Summary of Key Points
The State Administration for Market Regulation has released the "Guidelines on the Application of Personal Liability for Monopoly Agreements (Draft for Comment)," which aims to extend the responsibility for monopolistic practices from corporations to specific individuals—including the "key minority" (legal representatives, principal executives, actual controllers, etc.) and those who directly participate in such activities. The guidelines clarify which actions will result in legal proceedings, potentially higher fines, and even the possibility of criminal penalties in the future. The purpose is to make anti-monopoly enforcement more effective in deterring hidden forms of monopolization, such as coordinated price hikes and production restrictions.
Why This Draft? Monopolies Are Becoming More Sneaky, and Previous Sanctions Were Inadequate
Monopolistic practices (e.g., several companies secretly agreeing to raise prices or limit production) are considered a "cancer" to market competition. However, these activities have become increasingly covert, with companies using "industry association meetings" or "private dinners" as substitutes for formal contracts, making it harder to catch them in the act. Although the anti-monopoly law previously allowed for the imposition of penalties on individuals, the specifics of who should be held responsible and how the penalties should be imposed were not clearly defined, allowing some individuals to evade responsibility. This draft aims to clarify the rules so that enforcement authorities can accurately identify and punish the responsible parties, preventing them from shifting the blame onto the corporations.
Who Will Be Held Responsible? Neither the "Key Minority" nor the "Accomplices" Can Escape
The draft identifies two categories of individuals who will be held accountable:
1. "Key Minority": Legal representatives, principal executives, and actual controllers of companies. If they organize or lead monopoly agreements (e.g., initiate meetings to discuss price increases), approve or tolerate monopolistic activities (e.g., knowing about but ignoring them), or fail to prevent them despite having the ability to do so, they will be held responsible.
2. "Accomplices": Other employees who directly participate in monopolistic activities (e.g., drafting price increase plans, facilitating the implementation of agreements, or ensuring compliance) and play a crucial role will also be considered directly responsible. For example, a marketing manager who contacts other companies to discuss price increases, even if not the company's owner, could face fines.
Will the Penalties Be Stricter? Personal Fines Could Increase Significantly
In previous cases, personal fines were much lower than those imposed on corporations. For instance, in the Shanghai Xinyi Pharmaceutical case, the company was fined 223 million yuan, while the individual was only fined 500,000 yuan; in the Tianjin Active Pharmaceutical Ingredients case, the company was fined 362 million yuan, and the individual was fined 5 million yuan. The draft stipulates that personal fines should, in principle, not exceed those imposed on corporations. This means that if a company is fined 100 million yuan, an individual could face a fine of up to 100 million yuan—a substantial increase from the previous amounts. If a company is fined 500 million yuan for monopolistic activities, the responsible individuals could have to pay the same amount, which would be a significant deterrent.
Other Warnings: Criminal Penalties May Be Imposed in the Future
Currently, monopolistic activities are not subject to criminal prosecution, but the draft suggests that as anti-monopoly efforts intensify, legislation for criminal penalties may be introduced. This means that in the future, those involved in monopolies could face not only financial penalties but also criminal charges. For example, if someone orchestrates a long-term monopoly on a drug price, making it unaffordable for consumers, they could be sentenced to prison. This serves as a warning to all potential participants: hiding behind a company will not protect them from legal consequences.
The Significance of This Draft: Making Monopolists More Cautious
Previously, when companies were fined for monopolistic activities, the owners or executives often suffered little loss, so some were willing to take risks. By holding individuals accountable, not only will fines be imposed, but there is also the possibility of criminal prosecution. This will deter both the "key minority" of corporations from organizing monopolies and employees from participating in them, ultimately promoting fairer market competition and protecting consumers and smaller businesses from the abuses of monopolies.