CHINA Law and Practice Contributed by: Qian Xiaoqiang, Yang Yikai and Chu Linxian, Haiwen & Partners
Collateral Effects on the Undertaking’s Credit and Business Activities The administrative penalty decision will be announced to the public and recorded in the undertaking’s credit record in accordance with Article 64 of the AML, leaving a profound influ - ence on the undertaking’s business activities, including but not limited to the following. • Potential trading partners may be more cau - tious when considering business co-opera - tion with such undertaking. • The undertaking may be listed in the black - list if the punishment is rather heavy or the undertaking refuses to enforce the admin - istrative decision despite its ability to do so and therefore, may lose the qualification to be awarded in government procurement/bid - ding projects (based on the Administrative Measures for the List of Subjects with Seri - ously Illegal or Dishonest Acts under Market Regulation). • The undertaking may face difficulties in the listing process. The Undertakings’ Commitments Regime may potentially mitigate these collateral effects if the Competition Authorities decide to terminate the investigation thereof. 5.4 Sanctions and Penalties in Criminal Proceedings If the undertaking’s cartel-related infringement is serious enough to constitute a criminal offence, criminal liabilities would arise. For details, see 1.2 Regulatory/Enforcement Agencies and Penalties . 5.5 History of Criminal Sanctions No publicly known criminal penalties have been imposed on companies or individuals in cartel cases so far. According to publicly available
Engaging in the Undertakings’ Commitments Regime allows an undertaking to avoid admin - istrative penalties, mitigate reputational damage, and reduce the significant financial and opera - tional burdens associated with a full investigation and potential litigation. However, if the undertak - ing is unable to provide effective and enforce - able commitments, the Competition Authorities will continue the investigation and impose pen - alties, which may include substantial fines and mandatory corrective measures. 5.3 Effect of Liability Being Established If liability or responsibility were to be established in cartel cases, there could be collateral effects in follow-on private civil litigation or the under - taking’s credit record and business activities. Collateral Effects on Follow-On Private Civil Litigation According to Article 10 of the 2024 Judicial Interpretation, if an administrative decision made by the Competition Authorities on render - ing a monopolistic behaviour unlawful has not been subject to administrative litigation within the statutory period or has been confirmed by a court, there is no need for the plaintiff to provide additional evidence to prove the constitution of monopolistic behaviour, unless there is evidence to the contrary that is sufficient to overturn the conclusion. The 2024 Judicial Interpretation also authorises the courts to require the Competition Authorities who made the administrative decision to explain the relevant circumstances, which means that the plaintiff may have the opportunity to apply to the court for evidence supporting the decision.
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