and the administrative reconsideration decision. The Court of First Instance rendered a judgment dismissing the Cement Association's claims. Dissatisfied, the Cement Association filed an appeal.

Upon hearing the case at second instance, the Supreme People's Court held that the Cement Association had built a platform for communication and coordination by, among other means, setting up WeChat groups and organizing gatherings and industry meetings, and had organized and driven the major local cement enterprises to communicate repeatedly on such matters as peak-shifting production, the cement market situation, and cement sales prices, thereby forming a consensus to refrain from price competition and to adopt price-maintenance measures. The cement enterprises involved essentially all adjusted their cement prices uniformly according to the timing and extent of the price increases agreed in the WeChat groups or at the gatherings. In the course of the cement enterprises involved reaching and implementing the horizontal monopoly agreement at issue, the Cement Association, with the goal of "peak-shifting production and maintaining cement prices," actively and proactively planned, organized, coordinated, and drove the conclusion and implementation of the agreement, playing a leading role in the conclusion and implementation of the monopoly agreement at issue. Accordingly, it should be found that the Cement Association violated the provisions of the Anti-Monopoly Law that a trade association shall not organize business operators in its industry to engage in monopolistic conduct. The challenged penalty decision and the challenged reconsideration decision had ample factual basis for finding the Cement Association's illegal conduct, and the amount of the fine determined fell within the range of administrative penalties prescribed by law, was commensurate with the nature, duration, and degree of social harm of the Cement Association's illegal conduct, and conformed to the principle that the penalty shall be commensurate with the violation. The court of final instance therefore rendered a judgment dismissing the appeal and upholding the original judgment.

[Typical Significance] The judgment in this case makes clear that where a trade association, through such acts as establishing, convening, leading, planning, manipulating, directing, or initiating, plays a decisive or leading role in the conclusion or implementation of a monopoly agreement, it shall be found to constitute the conduct, prohibited by the Anti-Monopoly Law, of a trade association organizing business operators in its industry to engage in monopolistic conduct. The judgment in this case is of positive significance for correctly delineating the boundaries of trade association conduct and for regulating trade associations in carrying out industry guidance and services in accordance with the law.