Case Brief

State Administration for Market Regulation (the Defendant, hereinafter referred to as SAMR) successively received the market concentration declaration materials submitted by both Tuo X Xi Pharmaceutical Co., Ltd. (the Plaintiff, hereinafter referred to as Tuo X Xi) and Xian X Pharmaceutical Co., Ltd. (the Third Party, hereinafter referred to as Xian X) regarding Xian X's acquisition of equity in Tuo X Xi. After reviewing and evaluating the materials, SAMR concluded that the involved concentration did not meet the declaration threshold but might have the effect of excluding or restricting competition in the Chinese market for batroxobin injection. Xian X proposed commitments to impose restrictive conditions on the concentration. Considering that these commitments could effectively mitigate adverse effects on competition and meet the criteria for conditional approval under China's  Anti-Monopoly Law and other relevant regulations, SAMR approved the concentration under additional restrictive conditions. Tuo X Xi disagreed and filed for administrative reconsideration, but SAMR upheld its original decision in the reconsideration decision. Tuo X Xi disagreed with the reconsideration decision and filed a lawsuit.

The court of first instance concluded that the present case concerned a "voluntary declaration" in which the declaration threshold was not met, allowing the regulatory authority to conduct a substantive review of concentration activities that "might have the effect of excluding or restricting competition". The review decision imposed legal obligations on the post-concentration declarant Tuo X Xi, and thus Tuo X Xi had the standing to file an administrative lawsuit. The objective of the concentration review and enforcement of undertakings primarily lies in addressing competition issues arising from the concentration, rather than pre-existing competition issues. The competitive landscape in the market for batroxobin injection existed before the concentration and was not the focus of the review in this case. The State Council's anti-monopoly regulatory authority does not automatically prohibit concentrations that cause or might cause exclusionary or restrictive effects. After assessment, the proposed commitments were effective, feasible, and timely, and could effectively mitigate the negative impact of concentration on competition. The sued decision and the reconsideration decision were lawful.  Based on this, the court dismissed Tuo X Xi's claims. No appeals were filed after the first-instance judgment, and the judgment has entered into force.

Typical Significance

As the first administrative lawsuit in China against an administrative reconsideration decision on the declaration of concentrations between undertakings, the present case provides explicit clarification on issues, including whether the anti-monopoly administrative behavior involved is subject to litigation, the scope of review of concentrations between undertakings, and the evaluation criteria for additional restrictive conditions. It also provides clear guidance for both the declaring parties of concentrations and the anti-monopoly regulatory authority, and serves as a firm reference for the adjudication of similar cases.

(Source: Beijing Court 2024 Top 10 IP Judicial Protection Cases)