——(2020) Supreme People’s Court Final Civil Judgment No. 1382 Monopoly Case of "Brick and Tile Association"

In the monopoly dispute case including appellant Sichuan Yibin Wuqiao Building Materials Industry Co., Ltd. (hereinafter referred to as Wuqiao Company), Cao Peijun, Yibin Brick and Tile Association (hereinafter referred to as Brick and Tile Association), and the appellee Zhang Renxun, Yibin Hengxu Investment Group Co., Ltd. (hereinafter referred to as Hengxu Investment Company), Yibin County Sihe Building Materials Co., Ltd. (hereinafter referred to as Sihe Company), and Chuangli Machine Brick Co., Ltd. in Cuiping District of Yibin (hereinafter referred to as Chuangli Company), Zhang Renxun claimed that under the coercion of the founders of the association, that if Hengxu Investment Company, Wuqiao Company, and Sihe Company, over 50 brick and tile manufacturers including Yibin Gaodian Brick Factory (hereinafter referred to as Gaodian Factory) under Zhang Renxun’s name have successively joined the association, and they signed the "Production Suspension and Rectification Contract" and "Technical Service Contract" with the Brick and Tile  Branch of Yibin Building Materials Association, which is the predecessor of the Brick and Tile Association. In accordance with the "Production Suspension and Rectification Contract", Zhang Renxun was forced to suspend production and just received a few support fees for the suspension before September 2011.

In essence, the aforesaid behavior eliminated Zhang Renxun’s participation in competition, and constituted a monopolistic conduct, violating Zhang Renxun’s legitimate rights and interests, who filed a lawsuit with the Chengdu Intermediate People’s Court of Sichuan Province (hereinafter referred to as the court of first instance). The Supreme People's Court rejected Zhang Renxun's claim on November 6, 2020.

The second instance of the Supreme People’s Court held that the core issue of this case was whether Zhang Renxun, as one of the implementers of the horizontal agreements in this case, had the right to demand compensation from other implementers of the agreement for his so-called economic losses. As for this, it should be considered in light of factors such as the legislative purpose of Article 50 of the Anti-Monopoly Law of the People’s Republic of China, the characteristics of the accused monopoly conduct, and the legal effect of damage compensation.

Firstly, the legislative purpose of Article 50 of the Anti-Monopoly Law of the People’s Republic of China. Article 50 stipulates that a business operator who commits a monopoly and causes losses to others shall assume civil liability in accordance with the law. This article is aimed at providing civil judicial channels to stop and crack down on monopolistic behaviors, and providing civil remedies for subjects who have suffered damage due to monopolistic conducts. If the plaintiff is not the victim of the monopolistic behavior stipulated by the anti-monopoly law, but the implementer of the monopolistic behavior, his claim for damage compensation is actually a demand for the division of monopoly benefits, so it is not the object of relief intended by the anti-monopoly law. In this case, Zhang Renxun is one of the participants and implementers of the horizontal agreement, and he obtained a share of monopoly benefits within a certain period of time due to his participation in and implementation of the accused monopoly conduct in this case. He was not the victim of monopolistic behavior that anti-monopoly law intends to offer relief.

Secondly, those who request damage compensation must behave properly and legally. The subjects who participate in and implement the illegal act, though they suffer losses due to the participation and implementation of the illegal act, the loss should not be remedied as a result of their own improper act. In this case, Zhang Renxun voluntarily accepted the production suspension and rectification in the related contract, participated in and implemented the horizontal agreement, which itself is illegal, thus the damage he suffered should not be remedied.

Finally, compensation for damages to implementers of monopolistic behavior will impose negative legal effect of encouraging and supporting related monopolistic conducts. In this case, Zhang Renxun's claim of losses due to monopolistic behavior is essentially a requirement to enforce the horizontal agreement, and divide the monopoly income of the group in terms of the monopoly agreement on the distribution of monopoly benefits. If support Zhang Renxun's litigation claims, it is tantamount to holding and encouraging the illegal act.

Above all, the implementers of a horizontal agreement have no right to request other implementers of the monopoly agreement to compensate their so-called economic losses in accordance with the anti-monopoly law. As the implementer of the horizontal agreement involved in the case, Zhang Renxun's claim for compensation for losses cannot be established and supported.

From Sohu News

May 14th, 2021