On 9 April 2020, China’s State Administration for Market Regulation (SAMR) fined 3 pharmaceutical companies for abuse of dominance in the distribution of injectable calcium gluconate Active Pharmaceutical Ingredient (API). The three companies were found to be in breach of the PRC’s Anti-Monopoly Law (the AML) between August 2015 and December 2017, by selling at unfairly high prices and imposing unfair terms on downstream distributors.

The three companies were fined a total of RMB 325.5 million in relation to the infringements, which is the largest penalty imposed in an abuse of dominance case since the fine against Qualcomm in 2015. In addition, SAMR imposed additional fines on two of the three parties (along with 14 individuals) for obstructing the investigations, amounting to RMB 2.5 million. This includes a number of fines at the maximum amount allowed against undertakings and individuals for obstruction of investigations under the AML, reflecting the severity of the actions taken by the fined parties to impede SAMR’s investigation.

The conclusion of this case demonstrates that the pharmaceuticals and medical devices sectors continue to be an enforcement priority for SAMR amid the COVID-19 outbreak, echoing its recent “Notice on Antitrust Enforcement Measures to Facilitate Prevention and Control of the Novel Coronavirus Pandemic and the Resumption of Work and Industrial Production” issued on 5 April 2020.

The SAMR decision sets out detailed analysis on the application of many key concepts, including in relation to the control position of the parties, and when pricing may be characterised as “excessive” such that it amounts to abusive conduct.

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Contacts

Adelaide Luke

Adelaide Luke
Partner, Hong Kong
+852 2101 4135

Frances Xu

Frances Xu
Partner, Kewei, Mainland China
+86 21 2322 2129

Howard Chan

Howard Chan
Associate, Hong Kong
+852 2101 4265