went into effect on August 1, 2008. But until the end of 2012, this law seemed dormant. No single defendant had been convicted of violating Anti-Monopoly Law. In fact, the only monetary penalty levied by any Anti-Monopoly Law enforcement agencies was made against two small trading companies for their monopolizing a raw material. They were fined a total sum of RMB7 million in November 2011. Starting from early 2013, the enforcement of the AML tightened sharply. Well-known cases include: suppliers, including the two South Korean companies (Samsung and LG), and four Taiwan companies, were fined a total sum of RMB353 million for their horizontal monopoly agreement; were fined a total sum of RMB449 million for their respective vertical monopoly agreements; Gold Jewelry and five Shanghai local retailers were fined a total sum of RMB1.05 million for their horizontal monopoly agreement; powder suppliers were fined a total sum of RMB668 million for their respective vertical monopolistic conducts. 2014, Anti-Monopoly Law enforcement agencies have been even busier. Big brands such as Microsoft, Qualcomm, Tetra Pak, Sumitomo, Seiko, Mercedes, BMW and AUDI were investigated and/ or fined for their monopolistic activities. Sumitomo and seven other auto parts manufacturers were fined a total of RMB830 million and Seiko and three other bearing manufacturers were fined a total of RMB400 million. for their monopolistic conducts; some small and medium-sized companies were targeted by AM law enforcement. For example, in July 2014, the State Administration of Industry & Commerce announced that they had closed 12 cases, all involving small and medium- sized companies. Although more domestic companies have been investigated for monopolistic activities, most of the penalties were imposed on FIEs. This phenomenon has led to several foreign governments expressing their concerns to the Chinese government. In my presentation titled "China's Anti-Monopoly Law and its Impact on Distribution of Goods in China," which I presented at the Association of Corporate Counsel 2013 Annual Conference, I urged corporate counsel to pay more attention to compliance with China's AML to ensure smooth, hassle-free business activities. Now, on high alert, due to Anti-Monopoly enforcement pressure, some FIEs have already started to review their sales policies and legal documents, and to train their sales staff on how to be compliant with China's AML. corruption was nearly out of control, in both political and commercial activities. Many foreign businessmen had adapted themselves to this corrupt business environment and had even found it more lucrative for doing business than in less corrupt countries. President Xi, and his colleague Mr. Wang Qishan, secretary of the Chinese Communist Party Commission for Discipline Inspection, has significantly improved the corruption situation. From November 2012 to the end of 2014, 58 ministry level high officials (and retired high officials) have been investigated and/or arrested for corruption. Numerous lower level officials have been sent to jail. Dozens of officials have been frightened into committing suicide. An anti-corruption storm is sweeping over China! in the political realm than in the commercial. But I believe that this imbalance should not be interpreted to mean that China would continue as before to tolerate commercial corruption. In my opinion, this imbalance is just expediency of implementing the anti- corruption storm. President Xi and Wang Qishan know well that they need to tackle political corruption first before tackling commercial corruption. This is the reason why most bribers were freed after confessing to bribery activities. Bribers' testimony is needed for prosecuting corrupt officials. Once President Xi and Mr. Wang find that government officials are clean enough, the anti-corruption storm will surely blow stronger through the commercial sector. Several signs already show President Xi and Wang Qishan's hatred towards commercial corruption. For example, a large number of high officials of state- owned companies, including CNPC, China Resources, China Unicom, China Shenhua's high officials, have been sent to prison. Another example occurred in September 2014 when a record-high fine of RMB3 billion was imposed on the GSKCI for its corruption and GSKCI's chairman Mark Reilly was sentenced to three years imprisonment! I see no coincidence that the above three new policies/measures have all occurred since President Xi took office. Xi's concept of governance is clear to the public now. In the political field, he expects a clean, transparent and efficient government. Regarding commerce, he seeks to build a fair, transparent, hassle-free market. Such outcomes would, of course, be beneficial for foreign investors in general. But for those who are used to doing business in China's pre-Xi business environment, I suggest that they ought to take measures soon to prepare for the impending storm that is potentially coming their way. |