*AI-generated translation, for reference only.

[Case No.] the Supreme People's Court (2024) SPC IP Civil Final 456 and the First Intermediate People's Court of Chongqing (2023) Yu 01 Min Chu No. 303 (No. 5 Construction Engineering Group Co., Ltd. of [REDACTED] v. Jian[REDACTED] Concrete Co., Ltd., a Dispute over a Horizontal Monopoly Agreement)

[Case Facts] In March 2017, No. 5 Construction Engineering Group Co., Ltd. of [REDACTED] (hereinafter "No. 5 Construction Company") entered into a ready-mixed concrete sales and purchase contract with Jian[REDACTED] Concrete Co., Ltd. (hereinafter "Concrete Company"), agreeing on the unit price at which Concrete Company would supply ready-mixed concrete to No. 5 Construction Company. In September 2018, the two parties signed a supplementary agreement under which, based on the price in the sales and purchase contract, the unit price of ready-mixed concrete was increased by RMB 90 per cubic meter. After the supplementary agreement was signed and up to April 2020, Concrete Company supplied a cumulative total of 5,192.5 cubic meters of ready-mixed concrete to No. 5 Construction Company. In June 2021, the Administration for Market Regulation of [REDACTED] issued an administrative penalty decision finding that, during the period from April 2014 to March 2019, Concrete Company and Jiang[REDACTED] Building Materials Co., Ltd. (hereinafter "Jiang[REDACTED] Company") had reached and implemented a horizontal monopoly agreement to fix the sales prices of ready-mixed concrete and divide the ready-mixed concrete sales market, and that during this period only these two enterprises actually produced and sold ready-mixed concrete locally. In April 2023, No. 5 Construction Company filed a lawsuit on the ground that Concrete Company's implementation of the horizontal monopoly agreement had caused it losses, requesting an order that Concrete Company compensate for the losses. The Court of First Instance rendered a judgment ordering Concrete Company to compensate No. 5 Construction Company for losses of RMB 467,325. Dissatisfied, Concrete Company filed an appeal.

Upon hearing the case at second instance, the Supreme People's Court held that the sales and purchase contract and the supplementary agreement between No. 5 Construction Company and Concrete Company were signed, and performed in accordance with their terms, during the period in which Concrete Company and Jiang[REDACTED] Company implemented the horizontal monopoly agreement, rather than being signed and performed under normal, fair market competition conditions; the increase in the unit price of ready-mixed concrete borne by No. 5 Construction Company was precisely the result of Concrete Company's implementation of the monopoly agreement, so it could be reasonably presumed that No. 5 Construction Company had suffered losses as a result of Concrete Company's implementation of the monopoly agreement. As for the amount of compensation for losses, it was difficult in this case to obtain the competitive market price of ready-mixed concrete in the relevant market or the competitive market price of substitute goods, and there was likewise no evidence showing that, before or after the implementation of the challenged horizontal monopoly agreement conduct, Concrete Company had a ready-mixed concrete price formed through free market competition with its trading counterparts. The ready-mixed concrete prices agreed in the sales and purchase contract and the supplementary agreement signed by Concrete Company and No. 5 Construction Company were both "fixed prices" under Concrete Company's implementation of the horizontal monopoly agreement; given that No. 5 Construction Company claimed losses only with respect to the difference in the unit price of ready-mixed concrete between the supplementary agreement and the sales and purchase contract, it was not improper for the Court of First Instance to find that the direct economic losses caused to No. 5 Construction Company by Concrete Company's challenged horizontal monopoly conduct were at least not lower than RMB 467,325, the total price difference obtained by multiplying the RMB 90 per cubic meter difference in the unit price of ready-mixed concrete between the supplementary agreement and the sales and purchase contract by the total quantity of 5,192.5 cubic meters of ready-mixed concrete purchased by No. 5 Construction Company. Where Concrete Company claimed that the increase in the price of ready-mixed concrete was caused, in whole or in part, by non-monopoly factors such as a rise in raw material costs, it should adduce evidence proving the existence of such non-monopoly factors, or that monopoly and non-monopoly factors existed simultaneously, and reasonably distinguish the extent to which the monopoly and non-monopoly factors affected the transaction price; otherwise, it should bear the adverse consequences of failing to discharge the burden of proof. Concrete Company adduced no evidence on this point, nor did it distinguish and explain the extent of the influence of the monopoly and non-monopoly factors, so it was likewise not improper for the Court of First Instance to calculate the losses caused to No. 5 Construction Company by the challenged horizontal monopoly conduct on the basis of the extent of the increase in the unit price of the traded goods. The court of final instance therefore rendered a judgment dismissing the appeal and upholding the original judgment.

[Typical Significance] This case is a typical case of damages for a horizontal monopoly agreement. The judgment in this case makes clear the presumption of loss for a business operator that signs a contract with the implementer of a monopoly agreement during the period in which the horizontal monopoly agreement is implemented, and also makes clear the burden of proof and the legal consequences where the implementer of a horizontal monopoly agreement claims that the price increase involves non-monopoly factors, thereby easing the plaintiff's burden of proof and the difficulty of proof in horizontal monopoly agreement disputes, and is of positive significance for effectively safeguarding the lawful rights and interests of victims of monopolistic conduct.